Foreword
The Office of Finance administers the City's tax laws; issues tax registration certificates and
permits, and collects City taxes and fees. Most of the funds go into the City's General Fund to
support essential services such as public safety and street maintenance.
This information booklet will focus specifically on City of Los Angeles taxes administered by
the Office of Finance. These include Business Tax, Transient Occupancy Tax, Parking
Occupancy Tax, Communications Users Tax, Electricity Users Tax, and Gas Users Tax.
Anyone engaging in business activity within the City of Los Angeles, as defined in the Los
Angeles Municipal Code (LAMC) Section 21.00(i), must register for a Business Tax
Registration Certificate and is subject to business tax pursuant to LAMC Section 21. Each of the
other taxes are taxes on the user, not the business. However, businesses engaging in these types
of activities are required to collect the tax and remit it to the City.
While this booklet is periodically updated, changes in tax laws and the various regulatory
statutes may have occurred since its most recent printing. Changes in the law and how it is
applied may impact the obligations businesses and individuals have when conducting business
within the City. In all cases, the Los Angeles Municipal Code supersedes any guidance or
information contained herein.
We hope that you find this information helpful. If you have further questions about this
information, the tax code, or how it applies to your specific situation, please contact the Office of
Finance.
General Information and Disclosures
Purpose of the tax
The City of Los Angeles Business Tax is a privilege tax imposed for revenue purposes only. No attempt
is made through the business tax to regulate the conduct of businesses.
Business Regulation in Los Angeles
The issuance of a Business Tax Registration Certificate (BTRC) and the payment of the business
taxes do not authorize the conduct or continuance of any illegal business or of a legal business in
an illegal manner within the City of Los Angeles.
Legal action that may be taken for non-compliance
Failure to obtain the required Tax Registration Certificate and pay all taxes due is a misdemeanor
unless the violation or failure is declared to be an infraction. Any violation that is designated as a
misdemeanor may be charged by the City Attorney as either a misdemeanor or an infraction.
Violations designated as a misdemeanor shall be punishable by a fine of not more than $1,000.00
or by imprisonment in the County Jail for a period of not more than six (6) months, or by both
fine and imprisonment. Violations designated as an infraction shall be punishable by a fine of not
more than $250.00 for each violation.
Each person shall be guilty of a separate offense for each and every day during any portion of
which any violation of any provision of this code is committed, continued or permitted by such
person, and shall be punishable accordingly. Please refer to LAMC Sections 11.00 (m), 21.03,
21.12, 21.16, 21.19, and 21.20 for complete information.
Confidential Character of Information Obtained
LAMC Section 21.17 makes it unlawful, subject to certain exceptions, for the Office of Finance
or any person having an administrative responsibility to make known in any manner whatever
the business affairs, operations or information required of any person filing returns or paying
taxes under the provisions of the Los Angeles Municipal Code. This means that financial
information you provide to the Office of Finance connected to your tax account is held in
confidence, and cannot be shared with anyone outside of the Office of Finance except under
specific circumstances.
However, non-financial information such as business name, address, and primary activity, is not
confidential pursuant to the California Public Records Act. This information, including
residential addresses if they are used as a business or mailing address, is posted on the Office of
Finance website.
Taxes Collected by the Office of Finance
Business Tax
Article 1 of Chapter II of the LAMC covers business taxes, which are imposed for the privilege
of engaging in business activity within the City of Los Angeles. Most business activities are
taxed based on the gross receipts generated by the activity in the previous year, though some business
activities are taxed based on other measures, such as square footage or number of days
of operation. Gross receipts-based tax rates range from $1.01 per $1,000 (0.101%) to $4.25 per
$1,000 (0.425%) depending on the activity, with the exception of cannabis-related business
taxes, which have different rates as identified in LAMC Section 21.50 and 21.51. Most of the
material in this information booklet pertains primarily to business taxes. You will find
information about locations, activities, calculations, and exemptions later in this document.
Transient Occupancy Tax
Article 1.7 of Chapter II of the LAMC imposes a tax on each transient for the privilege of
occupancy in any hotel. The tax imposed shall be at a percentage rate of the rent charged by the
hotel owner and/or operator and shall be remitted to the Office of Finance on a monthly basis,
due on or before the 25th day following the close of each calendar month.
A transient is defined as: Any person, other than an individual, who exercises occupancy or is
entitled to occupancy by reason of concession, permit, right of access, license or other
agreement, for any period of time, or Any individual who personally exercises occupancy or is
entitled to occupancy by reason of concession, permit, right of access, license or other
agreement, for a period of 30 consecutive calendar days or less.
Exempted from the tax are rentals to:
- Any person as to whom, or any occupancy as to which, it is beyond the power of
the City to impose the tax herein provided; - Any Federal or State of California officer or employee while on official business,
including an employee of a federal credit union who provides proof of being on
Federal or State official business; - Any officer or employee of a foreign government who is exempt by reason of
express provision of federal law or international treaty; - Any person to whom rent is charged at the rate of $2.00 per day or less;
- Any person as to whom, or any occupancy as to which, rent is paid from funds
administered by the Emergency Food and Shelter National Board Program.
No exemption shall be granted under items A, B, or C of the listed exemptions unless a claim is
made at the time rent is collected upon a certificate distributed by the Office of Finance.
Utility Users' Tax
Article 1.1 of Chapter II of the LAMC imposes a tax on telephone, electricity and gas users
within the City. The tax imposed shall be at a percentage rate of the charges made for such
services and shall be included in the billings of the individual utility companies which are
responsible for remitting these taxes to the Office of Finance on a monthly basis.
Exemptions from payment of utility users' taxes are available to households where the combined
income of all residents is less than an annual minimum amount determined by the Federal
Department of Housing and Urban Development and either of the following conditions exists:
- At least one resident is 62 years of age or older, or
- At least one resident is disabled to the extent that he or she is unable to engage in any
substantially gainful activity.
For detailed information regarding exemption from payment of utility users' taxes, contact the
Utility Tax Exemption Unit at (844) 663-4411 option #3.
Parking Occupancy Tax
Article 1.15 of Chapter II of the LAMC imposes a tax for the privilege of occupying space in any
parking facility in the City of Los Angeles. The tax imposed on each occupant shall be at a
percentage rate of the parking fee paid to the parking facility owner and/or operator who is
responsible for remitting these taxes to the Office of Finance on a monthly basis, due on or
before the 25th day following the close of each calendar month.
Certain persons may qualify for exemption from the Parking Occupancy Tax. Information and
applications may be obtained by calling the Utility Tax Exemption Unit at (844) 663-4411 option #3.
Commercial Tenant's Occupancy Tax
Article 1.3 of Chapter II of the LAMC imposes an excise tax upon every tenant renting a
building or structure of any kind on land located in the City of Los Angeles for purposes other
than dwelling, sleeping or lodging, or renting space. This tax is applicable only in situations
where the landlord is exempt from the business tax on rental of office and commercial buildings
as defined in LAMC 21.43(d).
The landlord is obligated to collect this tax from the tenant and remit the tax to the Office of
Finance. The tax is $1.48 per $1,000 or less of charges attributable to each calendar and shall be
remitted to the Office of Finance on or before the last day of the month following the close of
each calendar quarter.
Business Tax Registration Certificates
All persons engaged in business in the City of Los Angeles must obtain a Business Tax Registration
Certificate (BTRC), unless specifically exempted.
How to apply for a BTRC
A BTRC may be obtained by filing an application with the Office of Finance by mail, email, on
the Finance website, or in person at one of the Office’s public counters.
The Office of Finance requires that the taxpayer provide the following:
- Full legal name of the business owner(s);
- Fictitious/doing business as (D.B.A.) name of the business, if any;
- Business address (no P.O. Boxes);
- Mailing address, if different from the business address;
- Business owner's Social Security Number (SSN) if the taxpayer is not required to report
employment taxes or give tax statements to employees or - Business owner's Federal Employer Identification Number (FEIN) if the taxpayer is
required to report employment taxes or give tax statements to employees; - Description of business activity (ies); and
- Start date of business activity (ies).
Once the application is processed, the official certificate will be mailed to you. This certificate
must be posted in public view at the business location.
Vendor Registration
There are vendors who conduct business with the City of Los Angeles in a manner that would
not subject them to a business tax liability. While these vendors do not owe any tax, they must
register for a BTRC. Please call the Administration Mail-In Unit at (844) 663-4411 for more
detailed information.
Is a separate registration certificate required for each business location?
Yes. Section 21.06 of the LAMC requires a separate registration certificate for each type of
business activity and for each business location in the City of Los Angeles. However, a
warehouse or distributing plant used in conjunction with a business in the City is not regarded as
a separate business location. The law also provides for an exception when the business locations
are outside the City of Los Angeles. In this instance, only one registration certificate is required
for each type of business for all locations which are outside the City.
Can a registration certificate be transferred from one ownership to another?
Section 21.11 of the LAMC states that a registration certificate may be transferred in those cases
where the real or ultimate ownership of the business after the transfer is substantially similar to
the ownership existing before the transfer. However, when the change in business ownership,
such as by sale, is substantially different, an application would have to be made for a new BTRC.
Can a registration certificate be transferred to a new location?
Yes. Upon your notification to the Office of Finance that you have moved and are conducting
your business at a new location, an amended Tax Registration Certificate will be issued to you.
The change of address can be submitted online by submitting a taxpayer information update, and
can also be submitted along with the annual renewal form by completing the information update
section on the back of the form.
Business Taxes
Who is required to pay the tax?
Every person who engages in any business within the City of Los Angeles is required to obtain
the necessary Tax Registration Certificate(s) and make payment of the business tax. “Person”, in
this context, is defined in LAMC Section 21.00(d) to cover any entity, be it an individual,
business, legal entity, or any other organization. “Business” is defined in LAMC Section
21.00(h) is defined as any activity, enterprise, profession, trade, or undertaking…with the object
of gain, benefit, or advantage.” The types of activities considered to be “engaged in business are
listed in LAMC Section 21.00(i).
Certain organizations, which are conducted solely for charitable or religious purposes, may be
entitled to receive tax-exempt registration certificates upon application and qualification. The
payment of tax is not required for engaging in a business activity when such payment of tax
would be in violation of the Constitution of the United States or the Constitution of the State of
California. Please refer to LAMC Sections 21.02, 21.22 and 21.49(c)(3) for more detailed
information.
How do I pay the tax?
Businesses currently holding a valid Tax Registration Certificate will receive renewal
statement(s) prior to the next tax period. If a renewal statement is not received in the mail, a
timely return must still be filed to avoid payment of interest and penalty. All taxes may be paid
online and finance.lacity.gov as well.
When is the tax due?
Due Dates for the following tax periods are:
Annual Business Taxes
Due January 1 of each year. Delinquent if not paid before March 1.
Quarterly Business Taxes
These are due on January 1, April 1, July 1 and October 1 of each year. In each case, delinquent if not paid before February 1, May 1, August 1 and November 1.
Monthly Business Taxes
These are due on the first day of each month and delinquent if not paid before the first day of the following month.
Daily Business Taxes
These are due on each day of the activity and delinquent the following day.
How is the amount of tax determined?
Most business taxes are based on gross receipts. For those Business Tax Classifications, the tax
rate is a specified amount per $1,000 of taxable gross receipts for each tax classification. Some
business taxes are based on a flat rate per tax period and others are based on the number of
vehicles, machines, devices or equipment used, the number of employees, square footage of the
area, seating capacity, or the scale of fees collected.
Fiscal Year Filing
Taxpayers have the option to report their tax measures based on their business' fiscal or calendar
year.
Single Primary Tax Classification Election
A taxpayer with multiple classifications whose rates are based on annual gross receipts, may
elect to have all of the business' taxable annual gross receipts reported and taxed at the rate
applicable to the activity constituting at least 80% of the entire annual gross receipts, after any
apportionments. Any business activities taxed other than on the basis of annual gross receipts
must continue to be reported separately.
Intercompany Transfers
That portion of a business' gross receipts attributable to amounts received from or charged to
closely held or related companies is exempt from business tax. Ownership interests in the related
or closely held companies must be at least 80% in common in terms of both value and voting
power.
Reporting on a cash or accrual basis (deductions for bad debts)
Gross receipts may be reported on either cash or an accrual basis in accordance with Internal
Revenue Service (IRS) guidelines. If reporting on an accrual basis (amounts billed), you may
exclude from your reported gross receipts any uncollectible amount ("bad debt") apportioned to
the City of Los Angeles that has been written off as a "bad debt" in compliance with IRS guidelines.
However, any portion of "bad debt" that had been previously written off and is later collected, is to be
reported as gross receipts in the year it is collected.
Business sold or discontinued
If a business is discontinued or dissolved before the end of a tax period, any taxes accrued or owing shall be due on the date of termination. Taxes due are delinquent if not paid within forty-five (45) days from the date of termination.
Small Business Exemption
A small business with $100,000 or less of total gross receipts (inside and outside the City), which
files a timely renewal for the tax period, is exempt from paying business tax for that period.
Creative Artist Exemption
Los Angeles Municipal Code Section 21.29 (b) provides for a Creative Artist tax exemption for
taxpayers who generate up to $300,000 in total taxable and non-taxable in-City and out-of-City
gross receipts attributable to their qualifying "creative activities". This exemption applies strictly,
only to individual "creative artists" (individual, individual acting as a corporation, or individual
acting through a limited liability company), when performing "creative activities" for
"entertainment or aesthetic purposes". The exemption only applies to those gross receipts the
creative artists earn from their creative activities and does not include income from any other
source. As with the small business exemption, the business must file a timely renewal to qualify
for the exemption.
Entertainment and Multimedia Business Tax Limitations
Section 21.27 of the LAMC applies to businesses located in either the Hollywood
Redevelopment or the North Hollywood Redevelopment Areas that generate more than 50% of
gross receipts from the entertainment and/or multimedia business activities. The tax owed by
these businesses are calculated with special limits in place as detailed in the LAMC. Please
contact the Office of Finance if you have questions about this limitation.
City Clerk Rulings
Section 21.15 (h) of the Los Angeles Municipal Code gives the Director of Finance the authority
to adopt and promulgate rules and regulations pertaining to the collection of Business Tax and
the enforcement of the provisions of Article 1 of Chapter II of the LAMC. The following is
general information that applies to specific activities. All of the City Clerk rulings can be found on the
Office of Finance website at finance.lacity.gov/tax-education/laws-regulations/city-clerks-ruling.
Below are the most widely-applicable City Clerk Rulings. Note that City Clerk Rulings 1, 4, 5, 6
and 12 have been repealed.
City Clerk's Ruling No. 13 (Persons selling goods, wares and merchandise in Los Angeles, with no fixed placed of business in Los Angeles)
Business Tax Classification Reference: Sections 21.42 (LGR1) and 21.44 (LGR2) of the Los Angeles Municipal Code:
A person who does not own, lease, occupy or otherwise maintain within the City of Los Angeles a place or premises upon which or from which such person engages in business, shall nevertheless be deemed to be engaged in business within the City of Los Angeles when, through the physical presence of such person, such person's employees, such person's agents, or such person's equipment, such person carries on activities within the City of Los Angeles which are designed to solicit, promote, stimulate, or otherwise encourage the sale of goods, wares, or merchandise.
The measure of tax for such person shall be:
- 35% of those gross receipts from all sales to customers located within the City of Los Angeles, where delivery or shipment is made to points within the City by vehicles operated by the taxpayer.
- 30% of those gross receipts from all sales to customers located within the City of Los Angeles where delivery or shipment is made to points within the City by means other than vehicles operated by the taxpayer regardless of the f.o.b. point or other conditions of sale.
- 30% of those gross receipts from all sales to customers located within the City of Los Angeles where delivery or shipment is made to points outside the City.
City Clerk's Ruling No.14 (Person's selling goods, wares and merchandise, who have a fixed place of business in Los Angeles)
Business Tax Classification Reference: Sections 21.42 (LGR1) and 21.44 (LGR2) of the Los Angeles Municipal Code
A person who owns, leases, occupies or otherwise maintains within the City a place or premises upon which, or from which the person engages in the business of selling goods, wares, and merchandise in the City and whose gross receipts from such sales are attributable to business activities carried on within the City and activities carried on outside the City, may apportion such gross receipts and include in the measure of tax those gross receipts directly attributable to activities carried on within the City.
In making a calculation of gross receipts to be reported as the measure of tax, the person may deduct from 100% of gross receipts the percentage of gross receipts deemed to be directly attributable to selling activities carried on by such person outside the City of Los Angeles. For the purposes of this calculation, the person may deduct, to the extent appropriate, but in no case in an amount greater than, the following percentages of those sales, or particular categories of sales, on which the corresponding elements of the selling process are performed at a place or location outside the City:
- Up to 30% for the location where the sale is negotiated or solicited by the taxpayer, through the physical presence of the taxpayer or the taxpayer's employees.
- Up to 20% for the sales office which serves as the base of operations for sales activities, or if there is no sales office which serves as a base of operations, the office from which the sales activities are directed or controlled.
- Up to 10% for the location where orders or contracts are accepted or approved. Such acceptance or approval shall be deemed to take place at the location of the office specified, in item 2 above, unless there is clear and conclusive evidence that a binding acceptance or approval occurs elsewhere.
- Up to 20% for any facility, operated by the taxpayer, where the goods, wares or merchandise are stored immediately prior to shipment or delivery.
- Up to 5% for the location, which gives the order for, or arranges for, the shipment or delivery of articles sold.
- Up to 5% for the place where billing procedures are performed.
- Up to 5% for the place where the collecting of receipts is performed.
- Up to 5% for the place to which merchandise is delivered by vehicles operated by the taxpayer.
City Clerk's Ruling No. 15 (Gross receipts attributable to business engaged in within the city)
Business Tax Classification Reference: Section 21.49
It is the ruling of the City Clerk that any person engaging in a business subject to tax under Section 21.49 of the L.A.M.C shall include in the measure of tax the total gross receipts from work performed within the City; and in addition thereto, if such person owns, leases, occupies or otherwise maintains within the City a place or premises from which such person engages in business activities outside the City, such person shall include a portion of the gross receipts from work performed outside the City in the measure of tax. In the absence of substantial information, 20% of gross receipts from work performed outside the City shall be deemed to be that portion subject to tax as attributable to business engaged in within the City.
Other city Clerk rulings (Not otherwise included in this material)
- City Clerk's Ruling No. 2 (Contractors)
- City Clerk's Ruling No. 3 (Commission Merchants, Commission Brokers, Commission Agents Dealing in Tangible Personal Property)
- City Clerk's Ruling No. 7 (Application of Business Tax Ordinance to Social Clubs, Automobile Clubs, Golf and Country Clubs, Employees' Associations, etc.)
- City Clerk's Ruling No. 8 (Discounts, Allowances, etc.)
- City Clerk's Ruling No. 10 (Employee Retention, Demonstration and Display of Goods, Wares or Merchandise)
- City Clerk's Ruling No. 11 (Federal Taxes)
- City Clerk's Ruling No.17 (Persons Leasing or Renting Tangible Personal Property)
- City Clerk's Ruling No.18 (Senior Citizen Exemption - Utility Users Tax: Claims for Refund)
- City Clerk's Ruling No.19 (Retailers Earning Finance and Other Charges on Deferred Payment Accounts)
Taxation of most common and typical types of business activities
Retail Sales
LAMC Section 21.44 defines retail sales as the selling of any goods, wares or merchandise for
any purpose other than resale. Common examples would be grocery stores, drug stores, hardware
stores, clothing stores, restaurants, etc.
Tax Rate: $1.27 per $1,000 or fractional part thereof of gross receipts.
Wholesale Sales
LAMC Section 21.42 defines wholesale sales as the selling of goods, wares or merchandise for the purpose of resale. An example would be a wholesale grocer selling goods to a grocery store.
Tax Rate:$1.01 per $1,000 or fractional part thereof of gross receipts.
Sellers who are engaged in both retail sales and wholesale sales are subject to both types of taxes. In these instances, it will be necessary to segregate the sales and pay a business tax for each classification.
Receipts, which may be excluded from Retail and Wholesale Business Taxes, are the following:
- Out-of-State sales, which are shipped by the seller directly to the purchaser to points outside the State of California.
- State or local sales and use taxes.
- Returned merchandise where cash or credit is allowed.
- Cash discounts allowed or taken.
Retailers and wholesalers may be entitled to an apportionment of their gross receipts if they are located in the City of Los Angeles and engage in sales activities both inside and outside the City (City Clerk's Ruling No. 14); or if they are located outside the City of Los Angeles and engage in sales activities within the City (City Clerk's Ruling No. 13).
Selling, soliciting on streets or sidewalks
Selling any goods, wares or merchandise on public streets and sidewalks on foot or using a pack,
stand or pushcart is illegal. It is also illegal to sell in vacant lots, auto service stations or any
other private property (abandoned or not) without the approval of the Department of Building
and Safety, Bureau of Street Services.
Persons operating food-catering vehicles may sell, provided that all of the following conditions
are met:
- The vehicle must be registered with the State Department of Motor Vehicles.
- Must obtain a Sellers Permit from the State of California, Department of Tax & Fee
Administration (818) 543-4900. - The vehicle must be approved by the Los Angeles County Health Department. The
telephone number is (888) 700-9995. - The food sold must be prepared and packaged ready for immediate human consumption.
- When stopping or parking on public streets, all signs must be obeyed. Certain stopping or
parking restrictions must also be complied with. - Only temporary stops on private property route locations may be made.
Note: Catering bicycles or tricycles (human powered) such as those used to vend ice cream,
tamales, candy, etc. are illegal upon City streets.
Where do I Apply for the City of LA Sidewalk and Park Vending
Permit?
Visit StreetsLA Headquarters
1149 S. Broadway, Room 350
Los Angeles, CA 90015
(213) 847-6000 | vending.lacity.org
Professions and Occupations
LAMC Section 21.49(c) covers any service activities that are not described as "Miscellaneous
Services", or specifically defined by other sections. Some examples are attorneys, dentists,
barbers, and auto mechanics.
Tax Rate: $4.25 per $1,000 or fractional part thereof of gross receipts.
Persons engaged in more than one trade, calling, occupation, vocation, profession or other means
of livelihood covered within this section shall consolidate all gross receipts and shall be issued
one Tax Registration Certificate covering all such service activities.
Persons who are in the business of providing services may be entitled to an apportionment of
gross receipts derived from activities conducted both inside and outside the City of Los Angeles
(City Clerk's Ruling No. 15).
Can a person in a selling business also be subject to the Professions and Occupations tax?
Yes. Many selling businesses also perform services or repairs. Common examples would be automobile dealers, television sales and services, gas stations, etc. In these cases, it is necessary to segregate the sales and services and pay a business tax for each business activity.
Independent Telemarketing Agency
LAMC Section 21.47 creates a business tax classification for persons engaged in the business of
marketing services or goods, wares or merchandise on behalf of three (3) or more clients
continuously, none of which has any ownership interest in said person, by use of a
telecommunications device at a call center.
Tax Rate: $3.15 per $1,000 or fractional part thereof of gross receipts.
Multimedia Businesses
LAMC Section 21.41 creates a business tax classification for multimedia businesses. A
"Multimedia Business" shall mean a business that: 1. Produces films, disks, tapes, software or
other recording devices, whether visual or audio, through the integration of two or more media,
which include, without limitation, computer generated graphics and video, film, slides, video
tapes, audio tapes and photographs; or 2. Provides computer programming services on a contract
or fee basis to the person defined in subsection 1 of this section, such services to include
computer software design and analysis, modification of custom software, digital imaging and
other related programming services; or 3. Develops online and Internet services, including the
design of websites, for clients. The activities of a motion picture, television or radio producer, as
defined in LAMC Section 21.109, a radio or television broadcaster, as defined in LAMC Section
21.45, and an adult entertainment business, as defined in LAMC Section 12.709(b) shall not be
subject to tax under this section.
Tax Rate: $1.01 per $1,000 or fractional part thereof of gross receipts.
Child Care Providers
LAMC Section 21.41 defines child care as providing non-medical care for children under 18
years of age in need of personal services, supervision or assistance essential for sustaining the
activities of daily living or for the protection of the individual on less than a 24-hour basis.
Tax Rate: $1.01 per $1,000 or fractional part thereof of gross receipts.
Rental of Dwelling Units
LAMC Section 21.43 covers persons who are engaged in the business of conducting or operating
a hotel, rooming house, apartment house, or other dwelling units.
Tax Rate: $1.27 per $1,000 or fractional part thereof of gross receipts.
A Tax Registration Certificate is required for persons having four (4) or more dwelling units in
the City. Unlike other business activities, gross receipts from all in-city rental locations can be
combined under one Tax Registration Certificate.
Rental of Commercial Property
LAMC Section 21.43 covers persons who are engaged in the business of renting or letting a
building to tenants for purposes other than dwelling.
Tax Rate: $1.27 per $1,000 or fractional part thereof of gross receipts.
Only one Tax Registration Certificate is required from persons having more than one
commercial property in the City but the gross receipts from all of these locations should be
reported in the measure of tax.
This tax does not apply to persons who operate storage warehouses or indoor auto parking as
they are subject to a business tax for the conduct of their businesses under ordinance Sections
21.46 and 21.49, respectively. Please refer to LAMC Section 21.43 for a complete list of
exemptions.
Contractor
LAMC Section 21.188 covers persons engaged in the business of constructing, altering,
repairing, or demolishing any building, highway, road or other structure.
Tax Rate: $153.00 for the first $60,000 or less of gross receipts plus $1.01 per $1,000 or
fractional part thereof in excess of $60,000. In-City Contractors pay an additional $2.55 per
$1,000 or fraction of all salaries and fees paid for services rendered in the City in connection
with out-of-city projects.
Depending on whether the contractor has a fixed place of business inside or outside the City, the
following methods are used to compute the contractor's tax base:
- Established place of business located outside the City: Gross receipts consist of the total amount of contracts from projects performed within the City without any deduction for subcontracts performed by others. Subcontractors are also subject to this tax. No tax payment is required for out-of-city contractors who have zero gross receipts in the city.
- Established place of business located inside the City: Gross receipts from jobs or projects performed both inside and outside the City are reported as follows (City Clerk's Ruling No. 2):
- Gross receipts from the total amount of contracts from projects performed in the City without any deduction for subcontracts performed by others plus
- An apportionment of the total wages, salaries and fees paid to employees and consultants for services rendered in the City in connection with projects located outside the City. The apportionment rate is based on the ratio of gross receipts from projects outside the City to total gross receipts from all business activities.
Commission Merchant or Broker
LAMC Section 21.47 defines commission merchant or broker as a person who brings buyers and
sellers of goods, wares or merchandise together, while serving in the capacity of an independent
contractor and not as an employee of another.
Tax Rate: $3.15 per $1,000 or fractional part thereof of gross receipts.
Commission merchants or brokers may be entitled to an apportionment of gross receipts if they
are located inside the City but have substantial activities outside the City or if they are located
outside the City but have business activities inside the City (City Clerk's Ruling 3 defines a
commission merchant or broker. See City Clerk's Ruling 15 for apportionment).
Personal Property Rental
LAMC Section 21.46 covers every person engaged in the business of leasing or renting any
tangible personal property, and not specifically taxed by other provisions of this article.
Tax Rate: $2.55 per $1,000 or fractional part thereof of gross receipts.
It is not required to include the gross receipts for the leasing or renting of tangible personal
property when the entire use is made wholly outside the State of California.
Persons engaged in the business of renting personal property may be entitled to an apportionment
of gross receipts derived from rental activities carried on both inside and outside the City (City
Clerk's Ruling No. 17).
Auto Parks
LAMC Section 21.49 covers every person engaged in the business of conducting any automobile
parking place, storage lot or storage place where motor vehicles are parked or stored, and a
charge made directly or indirectly for such parking or storage.
Tax Rate: $4.25 per $1,000 or fractional part thereof of gross receipts.
Business Tax Liaison
The Business Tax Liaison program was designed to provide personal assistance to taxpayers who have complex business tax problems. The Business Tax Liaison will be dedicated to researching and resolving issues and complaints from taxpayers. The Business Tax Liaison may be contacted by:
Whistleblower Program
The Whistleblower Program provides rewards for information resulting in the recovery of
business taxes. The amount of reward shall not exceed 10% of the additional taxes, interest and
penalties, which are recovered as a result of the information provided. No reward shall be paid if
the Director of Finance determines that the recovery was so small as to call for a reward of less
than $50.00. For more information, please contact the Business Tax Liaison.