Tax Rate Reduction and Fund Class Consolidation

On February 3, 2015, the City Council passed Ordinance #183419. This ordinance amends Subsection (f) of Section 21.33 of the Los Angeles Municipal Code (LAMC) to lower the business tax rate of Section 21.49 Professions and Occupations over time and amends Sections 21.41 and 21.43 while repealing Sections 21.42, 21.44 and 21.45 so as to consolidate several business tax classifications into two sections.

Tax Rate Reduction:

The lowering of the business tax rate for the L049 fund/class, which includes Professions and Occupations, will be phased in over three annual tax periods beginning January 1, 2016 as follows:

• January 1, 2016 reduced from $5.07 for each $1,000 of gross receipts or fractional part, to $4.75 for each $1,000 of gross receipts or fractional part.
• January 1, 2017 reduced from $4.75 for each $1,000 of gross receipts or fractional part, to $4.50 for each $1,000 of gross receipts or fractional part.
• Tax years beginning after December 31, 2017 the tax rate will be $4.25 for each $1,000 of gross receipts or fractional part.

Fund Class Consolidation:

Businesses currently reporting under LAMC Sections 21.41 and 21.42 will be consolidated as Gross Receipts Fund Class I (LGRI). LAMC Sections 21.43, 21.44 and 21.45 will be consolidated under Gross Receipts Fund Class 2 (LGR2). Businesses with fund classes that are undergoing the consolidation will receive updated business tax registration certificates that note the new fund class.

For additional information please click on the links below:

• FAQs regarding the Lowering of the L049 Professions and Occupations tax rate and Fund Class Consolidation

• Tax rate reduction and Consolidation Ordinance 183419