The Gross Receipts Tax and Business Registration Fees Ordinance (2012 Proposition E) was approved by San Francisco voters on November 6, 2012. It does not apply to the 2013 tax year or prior years. The first taxpayer filings affected will be the installment payments due April 30, 2014 and the Business Registration Fees due May 31, 2014. The changes to the Gross Receipts Tax and Payroll Expense Tax commenced January 1, 2014. The Office of Treasurer & Tax Collector will provide taxpayers with instructions about changed business registration fees and tax filings in 2014.
City voters have approved a business tax based on gross receipts. (Article 12-A-1 of the Business and Tax Regulations Code) Businesses with gross receipts of not more than $1 million annually will be exempt from the Gross Receipts Tax, but will be required to pay a business registration fee. The Gross Receipts Tax rates will vary depending on the type of business and annual gross receipts from business activity in the City. The City will phase in the Gross Receipts Tax, and reduce the Payroll Expense Tax, over a five-year period beginning in 2014.
Q. I run a business in San Francisco. How does the Gross Receipts Tax and Business Registration Fees Ordinance affect me?
A. If you own or manage a business in San Francisco, the way you calculate your business registration fees and taxes will change.
Q. When do these changes take effect?
A. Businesses will not see any changes in their tax payments until April 2014, when the first Gross Receipts Tax installment payments are due. Starting in early 2015, businesses will file the Gross Receipts Tax and Payroll Expense Tax return for Tax Year 2014.
Q. Will the Treasurer’s Office be communicating new tax instructions for the Gross Receipts Tax?
A. Yes. Taxpayers should expect to see these instructions in 2014.
Q. I hear businesses with no more than $1 million in gross receipts will not have to pay the Gross Receipts Tax. Is this true?
A. Yes. The Gross Receipts Tax has a small business exemption for businesses with no more than $1 million in gross receipts. This exemption also applies to residential rental property owners with fewer than four units in a building. Most businesses operating in San Francisco will pay a business registration fee.
Q. I hear we-businesses will still have to pay the Payroll Expense Tax. Is this true?
A. Yes. Over the 2014-2018 period, the new Gross Receipts Tax will be phased in, while the Payroll Expense Tax is adjusted. For the 2014 tax year, affected businesses will pay the Gross Receipts Tax at 10% of the rates approved by voters, and a reduced Payroll Expense Tax rate.