Chapter 3.01
BUSINESS TAX CERTIFICATION

Sections:

Article I. General Provisions

3.01.101    Purpose.

3.01.102    Business tax certificates required.

3.01.103    Exemptions.

3.01.104    Definitions.

Article II. Tax Amounts

3.01.201    Tax basis.

3.01.202    Tax rate.

3.01.203    Minimum tax.

Article III. Application and Renewal

3.01.301    Business tax certificate applications.

3.01.302    Business tax certificate renewals.

Article IV. Business Tax Certificate Issuance

3.01.401    Content.

3.01.402    Posting and keeping.

3.01.403    Duplicates.

3.01.404    Branch establishments.

3.01.405    Change of location.

Article V. Administration

3.01.501    Certification of records.

3.01.502    Information confidential.

3.01.503    Finance director adjustment powers.

3.01.504    Debt to city.

3.01.505    Delinquencies and penalties.

3.01.606    Enforcement.

3.01.607    Evidence of doing business.

3.01.508    Remedies cumulative.

3.01.509    Apportionment.

Article I. General Provisions

3.01.101 Purpose.

The provisions of this chapter are enacted solely to raise revenue for general municipal purposes and are not intended for regulation. (Ord. 1202 § 2, 1991)

3.01.102 Business tax certificates required.

Business taxes are hereby imposed upon all businesses, professions, trades, vocations, enterprises, establishments, occupations, or callings conducting business in the city to which a business tax may lawfully apply, in the amount of fifty cents per thousand dollars of gross receipts. It shall be unlawful for any person to transact and carry on any business, trade, vocation, enterprise, establishment, occupation, or calling in the city not otherwise exempt without first having procured a business tax certificate from the city or complying with all of the applicable provisions of this chapter.

The business tax certificate shall be evidence only of the fact that such business tax has been paid. Neither the payment of the business tax nor the possession of the business tax certificate shall authorize, permit, or allow the doing of any act which the person paying or holding such business tax certificate would not otherwise be entitled to do; nor shall it be construed as permission to conduct or carry on a business at any place within the city where the conducting or carrying on of such business is prohibited or fails to comply with the city’s zoning, planning, or building regulations, nor shall it be construed as permission to conduct or carry on a business in such a manner as to create or maintain a nuisance. (Ord. 1202 § 2, 1991)

3.01.103 Exemptions.

The following persons and organizations are exempt from the provisions of this chapter:

A. Minors Under the Age of 18. Businesses owned and conducted by minors under the age of eighteen years shall be exempt from the business tax provisions of this chapter where all of the following conditions exist and legal documentation is provided to support that:

1. All persons engaged in the operation of the business are under the age of eighteen years.

2. All persons engaged in the operation of the business have a bona fide ownership interest in the business.

B. Charitable, Religious, and Nonprofit Organizations.

1. Organization activities. The provisions of this chapter shall not be deemed or construed to require the payment of a business tax to conduct, manage, or carry on any business, occupation, or activity of any institution or organization recognized by a tax board of the state with a “Statement of Domestic Non Profit Organization” or the Internal Revenue Service of the United States which is conducted wholly for the benefit of charitable, religious, or nonprofit purposes and from which profit is not derived, either directly or indirectly, by any person.

2. Nonexempt activities. The exemption provisions of this section shall not be construed to extend to any person, business, corporation, or organization receiving a fee, wage, stipend, salary, remuneration, compensation, or pay for the performance of any business, occupation, or activity related to exempt organization activities. Any such person, business, corporation, or organization shall be subject to the business tax provisions of this chapter and shall obtain the business tax certificate prior to any business, occupation, or activity being undertaken.

C. Conflicts With Federal and State Laws or Contractual Agreements. The provisions of this chapter shall not be construed to require a person to obtain a business tax certificate prior to doing business within the city if such requirement conflicts with the applicable statues, laws, or constitution of the United States or the State of California or other contractual obligations or franchise agreements. The finance director may develop administrative guidelines concerning exemptions, apportionment, and any other matters which she or he or she determines as necessary for the lawful and effective implementation of this chapter. (Ord. 1202 § 2, 1991)

3.01.104 Definitions.

For the purposes of this chapter, unless otherwise apparent from the context, certain words and phrases used in this chapter are defined as follows:

A. “Business” shall mean and include professions, trades, vocations, rentals, leases, enterprises, establishments, and occupations and all and every kind of calling, any of which is conducted for the purpose of earning in whole, or in part, a profit or livelihood, whether or not a profit or a livelihood actually is earned thereby, whether paid in money, goods, labor, or otherwise, and whether or not the business has a fixed place of business in the city.

B. “Finance director” shall mean the individual designated by the city administrative officer to collect business taxes pursuant to the provisions of this chapter.

C. “Gross receipts” shall mean and include the total amounts actually received or receivable from sales, services, rentals, or leases in the total amounts actually received or receivable for the performance of any act or service, of whatever nature it may be, for which a charge is made or a credit allowed, whether or not such act or service is done as a part of, or in connection with, the sale or rental of materials, property (real or personal), goods, wares, or merchandise. Included in “gross receipts” shall be receipts, cash, credits, and property of any kind or nature, without any deduction therefrom on account of the cost of the property sold, rented or leased, the cost of the materials used, labor and service costs, interest paid or payable, or losses or other expenses whatsoever.

Excluded from “gross receipts” shall be the following:

1. Cash discounts allowed and taken on sales;

2. Credit allowed on property accepted as a part of the purchase price in which property may later be sold;

3. Any tax required by law to be included in, or added to, the purchase price and collected from the consumer or purchaser;

4. Such part of the sales price of property returned by purchasers upon the rescission of the sales contract as is refunded, either in cash or by credit;

5. Amounts collected for others where the business is acting as an agent or trustee to the extent that such amounts are paid to those for whom the amounts were collected;

6. Receipts of refundable deposits, except that refundable deposits forfeited and taken into the income of the business shall not be excluded;

7. As to a real estate transaction, the sales price of the real estate sold for the account of others, except that portion which represents commission or other income;

8. Income from businesses which perform the function of agent or broker, except that portion of income which represents commission or other income to the agent or broker;

9. As to a retail gasoline dealer, a portion of the receipts of the dealer from the sales of motor vehicle fuels equal to the amount of motor vehicle fuel license tax imposed.

10. As to retail gasoline dealer, any special motor fuel taxes if paid by the dealer or collected by the dealer from the consumer or purchaser.

D. “Person” shall mean and include all domestic and foreign corporations, associations, syndicates, joint-stock corporations, partnerships of every kind, clubs, Massachusetts trust, business, and other common law trusts, societies, and individuals transacting and carrying on any business in the city, other than an employee.

E. “Sworn statement” shall mean an affidavit sworn to before a person authorized to take oaths or a declaration or certification made under the penalty of perjury.

F. “Gross receipts subject to the business tax” shall be that portion of gross receipts relating to business conducted within the city. For businesses with their headquarters located within the city of San Luis Obispo, their total gross receipts shall be deemed to be related to business conducted within the city unless an apportionment of gross receipts is requested by the business pursuant to Section 3.01.509 of this chapter. (Ord. 1202 § 2, 1991)

Article II. Tax Amounts

3.01.201 Tax basis.

The amount of the business tax to be paid by the applicant is to be measured by gross receipts from the preceding completed calendar or fiscal year. For a new business, which has no gross receipt history, the applicant is required to pay the minimum tax. (Ord. 1202 § 2, 1991)

3.01.202 Tax rate.

The tax rate for all businesses shall be fifty cents per thousand dollars of gross receipts. This rate shall be applied in thousand-dollar increments, and gross income shall be rounded to the next highest thousand-dollar interval for the computation of the business tax. (Ord. 1202 § 2, 1991)

3.01.203 Minimum tax.

The minimum tax which shall be paid by any business will be twenty-five dollars ($25.00), which represents the minimum cost to the city of issuing or renewing the certificate. (Ord. 1202 § 2, 1991)

Article III. Application and Renewal

3.01.301 Business tax certificate applications.

Every person required to have a business tax certificate pursuant to the provisions of this chapter shall make a written application to the finance director and submit the following information:

A. The nature or kind of business for which the business tax certificate is requested;

B. The place where the business is to be conducted and, if the business is not to be conducted at a permanent location, the residence address, identified as such, of the owners of the business;

C. If the application is made for the issuance of a business tax certificate to a person to do business under a fictitious name, the names, social security numbers, and residence addresses of the owners of the business;

D. If the application is made for the issuance of a business tax certificate to a corporation or partnership, the names, franchise tax number, and residence addresses of the officers or partners thereof; and

E. Any further information which the federal or state taxing authority or the finance director may require to enable the issuance of the business tax certificate. (Ord. 1202 § 2, 1991)

3.01.302 Business tax certificate renewals.

In all cases, the applicant for the renewal of the business tax certificate required by the provisions of this chapter shall submit to the finance director a written statement, upon a form provided by the finance director, written under penalty of perjury or sworn to before a person authorized to administer oaths, setting forth the actual gross receipts earned the preceding calendar or fiscal year as reported to any federal or state taxing authority to which gross receipts are reported to enable the finance director to ascertain the amount of the business tax to be paid. Unless otherwise specifically provided, all annual business taxes required by the provisions of this chapter shall be due and payable on July 1st of each year and shall be delinquent on July 31st of each year.

No renewal of a business tax certificate shall be issued until payment in full of all delinquent business taxes, including accrued interest and applicable penalties thereon is received by the city. It shall be the responsibility of the applicant to ensure renewal of the business tax certificate. (Ord. 1202 § 2, 1991)

Article IV. Business Tax Certificate Issuance

3.01.401 Content.

All business tax certificates required by the provisions of this chapter, unless otherwise provided in this chapter, shall be prepared and issued by the finance director upon the payment to the city of the proper amount of business tax. Each business tax certificate shall state upon the face thereof the following:

A. The name of the person to whom the business tax certificate is issued.

B. The type of business taxed.

C. The location or address of the business taxes.

D. The date of the expiration of the business tax certificate.

E. That the business tax certificate when issued shall be the receipt for the business tax paid to the city.

F. That the possession of the business tax certificate shall not authorize, permit, or allow the person to do any act which such person would not otherwise be lawfully entitled to do. (Ord. 1202 § 2, 1991)

3.01.402 Posting and keeping.

All business tax certificates issued pursuant to the provisions of this chapter shall be posted and kept in the following manner:

A. Any persons transacting and carrying on business at a permanent location in the city shall keep such business tax certificate posted in a conspicuous place upon the premises where such business is carried on.

B. Any persons transacting and carrying on business, but not operating at a permanent location in the city, shall keep such business tax certificate upon them at all times while transacting and carrying on such business. (Ord. 1202 § 2, 1991)

3.01.403 Duplicates.

A duplicate business tax certificate may be issued by the finance director to replace any business tax certificate previously issued pursuant to the provisions of this chapter, which business tax certificate has been lost or destroyed, upon the filing of a statement of such fact and the payment of a duplicate fee set by resolution of the city council. (Ord. 1202 § 2, 1991)

3.01.404 Branch establishments.

A separate business tax certificate shall be issued for each branch establishment or location of business; provided, however, warehouses and distributing plants used in connection with, and incidental to, a business taxed pursuant to the provisions of this chapter shall not be deemed to be separate places of businesses or branch establishments; and provided, further, any person conducting two or more types of businesses at the same location and under the same management, or at different locations, but which businesses use a single set or integrated set of books and records, may elect to pay only one business tax calculated on all the gross receipts of the businesses, except that a fee set by resolution of the city council shall be paid upon issuance for each additional branch or location. (Ord. 1202 § 2, 1991)

3.01.405 Change of location.

No business tax certificate issued pursuant to the provisions of this chapter shall be transferable; provided, however, where a business tax certificate is issued for a person to transact and carry on a business at a particular place, such person, upon an application therefor and the payment of a fee set by resolution of the city council, may have the business tax certificate reissued for transacting and carrying on of such business under such business tax certificate at some other location to which it is to be moved. (Ord. 1202 § 2, 1991)

Article V. Administration

3.01.501 Certification of records.

A. Conclusiveness of Statements. No statement required by the provisions of this chapter shall be conclusive as to the matters set forth therein, nor shall the filing of such statements preclude the city from collecting by appropriate action such sums as are actually due and payable pursuant to the provisions of this chapter. Such statements and each of the several items therein contained shall be subject to certification by the finance director, the deputies of the finance director, or authorized employees or representatives of the city, who are hereby authorized to examine such books and records of any certificate holder or applicant for a business tax certificate as may be necessary in their judgment to verify or ascertain the amount of the business tax due.

B. Record Retention. All persons subject to the provisions of this chapter shall keep complete records of all business transactions and shall retain such records for examination by the finance director, the deputies of the finance director, or authorized employees or representatives of the city, and maintain them for a period of at least three years from the annual due date of the federal tax return or the city business tax return, whichever time period is greater. Records which shall be maintained for audit purposes shall include state and federal income tax returns, schedules and records included in such returns, and any and all work papers used to prepare such returns.

C. Examination of Records. All business tax certificate holders, applicants for business tax certificates, and persons engaged in business in the city are hereby required to permit an examination of such books and records for the purposes set forth in this section during regular business hours and at reasonable times.

D. Interest and Penalties. If, subsequent to the examination, it is determined that the business has been delinquent or has nonreported or under-reported gross receipts, thereby underpaying business taxes, the certificate holder shall pay to the city within ten days of notification of the determination of the amount of tax due, interest in the amount of eight percent from the date the tax was due, and a penalty in the amount of the business tax due. Interest shall continue to accrue on the additional tax amount until such amount is paid in full.

A mistake made in stating the amount of the business tax shall not, in any case, prevent or prejudice the finance director from collecting what is actually due from any person or entity carrying on a trade, calling, profession, or occupation subject to a business tax under this chapter.

E. Determination of Tax Amounts Due. If any person subject to the tax imposed by this chapter fails to submit information required, or if the finance director is not satisfied with records and statements filed, the finance director shall determine the amount of the business tax due from such person by means of such information as may be obtainable and shall mail a notice of the amount so assessed by serving it personally or by depositing it in the United States Post Office at San Luis Obispo, California, postage prepaid, addressed to the person at their last-known address. (Ord. 1202 § 2, 1991)

3.01.502 Information confidential.

It shall be unlawful for the finance director or designee, or any person having an administrative duty pursuant to the provisions of this chapter, to make known in any manner whatever the business affairs, operations, or financial information obtained by an investigation of the records of any person required to obtain a business tax certificate, or pay a business tax, or any other person visited or examined in the discharge of the official duty of the finance director, or of the amount or source of income, profits, losses, or expenditures, or any particular thereof, set forth in any statement or application, or amended statement or application, or copy of either, or in any book containing any abstract or particulars therein to be seen or examined by any person; provided, however, the provisions of this section shall not be construed to prevent:

A. Disclosure to, or the examination of records and equipment by, another city official, employee, or agent for the collection of taxes for the sole purpose of administering or enforcing the provisions of this chapter or collecting the business taxes imposed by the provisions of this chapter;

B. The disclosure of information to, or the examination of records by, federal or state officials, or the tax officials of another city or county, if the reciprocal arrangement exists, or to a grand jury or court of law upon a subpoena;

C. The disclosure of information and the results of examination or records or particular taxpayers, or relating to particular taxpayers, to a court of law for proceedings brought to determine the existence of the amount of any business tax liability of such particular taxpayers of the city;

D. The disclosure, after the filing of a written request to the effect, to the taxpayer, or to the taxpayer’s successors, receivers, trustees, executors, administrators, assignees, or guarantors if directly interested, of information as to items included in the measure of any paid business tax, any unpaid business tax, or any amount of business tax required to be collected, including interest and penalties; further provided, however, that the city attorney shall approve each such disclosure, and the finance director or designee may refuse to make any disclosure referred to in this subsection when, in their opinion, the public interest would suffer thereby;

E. The disclosure of the names and business address of persons to whom business tax certificates have been issued and the general type and nature of their business;

F. The disclosure, by way of public meeting or otherwise, of such information as may be necessary to the city council in order to permit the city council to be fully advised as to the facts if a taxpayer files a claim for the refund of business taxes, or submits an offer of compromise with regard to a claim asserted against them by the city for business taxes, or when acting upon any other similar matter; and

G. The disclosure of general statistics regarding business taxes collected or business done in the city. (Ord. 1202 § 2, 1991)

3.01.503 Finance director adjustment powers.

The finance director shall have the power, for good cause shown, and documented by the finance director as a permanent record:

A. To extend the time for filing any required sworn statement;

B. To waive any penalties which would otherwise have accrued;

C. To adjust the amount of the business tax due;

D. To make refunds or prorations of taxes paid. (Ord. 1202 § 2, 1991)

3.01.504 Debt to city.

The amount of any business tax and penalty imposed by the provisions of this chapter shall be deemed a debt to the city. A suit may be brought against any person to enforce the collection of the debt described in this chapter in any court of competent jurisdiction.

The conviction of any person for transacting any business without a certificate shall not excuse or exempt such person from payment of any license due or unpaid at the time of such conviction, and nothing herein shall prevent a criminal prosecution for any violation of the provisions of this chapter. (Ord. 1202 § 2, 1991)

3.01.505 Delinquencies and penalties.

For failure to pay the business tax required by the provisions of this chapter prior to the delinquency date, the director of finance shall add a penalty. The amount of this penalty shall be set by resolution of the city council. [See Section 4.20.110.] (Ord. 1234 § 1, 1993: Ord. 1202 § 2, 1991)

3.01.606 Enforcement.

A. Duties of the Finance Director and Chief of Police. It shall be the duty of the Finance Director to enforce each and all of the provisions of this chapter, and the chief of police shall render such assistance in such enforcement as may from time to time be required by the finance director.

B. Inspections. The finance director, in the exercise of the duties imposed by the provisions of this section, and acting through deputies or duly authorized assistants, shall have the right to enter and examine all places of business free of charge during normal business hours to ascertain whether the provisions of this chapter are being complied with.

C. Penalty for Violation. Any person who violates any provisions of Section 3.01.102 by transacting and carrying on any business, trade, vocation, enterprise, establishment, occupation, or calling in the city without first having procured a business tax certificate from the city or without complying with all of the applicable provisions of this chapter is guilty of an infraction and is subject to punishment as provided for in Chapter 1.12 of this municipal code. (Ord. 1202 § 2, 1991)

3.01.607 Evidence of doing business.

When any person, by the use of a sign, circular, card, telephone book, newspaper, other publication, or advertising media, shall advertise, hold out, or represent that such person is in business in the city, or when any person holds an active license or permit issued by a government agency indicating that such person is conducting a business in the city, and such person fails to deny, by a sworn statement given to the finance director or designee, that such person is not conducting a business in the city after being requested to do so by the finance director or designee, then these facts shall be considered prima facie evidence that such person is conducting a business in the city. (Ord. 1202 § 2, 1991)

3.01.508 Remedies cumulative.

All remedies prescribed by the provisions of this chapter shall be cumulative, and the use of one or more remedies by the city shall not bar the use of any other remedy for the purpose of enforcing the provisions of this chapter. (Ord. 1202 § 2, 1991)

3.01.509 Apportionment.

When the business tax imposed by this chapter cannot be enforced without there being an apportionment according to the amount of business done in the city of San Luis Obispo, apportionment rules shall be established by the finance director. The finance director shall conduct an investigation and shall fix as the business tax for the applicant an amount that is reasonable and nondiscriminatory or, if a business tax has already been paid, shall order a refund of the amount over and above the business tax so affixed. In fixing the business tax to be charged, the finance director shall have the power to base the business tax upon a percentage of gross receipts, operating expenses, floor space, payroll, number of employees, business taxes paid to other cities, or any other measure which will assure that the business tax assessed shall be uniform with the amount of business done in the city of San Luis Obispo, or of businesses of a like nature, so long as the amount assessed does not exceed the business tax set forth in this chapter. (Ord. 1202 § 2, 1991)