HomeMy WebLinkAboutD-5 Staff Report - Business License Tax Amnesty ProgramSCHEDULED ITEM
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TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
VIA: TROY L. BUTZLAFF, ICMA-CM, CITY MANAGER
FROM: LOUIE F. LACASELLA, MANAGEMENT ANALYST
DATE: JUNE 19, 2017
SUBJECT: PROPOSED BUSINESS LICENSE TAX AMNESTY PROGRAM
SUMMARY:
The City’s Municipal Code authorizes the levy and collection of a Business License Tax from
businesses operating in the City. The City currently has a contract with MuniServices to perform an
audit of businesses operating in the City to determine if businesses are paying a business license tax. As
part of this program, Staff is proposing that the City Council authorize an Amnesty Program that would
facilitate voluntary compliance for businesses that have failed to obtain a business license tax, or
underpaid their tax obligation. This action approves Resolution No. 2017-C44 authorizing an amnesty
program to encourage non-compliant businesses to pay their taxes
RECOMMENDATION:
Staff recommends that the City Council take the following action:
1) Adopt Resolution No. 2017-C44 authorizing an amnesty program that would facilitate voluntary
compliance for businesses that have failed to obtain a business license tax, or underpaid their tax
obligation while waiving the payment of penalties or interest.
DISCUSSION:
The City’s Municipal Code authorizes the levy and collection of a Business License Tax on businesses
operating in the City. Specifically, Section 18-5 of the Azusa Municipal Code states that “it is unlawful
for any person to transact and carry on any business, trade, profession, calling or occupation in the City
without first having procured a license from the city to do so”.
Recently, the City Council approved a contract with MuniServices to conduct an audit of
persons/entities engaged in business in Azusa that have not obtained the required license, as well as to
ascertain if licensed businesses have accurately reported their gross receipts and paid the appropriate
license fees.
APPROVED
CITY COUNCIL
6/19/2017
Proposed Business License Tax Amnesty Program
June 19, 2017
Page 2
The Azusa Municipal Code provides that penalties be assessed if the business license tax is not paid by
the set deadlines. Section 338 of the California Code of Civil Procedure allows cities to collect the
current year business tax and up to three years of back taxes plus penalties and interest. Taxes can be
paid all at once or, if it is agreed upon by the City, an installment agreement can be made to pay in three
installments. If the installment agreement is not upheld, then penalties will be applied to the remaining
balance due as follows:
Business License
Current Fees (not including interest)
Days Fee
31 - 40 5 %
41 – 71 Additional 15 % (20%)
A maximum penalty of 100% shall be paid the fifth month per AMC Ch apter 18 Article 1 Sec 18 -28 (a)
To help encourage a higher compliance rate for collection of past due taxes (past three years and
current), and to help encourage businesses that have never registered with the City the opportunity to
comply with the City’s Business Licensing requirements, Staff recommends that the City Council
authorize an amnesty period of 90 days during which interest and penalties on past due taxes will be
waived by the City for businesses who have not obtained or filed previously. MuniServices will be
sending letters indicating that the penalties and interest will be waived by the City if the noncompliant
business complies with the City.
Many cities throughout the country have implemented similar amnesty programs with great success.
The City’s consultant believes that an amnesty program is a prudent strategy to encourage individuals
and entities that do business in the City to obtain their business license without having to worry about
paying penalties and interest.
Staff has reviewed the proposed amnesty program with the Azusa Chamber of Commerce and the
Chamber is willing to assist the City in promoting the amnesty program to the business community.
FISCAL IMPACT:
Staff anticipates that the implementation of the amnesty program would bring additional revenue to the
City through new businesses obtaining business licenses and paying underreported taxes.
Prepared by: Reviewed and Approved:
Louie F. Lacasella Troy L. Butzlaff, ICMA-CM
Management Analyst City Manager
Attachments:
1) Resolution No. 2017-C44
RESOLUTION NO. 2017-C44
A RESOLUTION OF THE CITY COUNCIL OF AZUSA
APPROVING AN AMNESTY PROGRAM FOR BUSINESS
LICENSE TAX
WHEREAS, the City Council of the City of Azusa (the “City”), approves the
implementation of an Amnesty Program for Business License Tax for businesses which have
failed to obtain a business license tax, or underpaid their tax obligation; and
WHEREAS, the proposed Amnesty Program would permit the Business
License Division to waive interest and penalties for applicable tax periods in which fees are
owed; and
WHEREAS, penalties are reassessed if Business License Tax are not paid by
the set deadline;
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of
Azusa that the Council hereby approves the implementation of a Business License Tax
Amnesty program for a period of three months.
PASSED, APPROVED and ADOPTED this 19th day of June, 2017.
_______________________________
Joseph Romero Rocha
Mayor
ATTEST:
___________________________________
Jeffrey Lawrence Cornejo, Jr.
City Clerk
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss.
CITY OF AZUSA )
I HEREBY CERTIFY that the foregoing Resolution No. 2017-C44 was duly adopted
by the City Council of the City of Azusa at a regular meeting thereof, held on the 19 th day of
June, 2017, by the following vote of the Council:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
___________________________________
Jeffrey Lawrence Cornejo, Jr.,
City Clerk
APPROVED AS TO FORM:
___________________________________
Best Best & Krieger, LLP
City Attorney