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Thursday, Feb 2, 2023
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Tougher Enforcement to Follow City Tax Amnesty

Mayor Antonio Villaraigosa’s business-tax amnesty offer expires at the end of July, and for now the mayor’s office is taking a wait-and-see stance about whether or not the program is on schedule toward yielding the amount of additional revenues originally projected. It is estimated that the city is owed more than $250 million in outstanding business taxes. The mayor hopes the program, which began May 1 and will end July 31, will bring in at least $10 million at a time when the city is burdened with a $530 million budget shortfall. Here in the Valleys, tax accountants are reaching out to clients and prospective clients with the message that, if they owe back taxes to the City of Los Angeles, now is the time to ‘fess up’ and pay. “Amnesty gives them an opportunity to avoid penalties,” said CPA Mel Kohn of Encino-based Kirsch Kohn & Bridge LLP who has been involved in business tax reform in Los Angeles. “But what’s also important is for the companies and the professionals who are not in the system, and not paying their fair share of taxes to the city, to be brought in.” Kohn said there are three reasons to take advantage of tax amnesty now. One reason, he said, is that doing so will help people avoid paying big penalties up to 40 percent of the principal for being delinquent in filing and/or paying. “Keep in mind, you’re exempt if your make less than $100,000” Secondly, according to Kohn and as announced by Villaraigosa, the city is getting better at cross referencing other sources to find out who owes money. “The letters are computer-generated and they’re going out all the time now,” Kohn said. “They say something like ‘we know you’re in the city; you put down that you’re here when you filed with the state.'” In addition to new inter-governmental information sharing that came with the passage of AB 63, the city also employs private tax “bounty hunters,” who investigate and bring delinquent taxpayers to the attention to the city’s Office of Finance. The third reason people should take advantage of the amnesty program and, and perhaps most important, according to Kohn, is getting more businesses which, by statute, should paying city taxes but are not, into the system. Having more taxpayers contributing will bring down tax rates for everyone, Kohn said. “That will help not only this year, but in future years too,” said Kohn, who led the private-sector charge for reform of the local tax code in 2005. That’s what business tax reform was about.” The status quo puts a disproportionate tax burden on honest companies, said Kohn. “We want everyone in the system so we don’t have some people paying for other people’s tax obligation,” he said. “The more people you have paying their fair share, the lower the tax rate will be for everyone.” Kohn was with Mayor Villaraigosa when he announced the tax-amnesty program. “Businesses create jobs and promote economic development and by paying their fair share of City taxes, businesses support the essential services that make our city safe and vibrant,” Villaraigosa said. “This is a unique window of opportunity, and I encourage all eligible businesses to participate.” The mayor warned that businesses that who do not take advantage of the amnesty program could later be netted by a stepped up, and substantially more aggressive, enforcement regime. Los Angeles’ amnesty program also includes those who owe telephone, electricity, and gas-users taxes, as well as commercial tenant’s occupancy taxes, transient occupancy taxes, and parking occupancy taxes. To take advantage of the amnesty program call the Los Angeles Tax Amnesty Hotline at (213) 978-1555 weekdays from 8 a.m. to 5 p.m., or go to www.lacity.org/finance/amnesty.

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