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tvp

City of LA Business Tax for freelancers

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For those who don't already know, I just wanted to make people aware who are freelancing in LA or are going to be freelancing in LA, you need to register with the City for a Business Tax License within a month (I believe) of starting out. Otherwise, they will disallow the many exemptions for small businesses and creative artists and come after you for more money than you will owe the Feds or the State.

 

Most people don't even know about this and the City of LA doesn't make a point to get the message out there because they would rather take your money.

 

Their scam is that if you fail to register and miss their deadline, then unlike the Feds or the State, they disallow all exemptions that would probably guarantee that you don't owe them anything. Then they charge you in tax, interest and penalties more than the Feds or the State ever would.

 

In my experience, most people don't know about this, especially freelancers starting out. Then two years down the road...they're coming after your ass and they're not interested in using lube or condoms.

 

But don't take my word for it.

 

Check for yourself here:

 

http://www.cityofla.org/finance/

 

xT

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I F@*#&^(#@&*#^@&(*@^&*#@*^ HATE THE LA BIZ TAX...... its SUCH a racket!

 

If you miss the deadline you owe... a friend of mine just got hit with a bill for over 4grand... its such a scam and is total BS.

 

make sure you file exempt status before the deadline...EVERY SINGLE YEAR...

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What form do we need to file? Does it only apply to people who who live/work there? What if you remotely work for a company from LA?

 

then you have to pay different tax for doing business in LA.

 

Check the web-site:

 

www.cityofla.org/finance

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I don't think it would apply to you if your business address is not in LA. You have to file for exemption if you do live in LA. If you have a good tax person, they should do this for you. Also, according to my tax people, they can write a letter to get you out of fees and penalties.

 

 

oh - and I think you are exempt if you make under $250,000.

Edited by fishface

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I F@*#&^(#@&*#^@&(*@^&*#@*^ HATE THE LA BIZ TAX...... its SUCH a racket!

 

If you miss the deadline you owe... a friend of mine just got hit with a bill for over 4grand... its such a scam and is total BS.

 

make sure you file exempt status before the deadline...EVERY SINGLE YEAR...

 

 

Right. It is bullshit. They disallow the exemptions if you miss the deadline. They are also counting 1099s as "gross receipts" and that is what they base their tax on.

 

Your friend needs to go down to an Office of Finance branch office and sort it out with them. He / she should bring their 1099 forms and have one of the clerks go through them and see which ones are subject to tax. Some will be more subject to tax than others depending on where they are. For instance, 1099s from shops in Santa Monica, won't be subject to tax or as much tax as those in LA proper.

 

THE CITY WILL ASK FOR YOUR SOCIAL OR YOUR TAX ID NUMBER. AS FAR AS I KNOW, YOU DON'T HAVE TO GIVE IT TO THEM. IT ISN'T THE LAW. THEY ONLY NEED YOUR ADDRESS, YOUR PHONE NUMBER AND YOUR MONEY. WHEN I WENT DOWN THERE, I KNEW THAT IF THE STATE HADN'T GIVEN THEM MY SOCIAL, THEN IT WASN'T THE LAW THAT THEY HAVE IT. DON'T LET THEM TELL YOU OTHERWISE. ALL OF THE CLERKS ARE NOT THE SAME. HOWEVER, I TOLD THEM I WASN'T GIVING THEM MINE AND THEY STILL PROCESSED EVERYTHING, THEREFORE, THEY DON'T NEED IT AND ONLY WANT IT SO THEY CAN HASSLE YOU MORE.

 

As I stated previously, they don't publicize the need for a business tax license so they can screw as many people as possible; especially freelance aka temporary workers who in reality don't have an actual "business" so would never know about the certificate and the deadline because they aren't applying for permits with the City for a brick and mortar store front.

 

What you can do about it is this-

 

Write a formal complaint letter to your City Council Member.

 

Give it time to get response. Mine took about a week and a half.

 

If they don't respond, send another complaint letter to the Mayor's office.

 

You can actually email it to either of them. Their staff does read them.

 

Write a letter to the Office of Finance asking for an appeal and subsequent refund. You have a legal right to two appeal hearings. I would certify mail / return receipt this letter. The Office of Finance is bureaucratic black hole where everything disappears and or gets lost. So make sure they have to sign for your appeal request and get proof they did by sending the letter "certified mail / return receipt" from your local post office.

 

In reality, despite whatever the government wants to classify you as, if you are a freelancer that only "freelances" at shops and doesn't do jobs directly with clients, then you really aren't a "business" as much as you are a temporary employee.

 

If this is the case, you should tell them that in your letters.

 

Writing your City Council Member does help.

 

Mine has already advised me to write a letter to the Office of Finance for an appeal / refund and to let them know if I have any problems getting my money back.

 

It's not a guarantee that I will get it back, but it is something.

 

Council Member offices actually do have a lot of sway with the City.

 

I hope this info helps.

Edited by tvp

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I don't think it would apply to you if your business address is not in LA. You have to file for exemption if you do live in LA. If you have a good tax person, they should do this for you. Also, according to my tax people, they can write a letter to get you out of fees and penalties.

 

 

oh - and I think you are exempt if you make under $250,000.

 

If your business address is not in LA, but you do business in LA, you still have to pay, according to the Office of Finance.

 

There are many exemptions, some as high as $500,000, if you make their deadline to file, which is Feb 28 of each year.

 

The issue here is that they disallow the exemptions if you miss the deadline. A deadline that no one knows about because the City doesn't publicize it. Even the Feds and the State don't disallow exemptions for late filing.

 

"If you have a good tax person" -Well, a lot of freelancers don't. That's not reality and is beside the point.

 

You can get out of the fees and penalties, but they still charge you exorbitant amounts of tax and interest if you miss their deadline, which most people don't know about.

 

You have to bark louder to try and get your money back when it comes to the actual tax and interest. As I mentioned elsewhere, bringing it up in a complaint letter to your City Council Member helps.

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Im still trying to figure out how nyc is screwing me. Hopefully la doesn't come after me even though i left mid last year..

 

 

They probably will, so just be prepared.

 

They are getting their information from the State of CA, who is not giving them social security and tax id numbers, but is giving them the names and address of anyone who received 1099s and / or filed a schedule C with the Feds.

 

From this information they are electing to charge anyone who received a 1099 a "Business Tax" and requiring them to get a Business Tax Certificate.

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If your business address is not in LA, but you do business in LA, you still have to pay, according to the Office of Finance.

 

Interesting.

 

The issue here is that they disallow the exemptions if you miss the deadline. A deadline that no one knows about because the City doesn't publicize it. Even the Feds and the State don't disallow exemptions for late filing.

 

Yes. That is possibly the most unfair thing I have ever heard of. Also, who would think that you would have to pay this tax or file for something you wouldn't believe possible?

 

"If you have a good tax person" -Well, a lot of freelancers don't. That's not reality and is beside the point.

 

I couldn't disagree more - it is exactly the point. If you don't have a good tax person, get one. Have them take care of this for you. I can recommend one to anyone who wants. Getting a tax person who is on top of it pays for themselves alone by doing all the awful things you don't want to waste your time with - such as talking to the City of LA Business Tax people. No one cares about an individual, but when you have a team of hired killers on board - things get done.

 

If you don't have help, get help. Save yourself money, and focus on doing the things you do well instead of wasting away in a world most designers fell very uncomfortable in.

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I couldn't disagree more - it is exactly the point. If you don't have a good tax person, get one. Have them take care of this for you. I can recommend one to anyone who wants. Getting a tax person who is on top of it pays for themselves alone by doing all the awful things you don't want to waste your time with - such as talking to the City of LA Business Tax people. No one cares about an individual, but when you have a team of hired killers on board - things get done.

 

If you don't have help, get help. Save yourself money, and focus on doing the things you do well instead of wasting away in a world most designers fell very uncomfortable in.

 

That's nice.

 

I didn't post this to have a debate with you.

 

If you feel that strongly about why everyone should have a CPA to respond to tax issues, even if they can't afford one or haven't been able to find one, or whatever, then feel free to start another thread if you want.

 

This thread isn't a debate or an argument.

 

This thread is to let people know about what the City of LA is doing to people and what people can do on their own to follow up with the City and City Council Members to get their money back, if the City of LA has already done it to them. That is the point of this thread, that I started.

 

So feel free to disagree all you want and dole out all the condemnation you can think of to everyone who reads this and doesn't happen to have an accountant. Feel free to reply to this post as well so you can rest safe in the knowledge that you've had the last word and told me just how right you are about everything.

 

I know it will make you feel better, but it won't change the fact that why you think everyone should have a CPA or tax person to deal with their tax issues, isn't the reason I posted this thread about the actions and business tax of the City of LA and how to follow up without the sort of representation you speak of.

 

Thanks and have nice day.

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Jesus, man. Ease up. I didn't mean to condemn anyone - and honestly don't think I did. My point was simple - people who deal in this realm have a better chance at getting your penalties waved. I thought that to be relevant. There are plenty of people that shy away from confrontation and may not do so well in a meeting about taxes.

 

I just wanted to add - that for zero additional money - my accounting firm is more than happy to take care of things like this with a simple letter. Thats it. It was meant to share, and possibly help. I'm sorry if come across as an asshole to you. It wasn't meant to be like that at all, and nothing was directed at you personally.

 

I don't agree with the tax. I didn't cost you any money.

 

I can assure you I don't know everything. Nor do I think I do. Just learning as I go. Maybe I am just a dick in nature, and don't realize it - but giving advice to get professional help to save money was intended to help people who read this. Not to make them feel inadequate for not having my tax professional.

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