MORE

Is L.A. Unfairly Taxing Unincorporated-Area Businesses?


As the financial crisis tightens its grip on California, the pressure to squeeze out more local revenue is causing rifts between the city and county governments -- and the results are not pretty. Last week the County Board of Supervisors unanimously supported a letter proposed by Supervisor Gloria Molina and backed by her colleague Mike Antonovich, advising the City of Los Angeles to stop taxing businesses that lie outside its borders.

"Investigators with the County's Treasurer and Tax Collector and

Auditor-Controller conducting field inspections and interviews at

sample businesses in East Los Angeles," noted an Antonovich press release, "found that 15% of the businesses

surveyed, all of which are sited wholly outside the City's

jurisdiction, had current City of Los Angeles business tax licenses or

other permits. This practice has also occurred in various

unincorporated communities, including Universal City, Sunland/Tujunga,

Charter Oak, East Los Angeles, Hacienda Heights, and Quartz Hill which

are subject to County zoning and business license requirements."

Gerry Hertzberg, who works as Molina's policy and political director, set the background.

"Businesses were getting notices for fees and deductions for gross," Hertzberg told the L.A. Weekly, "from way, way

far from Los Angeles -- from Pomona to the Antelope Valley. Our auditor asked the city

to stop and they didn't.

Now we're asking the city to refund these folks."

In an emailed response to questions, Antoinette Christovale, director

of the city's Office of Finance, cited several sections of Article 1,

Section 21.00 (i) of the Los Angeles Municipal Code defining which

businesses must pay the City of L.A. taxes. Some of these definitions

seem pretty all-encompassing, such as including any "such person or his

employee [who] regularly conducts

solicitation of business within the City or . . . such person or his

employee [who] utilizes the streets within

the City in connection with the operation of motor vehicles for

business

purposes."


In other words, merely using city streets in the course of conducting

business is grounds to be taxed by L.A., along with simply seeking

customers here.

When asked what her office's position was in

regard to the supervisors' letter, Christovale emailed, "We disagree

that businesses located in unincorporated county communities who are

'engaged in business' in the city as defined by our municipal code are

being illegally taxed. My office is in contact with county staff to

resolve this matter."

Gerry Hertzberg from Molina's office said

that for now the supervisors are hoping the city will act to comply

with the board's request. He wouldn't say what will happen if the city

simply agrees to disagree.