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
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
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.
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