L.A. Lets $20 Million a Year in Taxes Fall Through the Cracks

L.A. Lets $20 Million a Year in Taxes Fall Through the Cracks
STERLINGDAVISPHOTO/L.A. Weekly Flickr pool

This will make you mad.

At a time when our streets are nearly the worst in the nation, about $20 million in annual tax revenue is falling through the cracks because municipal and L.A. County officials aren't coordinating their efforts and because sales tax isn't being properly collected, according to results of an audit by city controller Ron Galperin.

The audit, unveiled today, says that some businesses are claiming different taxes depending on whether they're in the city or the county. If the tax claims were more consistent, and if city and county officials coordinated their efforts, the cash could amount to millions.

In fact, Galperin estimates county government, too, is losing cash — at least $6.5 million a year.

"We documented between $19.6 million to $21.6 million in estimated annual ongoing city general fund receipts foregone as a result of current practices by the city," the audit states.

The controller found variations in how business property, including real estate and equipment and furnishings, was taxed by the city and county. Property transfer taxes also are under-collected because city officials do not "verify exemptions" claimed, the audit states.

The leakiest culprit was sales taxes, which made up "the lion's share" of the estimated losses, a rep for Galperin told us.

Sales tax worth an estimated $19.2 million is being lost because of discrepancies in what businesses report to the city and state and because of "tax evasion, out-of-state Internet sales and some businesses’ lack of knowledge about tax rules," the Controller's Office states.

Galperin says the city should plug into the Los Angeles County Office of the Assessor and to the state Board of Equalization to ensure that all parties are getting their due income.

"These agencies are the city’s tax collectors," Galperin said. "By working together and sharing information, we can ensure that taxes are applied more fairly and efficiently — which will enable us to use revenues to improve city services, such as street maintenance and infrastructure improvement."


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