Taxpayers conducting business in the City of Los Angeles, as well as in neighboring cities, may be subject to the annual Los Angeles City Business Tax (LACBT) with a filing deadline of March 1. Companies unknowingly may be subject to the LACBT due to broad nexus standards that include regularly soliciting business in Los Angeles.
As a result of the COVID-19 pandemic, with many employees working remotely, taxpayers unexpectedly may find themselves triggering a filing obligation or increasing/decreasing their level of business activity in Los Angeles. For companies subject to the tax but not yet registered, a voluntary disclosure program is available.
City tax audits can be a challenging process, often spanning numerous years with informational demands that prove to be burdensome for many taxpayers. With a projected budget gap of $400 - $600 million for the fiscal year, we anticipate the City to increase its enforcement efforts.
The rules surrounding the LACBT are unique and complex and careful consideration should be given as to whether a filing obligation exists, what gross receipts are subject to apportionment, and how such gross receipts should be apportioned to the City.
The 2021 Business Tax Renewal Form, based upon 2020 activity for calendar-year taxpayers, must be filed on or before March 1, 2021.