In response to projected budget deficits resulting from the COVID-19 pandemic, San Francisco (City) adopted several new tax measures on November 3, 2020 to fill the expected budget gaps. Their effects on San Francisco taxpayers will vary based on taxpayer business activities, executive compensation, and level of gross receipts apportioned to San Francisco.
Some taxpayers could see their existing City tax liability more than double, and the long term impact of these tax changes will alter the business tax landscape of San Francisco.
The San Francisco tax and penalty landscape has changed remarkably in a short amount of time. Now more than ever, given the dollar amounts at play, tax departments will need to model the impact of not only the change in tax rules, but the change in how business itself is conducted (i.e., the impact of a work from home workforce). Prudent taxpayers will want to consider more robust tracking mechanisms to determine in City payroll and gross receipts measurement.