Taxpayers conducting business in certain cities within Los Angeles County -- including the incorporated City of Los Angeles, Beverly Hills, Culver City, and Santa Monica -- may be subject to annual business license taxes based upon gross receipts for the privilege of conducting business within city limits.
The business license taxes may be a trap for the unwary due to broad nexus standards and a challenge for compliant filers due to antiquated ordinances, lack of published guidance, and inconsistent audit practices.
Although each city has its own rules and practices, there are common elements, which we have highlighted in this Insight.
The rules surrounding each local business license tax are unique and complex, and careful consideration should be given as to whether a filing obligation exists, what gross receipts are subject to taxation, and how such gross receipts should be apportioned.
The issues and concerns taxpayers should consider include: