Many cities in our area are facing tough fiscal times, including the City of Los Angeles which is trying to figure out what to do with a $400 million deficit. Cities may sometimes look to raising fees and taxes - especially business license taxes - to help close the revenue gap.
REALTORS® should not have to face the brunt of the cities' fiscal crises by paying higher taxes and fees. To confuse the matter more, cities can one of several different methods for calculating business license taxes, based on factors such as net income, number of employees, number of transactions per year, and more. This document at C.A.R.'s Web site is a useful tool for understanding how business license taxes are calculated.
The Citrus Valley Association of REALTORS® is addressing its own business taxation matters this month with the City of Glendora:
The City which began enforcing a 3 decade old regulation requiring people transacting business in Glendora to have a business license rejected a list of concerns from REALTORS®. REALTORS® citing California Business and Professions Code sections 10131-10132 which states that a real estate salesperson is an “employee”, not an “independent contractor”, have asserted that as such they are not required to have a separate business license. Glendora officials assert that as real estate sales people receive a 1099, they are required to have a business license. Glendora officials admit that their own Municipal Code fails to differentiate between a 1099 or a W-2 and therefore they defer to the California Business and Professions Code, although in the case of real estate salespersons; officials cite the code is “open to interpretation”. CVAR REALTOR® members are organized and prepared to continue to fight the matter.
Why does this matter? We are watching to ensure that business license taxes are not raised or levied in excess on REALTORS in the South Bay. Watch this space for more updates on taxes, and contact us if you notice a big increase in your taxes this year.