Program Gives Businesses Tax Amnesty

Los Angeles businesses that failed to pay city taxes may participate in an amnesty program beginning Oct. 1 and avoid penalties that could add as much as 40% to their tax bills, Mayor James K. Hahn said Wednesday.

Firms wanting to participate in the Business Tax Amnesty Program will be required to apply and pay delinquent taxes by Dec. 31.

“This program is a great opportunity for those businesses that want to comply to do so without penalty,” Hahn said in announcing the program at the Los Angeles Area Chamber of Commerce. “Now is the time for businesses that owe business taxes to pay their fair share.”

He said the $20 million expected to be received during the amnesty period will help pay for tax reform and affordable housing programs.

All L.A. businesses are assessed a tax based on gross receipts. About 235,000 firms are registered with the city and pay roughly $345 million a year in total. The funds help finance police, fire and other city services.

City officials estimate that 60,000 businesses have not registered and paid taxes, depriving the city of about $4 million annually.

The last time the city offered an amnesty program, in 1995, about 14,000 firms registered and paid $20 million.

The city plans to crack down on scofflaws--after the new amnesty program expires--by gathering tax information from other government jurisdictions, increasing the number of on-site business investigations and launching a whistle-blower program that rewards those who provide information leading to the collection of delinquent taxes.

The amnesty program is a “golden opportunity” for businesses that owe taxes, according to Antoinette Christovale, director of the city’s Office of Finance.

“After the amnesty program, we will redouble our enforcement efforts, locate delinquent taxpayers and assess the full range of penalties,” she said.

Chamber President Charlie Woo encouraged the city to continue pursuing reform of the city’s tax system to reduce the burden on firms operating in Los Angeles.

Firms interested in information on the amnesty program may call city officials at (213) 368-7000.