Agenda - City of Santa Monica

The remaining one t hird (approximately $3.1 million) is generated by City-owned
facilities that would not be part of the scope of services of this contract.
Business License Tax
Businesses operating in the City of Santa Monica are required to obtain a business
license annually and pay a tax. In most cases, the amount of the tax is based on prior
calendar year gross receipts.
There are three major gross receipts categories:
• Professional: $5.00 for each $1,000 in gross receipts
• Services: $3.00 for each $1,000 in gross receipts
• Retail/Other: $1.25 for each $1,000 in gross receipts
Businesses with gross receipts between $40,000 and $60,000 annually pay a minimum
tax of $75. Businesses physically located within Santa Monica with worldwide gross
receipts less than $40,000 annually are exempt. Certain other small categories pay a
flat tax.
Business License taxes are due on June 30th of each year for the upcoming fiscal year,
which runs from July 1st to June 30th of each year. If full payment is not received by
August 31st, a 10% penalty is assessed each month, up to 100% of the business
license tax due. The City currently administers approximately 22,000 business license
accounts annually, and collected $25.5 million and $26.3 million in business license
taxes and penalties in FY 2010-11 and FY 2011-12, respectively.
The City may not receive all the tax revenue that it is legally entitled to due human error,
the complex nature of the business, or fraud. Therefore, audits should be conducted to
ensure proper payment of taxes. Additionally, Section 6.04.280 of the SMMC requires
the Finance Director to conduct a program to audit business license tax returns of
businesses operating in the City of Santa Monica
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