Action/Alerts

San Francisco voters approved Proposition E in the November 6, 2012 election, an ordinance amending the San Francisco Business and Tax Regulations Code to enact a new Gross Receipts Tax Ordinance. The measure phases in a Gross Receipts Tax (GRT) over a five-year period beginning January 1, 2014, and phases out the current 1.5% tax on business payrolls over the same period. The new GRT is imposed for the privilege of "engaging in business" in San Francisco, with certain exceptions. The GRT is based on a taxpayer's gross receipts attributable to business activities in San Francisco.

Lessors of residential real estate must make quarterly installment payments with respect to their rents from residential real estate for each individual building in which they lease 4 or more residential units, regardless of their annual San Francisco gross receipts. Lessors of residential real estate that earn gross receipts from business activities other than leasing residential real estate need to follow the general rules for those business activities. 

Example: Corporation A is: ·        a lessor of 6 residential units in Building B; ·        a lessor of 5 residential units and 1 commercial unit in Building C; and ·        sells widgets. All activities listed above are in San Francisco. Corporation A will be treated as 3 separate taxpayers, each requiring a separate Business Account Number and return. Business Account 1: 6 residential units in Building B; Business Account 2: 5 residential units in Building C; and Business Account 3: Commercial unit in Building C and the widget sales combined.

Note: If you have 4 or more rental units in a building you may exclude from gross receipts in any tax year 50 percent of the total amount received from the rental of real property to tenants in occupancy at any location in the City, which is subject to limits on rent increases pursuant to the Residential Rent Stabilization and Arbitration Ordinance, San Francisco Administrative Code, Chapter 37, Section 37.1 et seq.  Also note that 4 units do not include the owner-occupied unit.

Every person or entity doing business in the City and County of San Francisco must possess a valid Business Registration Certificate from the Office of the Treasurer & Tax Collector, as stated in Article 12 of the San Francisco Business and Tax Regulations Code. Business Registration Certificates are issued on an annual basis and are valid for the City's fiscal year calendar, beginning on July 1st, and ending June 30th of the following year. All businesses are required to file a Gross Receipts Tax and Payroll Expense Tax Statement for their business annually by the last day of February for the prior calendar year (Jan. 1st - Dec. 31st) and must also renew their Business Registration Certificate for the next fiscal year (July 1st - June 30th) on or before May 31st if they plan to conduct business within the new fiscal year. There is an exemption. An entity receiving rental income solely from one cooperative housing corporation, one residential structure of fewer than 4 units, or one residential condominium shall not be deemed to be engaging in business.

All new businesses must complete a business registration form to obtain a Business Registration Certificate. The completed form and registration fees can be submitted in person or via mail, to the Office of the Treasurer & Tax Collector, City Hall - Room 140, 1 Dr. Carlton B. Goodlett Place, San Francisco, CA 94102-4638. The business registration certificate is issued on a yearly basis.

The Gross Receipts Tax Computation Worksheets are used to prepare the Gross Receipts Tax Statement due annually by the last day of February for the prior calendar year. These worksheets may NOT be filed with the Office of the Treasurer and Tax Collector as an official Gross Receipts Tax return. The official 2014 Payroll Expense Tax and Gross Receipts Tax return will be available online through the Office of the Treasurer and Tax Collector's website in early 2015.