The Franchise Tax Board has been successful in enlisting the help of 107 cities in California in their efforts to identify individuals and businesses who are not filing their income tax returns. In exchange, the cities are able to identify individuals and businesses that may have a local business tax filing requirement. The cities that participate locally in the “City Business Tax Program” include Morro Bay, Paso Robles, and San Luis Obispo.
These cities send the Franchise Tax Board a listing of business licenses that the FTB then compares to tax records. Where there is no match, the FTB sends a notice to the non-filing business licensee. The cities receive a similar list showing who has filed an income tax return and we can speculate that cities will compare the list to their business license list and reach out to those who have business income but no business license.
If you have self-employment or business income and don’t have a business license you probably need one in the city where you do business. This includes rental income, an often overlooked requirement. If you are in this situation you can probably expect to hear from your city.
Pursuant to IRS Circular 230, the Internal Revenue Service requires us to inform you that any tax advice included herein is not intended or written to be used, and it cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed by the IRS on the taxpayer. That said, please do not hesitate to contact us if you have any further questions regarding this matter.