Willow Glen Resident

News

Business-tax amnesty plan could infuse $1 million to General Fund

By Monica Heger

The recently launched business tax amnesty program could be a win-win for everyone.

The program, which will run through Sept. 29, grants amnesty to any business that has failed to register during the past three years with the city and pay the associated fees. All accumulated taxes, penalties and interest will be forgiven if business owners pay the current year's fees and register their business with the city by the end of September.

Scott Johnson, director of finance for San Jose, said the program will benefit both the city and its businesses. He estimated the city will collect about $1 million from businesses that come forward to register and will continue to collect taxes from those businesses annually. That money will go into the General Fund. The cost of the program to the city is $228,000.

Johnson said the city created the amnesty program for several reasons.

"Part of the amnesty program is an education process," Johnson said. "Some folks, for one reason or another, may not realize they are subject to the business-tax fee."

He cited commercial landlords and home businesses such as consulting work, as common businesses that are often overlooked.

There are 76,800 businesses registered with the city, and they bring in $11 million from the business tax annually.

Another reason for the amnesty program is to encourage businesses to register with the city.

"Our council is small-business-friendly," Johnson said. "This is just another means to try to do the outreach to help people be in compliance with our business-tax ordinance. It is also an opportunity to generate revenue for the city."

Prior to the business-tax amnesty program, the finance department embarked on a project to identify businesses that had not registered with the city and paid the associated taxes. The project used data from sources such as the California Franchise Tax Board, state resale permits and fictitious business filings to identify these companies. Those entities were not given amnesty, and had to pay the business tax plus any interest or penalties that had accrued.

During the last 2 ¹/2 years, the city collected $3.8 million in business taxes, interest and penalties based on the businesses it found to be noncompliant, and has increased the number of businesses registered with the city by about 10,000.

Aside from being granted amnesty for money owed to the city, businesses that participate in the program will be granted amnesty for any taxes they owe for being in a business improvement district.

There are three business improvement districts in the city--Willow Glen, Japantown and downtown San Jose. These districts have their own set of taxes that go directly into improvements within those specific neighborhoods.

The business tax amnesty program will run through Sept 29. For more information, visit www2.csjfinance.org.