San Francisco voters approved a homelessness gross receipts tax, effective January 1, 2019, authorizing the city and county of San Francisco to fund housing and homelessness services by taxing certain businesses at the following rates:
- 0.175% to 0.69% on gross receipts for businesses with over $50 million in gross annual receipts, or
- 1.5% of payroll expenses for certain businesses with over $1 billion in gross annual receipts and administrative offices in San Francisco.
- Significant additional tax on many businesses operating in the city. For some taxpayers, the measure may double their tax liabilities.
The measure will impose significant additional tax--and could double the gross receipts tax liability--on many businesses operating in the city that exceed the gross receipts threshold. Businesses should estimate their annual tax increase for budgeting purposes and set up procedures to increase their 2018 estimated payments beginning with April 30, 2019, payments.
State and local tax (SALT) increases weigh down businesses, leading to less competitive business environments. U.S. businesses paid over $738 billion in state and local taxes in fiscal year 2018, an increase of 2% from FY2016 (Total State and Local Business Taxes: State-by-State Estimates for Fiscal Year 2017, Council on State Taxation and State Tax Research Institute). Growth in SALT revenue from business was concentrated in property taxes and sales taxes. Business tax revenue accounted for about 44% of all SALT revenue.
SALT taxes paid by businesses vary by state. According to the report, SALT corporate income and business gross receipts tax revenue was $62.7 billion in FY2017, down from 0.7% from FY2016. In imposing this gross receipts tax, San Francisco is moving in the opposite direction, growing its local tax base quickly. Out-of-state sellers be aware.
You want great cities, great roads, great schools, police and fire--that's why it is important to get in front of SALT obligations before they catch up and figure out how you play a part. We are all together on this.
Let's talk tax
Judy Vorndran can be reached at firstname.lastname@example.org or 720.227.0093. Follow Judy on LinkedIn.
We're working for you to make Colorado more business-friendly. Read more at The fix is on: Simplifying Colorado Sales Tax enters active phase and join the Simplify Colorado Sales Tax coalition. Learn more.
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