Agenda Packet_2022-05-17 - Laserfiche WebLink

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Proposed Ballot Measure to Restructure Business License Tax Code May 17, 2022 Page 4 basis and hence were deemed nontaxable. The exemption for hospitals was extended to include all medical services provided by doctors having admitting rights to said hospitals. The nature of hospitals has changed significantly over time so that such facilities are no longer non-profit. For this reason, a system that exempts physicians from normal business license requirements because of the location of their office within the City is no longer justifiable and results in unequal treatment visa via other physicians. ➢ Establishment of a family member childcare exemption. An equitable exception, however, is justifiable in the case of individuals providing childcare services to their own immediate and extended family members residing within the City. Staff recommends that public policy should endeavor to maximize the provision of in -home childcare services, especially when provided by one Santa Ana family member to another. ➢ Removal of Obsolete Limitation of Assessment of Business License Taxes on Interstate and Non -domestic Telephone Services. Prior to 1991, the conventional interpretation of the City's right to assess taxes on interstate and non -domestic telephone services limited taxability to interstate domestic phone services only. Subsequent judicial interpretation lifted this restriction in 1991. The City's Utility Users' Tax Code was amended to reflect this change but the Business License Tax Code was not. Staff recommends that the voluntary limitation on the City's ability to assess a business license tax on interstate and non -domestic telephone services be lifted to bring the City's business license tax treatment of telephone services into line with the City's utility users' tax treatment of telephone services. In addition to a changeover in assessment methodologies and the adjustment of business license exclusions/exemptions to better reflect current circumstances and public policy aims, Staff recommends the adoption of a flexible Tax Holiday Program. ➢ Establishment of a flexible Tax Holiday Program. The purpose of a Tax Holiday Program would be to allow a flexible period (which will vary based on a business' tax status and assessment period) for unlicensed, past due, or under -assessed businesses to obtain a valid business license or satisfy unpaid or unassessed taxes. This is desirable as the proposed restructuring of non -cannabis business license tax rates and tax methodologies will result in a substantial portion of the City's underground economy become willing to surface and become legitimate licensed businesses, contributing annually to the maintenance of the City's marketplace infrastructure. A Tax Holiday allows for two forms of tax reconciliation: (1) unlicensed businesses may shed their past tax liability by fully licensing themselves and paying all tax obligations for the current year; City Council 37 — 4 5/17/2022