Los Angeles City Business Tax (LACBT) Annual Filing Due Date
One of the many effects of the COVID-19 pandemic has been a sharp increase in the number of employees of large businesses working remotely, usually from home. Depending on where employees are located while working remotely, companies may discover that tax nexus could be triggered in jurisdictions where the business had not historically filed tax returns.
One such jurisdiction is the city of Los Angeles and some surrounding municipalities. The city levies a gross receipts tax on businesses performing work within the city seven or more days per year. The tax rate varies based on the industry the business is involved with and features a $153 minimum tax. The due date to file the tax return is February 28, 2022. Nexus for the tax can be triggered in several ways, including employing individuals who work remotely from within the city limits, as well as regularly soliciting business in the city. The city offers a voluntary disclosure program for businesses that have established nexus and have not filed returns or received communication from the city.
Businesses should consider what, if any, activity they have in Los Angeles and the surrounding municipalities. If any activity has been sustained in the area, then careful consideration should be given to whether nexus exists and whether the company will file business tax returns. The city has made clear that it will strengthen detection and enforcement of the tax, partially as a result of budget shortfalls and revenue declines resulting from the COVID-19 pandemic.
If you or your client would like assistance filing and paying the business tax or believe you may have established nexus with the city, please reach out to our state and local tax services group. For additional guidance, contact your BKD Trusted Advisor™ or submit the Contact Us form below.