Article III — Adjustments – Exemptions – Taxpayer Relief

If a licensee or applicant believes that his or her individual business is not assigned to the proper classification because of circumstances peculiar to it, as distinguished from other businesses of the same kind, he or she may apply to the collector for reclassification. The application shall contain such information as the collector requires in order to determine whether the business is properly classified.

The collector shall conduct an investigation following which the collector shall assign the applicant's individual business to the classification shown to be proper on the basis of the investigation. The proper classification is that classification which, in the opinion of the collector, most nearly fits the applicant's business. If there is uncertainty in this chapter or the resolution establishing the amount of taxes, the collector may rely on categories set forth in the Standard Industrial Code (SIC) and amendments to it. The reclassification is not retroactive, but applies at the time of the next regularly ensuing calculation of the applicant's tax. No business shall be reclassified more than once during a year. (1991 code § 6-4.1; Ord. 754 § 1, 2000)

A person who believes that the license tax places an undue burden upon interstate commerce or violates the equal protection or due process clause of the state or federal constitution may apply to the collector for an adjustment of the tax. The applicant shall by affidavit and supporting testimony show the method of business and the gross volume of business and such other information as the collector considers necessary. The collector shall conduct an investigation and after obtaining the written approval of the city attorney shall fix as the license tax an amount that is reasonable and nondiscriminatory. In fixing the license tax, the collector may base the license tax upon a percentage of gross receipts or other measure which assures that the license tax is uniform with that assessed on businesses of like nature. The amount fixed shall not exceed the license tax prescribed by this chapter. If the collector determines that the gross receipts measure of license tax is the proper basis, he or she may require the applicant to submit a sworn statement of the gross receipts and pay the amount of license tax. (1991 code § 6-4.2; Ord. 754 § 1, 2000)

A claim for refund of an overpayment must be filed with the collector in the manner prescribed, and within four months of the last day of the period for which the overpayment was made. If the collector determines that an overpayment has been made, he or she may refund the amount overpaid, less an administrative fee set by council resolution. There is no refund for overpayment when a business closes if the city is not notified within the time period set forth in PHMC § 5.05.110.

(1991 code § 6-4.3; Ord. 754 § 1, 2000)

A person claiming an exemption under this article shall file a written statement with the collector. The statement shall include a sworn statement, stating the facts upon which the exemption is based, and when applicable, the statute or other legal authority on which the claim for exemption is based. Upon a proper showing, the collector may issue a license without payment of the license tax. A person aggrieved by a decision of the collector may appeal as provided in PHMC § 5.05.260.

(1991 code § 6-4.4; Ord. 754 § 1, 2000)

The following organizations and activities are exempt from payment of the business license tax:

• A. Alcoholic beverages. The manufacture, sale, purchase, possession and transportation of alcoholic beverages regulated under the exclusive power of the State of California. (Cal. Const. Art. 20 § 22.)

• B. Bail bond agents. (Hughes v. Los Angeles (1914) 168 Cal. 764.)

• C. Banks and financial corporations. (Rev. and Tax. Code § 23182.)

• D. Blind person. A blind person operating a vending facility. (Welf. and Inst. Code § 19633.)

• E. Cafe musician. A cafe musician as defined in Business and Professions Code section 16000.5.

• F. Charitable and nonprofit organizations.

  1. Business conducted for a charitable purpose.

  2. The conduct of entertainment, a concert, exhibition or lecture whenever the receipts are for a religious, educational or charitable purpose.

  3. A minister, clergyman, Christian Science practitioner, rabbi or priest of any religious organization that has been granted an exemption from federal income tax under Internal Revenue Code § 501(c)(3). (Bus. and Prof. Code § 16000(b); Rev. and Tax. Code § 7284.1.)

  4. When an exemption is claimed under this subsection F, the collector may request written evidence of the charitable or nonprofit status, including evidence of the organization's status under Internal Revenue Code § 501(c)(3). (Bus. and Prof. Code § 16000(b); Rev. and Tax. Code § 7284.1.)

• G. Constitution or statute. The tax imposed by this chapter does not apply to a person transacting and carrying on a business exempt by the constitution or statutes of the United States or the State of California. (See also PHMC § 5.05.210.)

• H. Exhibiting artist. An individual artist who displays a painting, sculpture, photograph, or other fine art in a public building, art gallery, or business establishment, if: the display is incidental to the primary business conducted on the premises; the display is primarily for cultural and educational purposes; and the artist's annual gross receipts from all displays in the city do not exceed $2,000 per year.

• I. Insurance company. Insurance company which pays an in-lieu tax or premium under California Constitution Article XIII, Section 28.

• J. Interstate commerce. An intercity transportation business by any household goods carrier, or a person or corporation owning or operating a motor vehicle in the transportation of property for hire, under the jurisdiction of the State Public Utilities Commission. (Pub. Util. Code § 5327.)

• K. Laundry equipment. The rental, leasing or operating of laundry equipment which meets the standards for exemption under Business and Professions Code section 16002.2.

• L. Part-time domestic work. A natural person who performs gardening, janitorial, housework, or similar household or domestic services on a part-time basis and whose gross receipts earned in the city do not exceed $2,000 per year.

• M. Public utility franchise. A public utility holding a franchise granted by the city (under Public Utilities Code sections 1011 and 6001 et seq.) and which makes payments under the franchise.

• N. Real estate auctioneer. A real estate auctioneer, unless the auctioneer's permanent place of business is in the city. (Bus. and Prof. Code § 16002.1)

• O. Residential care facility or residential family day care home. Residential care facility or residential family day care home of six people or less, whether adults or children or a small or large residential family day care home. (See generally: Health and Saf. Code §§ 1502, 1502.5, 1523.1(a)(3), 1566.2, 1568.05(b), 1569.18, 1596.78(c), 1596.803(a)(3), 1597.42, 1597.45(b).)

• P. Second unit. A second dwelling unit approved under PHMC § 18.20.095.

• Q. Self-employed minor. A self-employed minor under 18 years whose gross receipts do not exceed $2,000 a year.

• R. Soliciting subscriptions. A natural person under 18 years who solicits subscriptions for, or sells, delivers or makes collections for, a newspaper or magazine.

• S. Tow trucks. Consistent with PHMC § 5.05.020's definition of gross receipts and Vehicle Code section 12111, a vehicle tower having no fixed place of business in the city is taxed based on gross receipts attributable to work done within the city.

• T. Veterans.

  1. A veteran holding an honorable discharge from a branch of the military service of the United States, who is physically unable to obtain a livelihood by manual labor. (Bus. and Prof. Code §§ 16001 and 16001.5.)

  2. The soliciting for donations for the support of veterans by a federally chartered veterans' organization specified in the United States Code Title 36. (Bus and Prof. Code § 16000.7.)

• U. Wholesaler/commercial traveler. A commercial traveler without a fixed place of business in the city whose business is limited to merchandise sold or dealt in at wholesale in this state. (Bus. and Prof. Code § 16002.)

(1991 code § 6-4.5; Ord. 754 § 1, 2000; amended during 2005 recodification; Ord. 964 § 3, 2023)

The exemption from payment of license tax granted by this chapter does not exempt the person conducting the business from complying with the other permit requirements of this chapter. (1991 code § 6-4.6; Ord. 754 § 1, 2000)

• A. A person aggrieved by a decision of the collector or of any other officer of the city made under this article may appeal to the city council.

• B. A person appealing a decision shall file written notice of the appeal with the city clerk within 15 days after notice of the decision. The notice shall state the grounds relied upon for appeal.

• C. The city clerk shall cause the matter to be set for hearing before the city council within 45 days from the date of receipt of the notice of appeal, giving the appellant not less than 10 days' notice in writing of the time and place of hearing.

• D. The findings and determination of the city council at the hearing are final and conclusive. Within three days after the findings and determinations are made, the city clerk shall give written notice of them to the appellant.

• E. If no appeal is taken, the decision of the collector or other officer is final and conclusive on expiration of the time fixed for appeal.

(1991 code § 6-4.7; Ord. 754 § 1, 2000; Ord. 846 § 3, 2010)