Chapter 4.76 — BUSINESS TAX

Editor's note— Measure G (Ord. 2016.2), approved on Dec. 13, 2016 by a majority vote of the electorate, effective July 1, 2017, amended Ch. 4.76 in its entirety to read as herein set out. The former Ch. 4.76 pertained to business license taxes, and derived from Ords. 19306, 19672, 19799, 21275, 21518, 21734, 22267, 22534, 22612, 22702, 22772, 23152, 23674, 23985, 24038, 24133, 24211, 24402, 24753, 25182, 25473, 25645, 25714, 26035, 26059, 27157, 27787, 27790, 28431, 28599 and 29220. See the Code Comparative Table for a detailed analysis.

State Law reference— For statutory provisions authorizing cities to license businesses for purpose of revenue and regulations, see Gov. Code § 37101.

Part 1 - PURPOSE AND DEFINITIONS

This chapter is enacted solely to raise revenue for municipal purposes and is not intended for regulation.

(Measure G (Ord. 2016.2), adopted by electorate, 12-13-16)

For the purpose of this chapter, certain words and phrases are defined and certain provisions shall be construed as set forth in this Part 1, unless it shall be apparent from their context that a different meaning is intended.

(Measure G (Ord. 2016.2), adopted by electorate, 12-13-16)

A.

"Average number of employees" means the average number of employees employed in the city in applicant's business in the one year immediately preceding the commencement of the year for which the business tax certificate is being issued, and shall be determined as follows:

By ascertaining the total number of hours of service performed in the city by all employees in the applicant's business during the preceding year and dividing the total number of hours of service thus obtained by the number of hours of service constituting a day's work according to the laws, custom or usage governing or pertaining to such employment, and the number thus obtained shall then be divided by the number of business days in the preceding year; or

At the option of the applicant, if the applicant files with the state department of employment the forms and reports hereinafter mentioned, and if the applicant reports therein all applicant's employees as defined in this chapter, the applicant may calculate the average number of employees by taking the number of employees employed in applicant's business in the city in each month of the preceding year as shown and reported on all DE3 forms, and by dividing the sum thus obtained by twelve. The DE3 and other forms hereinabove referred to are those certain forms entitled "DE3 Contribution Return and Report of Wages Under the Unemployment Insurance Code," which employers are required to file with the state department of employment, under the Unemployment Insurance Code of the state for the purpose of reporting contributions due under such code, and any other form or forms now or hereafter required by the state for such purposes.

B.

In computing the average number of employees, fractions of numbers of one-half and greater shall be rounded up to the next whole number.

(Measure G (Ord. 2016.2), adopted by electorate, 12-13-16)

A.

The provisions of Section 4.76.030 to the contrary notwithstanding, in the case of a new business, "average number of employees," as used in this chapter, means the average number of employees employed in the city in the applicant's business in the period of time for which the business tax certificate is being issued, and shall be determined as follows: The applicant, if all or part of the tax imposed on the business is based on the average number of employees in such business, shall file with the director, with the application for a business tax certificate under the provisions of this chapter, a written statement, on forms furnished by the director, setting forth the estimate of the average number of employees which the applicant intends or

expects will be employed in the city in applicant's business in the period of time for which the business tax certificate is to be issued. Any tax imposed hereunder on such business, based upon the average number of employees in such business, shall thereupon be calculated upon the basis of the estimate, and applicant shall thereupon pay such tax based upon such estimate.

B.

At the end of the period for which the business tax certificate has been issued, the applicant shall file with the director a written statement showing the actual average number of employees employed in the city in applicant's business during such period, computed in accordance with Section 4.76.030 above. If the tax based on the actual average number of persons employed in such period exceeds the tax based on the number estimated at the time the business tax certificate was issued, the applicant shall thereupon pay the difference to the director.

If the tax based on the actual average number of persons employed in such period is less than the tax based on the number estimated at the time the business tax certificate was issued, the applicant shall be credited by the city a sum equal to the difference.

(Measure G (Ord. 2016.2), adopted by electorate, 12-13-16)

The term "business" shall include all activities engaged in or caused to be engaged in within this city including any commercial or industrial enterprise, trade, profession, occupation, vocation, calling, or livelihood including rental or lease of residential or nonresidential real estate and mobilehome parks, or independent contractors, whether or not carried on for gain or profit, but shall not include the services rendered by an employee to his employer.

(Measure G (Ord. 2016.2), adopted by electorate, 12-13-16)

"Business tax certificate" or "certificate" means the certificate issued by the city to the taxpayer upon completion of the business tax application and payment of the tax prescribed by this chapter, or the certificate issued by the director pursuant to Section 4.76.610 upon a determination by the director that an applicant for an exemption from payment of the business tax under the provisions of this chapter is exempt.

(Measure G (Ord. 2016.2), adopted by electorate, 12-13-16)

"Calendar quarter" means any of the four three-month periods of the calendar year commencing on January 1, April 1, July 1, and October 1.

(Measure G (Ord. 2016.2), adopted by electorate, 12-13-16)

"CPI Index" means the Consumer Price Index - All Urban Consumers for All Items (with a base period of 1982 - 1984 = 100) for the San Francisco-Oakland-San José Area published by the United States Department of Labor, Bureau of Labor Statistics.

(Measure G (Ord. 2016.2), adopted by electorate, 12-13-16)

"Day" means calendar day unless otherwise specified.

(Measure G (Ord. 2016.2), adopted by electorate, 12-13-16)

"Director" means the director of the finance department of the city.

(Measure G (Ord. 2016.2), adopted by electorate, 12-13-16)

"Employee" means each and every person engaged in the operation or conduct of any business, whether as owner, member of the owner's family, partner, associate, agent, manager or solicitor, and each and every other person employed or working in such business for a wage, salary, commission or room and board.

(Measure G (Ord. 2016.2), adopted by electorate, 12-13-16)

"Engaged in business" means the commencing, conducting, operating, managing or carrying on of a business and the exercise of corporate or franchise powers, whether done as owner, or by means of an officer, agent, manager, employee, servant or otherwise, whether operating from a fixed location in the city or coming into the city from an outside location to engage in such activities.

(Measure G (Ord. 2016.2), adopted by electorate, 12-13-16)

Whenever any person by use of signs, circulars, cards or any other advertising media, including the use of internet or telephone solicitation, represents that such person is engaged in business in the city, then these facts may be used as evidence that such person is doing business in the city.

(Measure G (Ord. 2016.2), adopted by electorate, 12-13-16)

"Business tax," or "tax" means the tax due for engaging in business in San José.

(Measure G (Ord. 2016.2), adopted by electorate, 12-13-16)

"NAICS code" means the numerical classification for business activities established in the North American Industry Classification System.

(Measure G (Ord. 2016.2), adopted by electorate, 12-13-16)

"New business" means a business in existence and operation for ninety days or less.

(Measure G (Ord. 2016.2), adopted by electorate, 12-13-16)

"Online filing system" means an internet based system as an optional method for the filing of an application for a business tax certificate and making payment of the business tax, including any interest and penalties, required to be paid pursuant to this chapter.

(Measure G (Ord. 2016.2), adopted by electorate, 12-13-16)

"Person" means any domestic or foreign corporation, firm, association, syndicate, joint-stock company, partnership of any kind, joint venture, club, Massachusetts business or common law trust, society, individual, estate, business trust, receiver, retirement plan, trustee, or any other group or combination acting as a unit.

(Measure G (Ord. 2016.2), adopted by electorate, 12-13-16)

"Small business" means a business owned and operated by a single natural person or owned and operated jointly by married spouses or domestic partners, without other principals or employees. A small business includes a trust where a natural person or married spouses or domestic partners are the only trustees of the trust. For purposes of this chapter, "domestic partners" means two individuals who have a current declaration of domestic partnership on file with the California Secretary of State pursuant to the Domestic Partner Registration Act, California Family Code Section 297 et seq., as may be amended, identifying themselves as each other's domestic partner. A "small business" does not include a corporation, partnership, or association unless the single business operator or married spouses or domestic partners are the only employees of the corporation, partnership, or association.

(Measure G (Ord. 2016.2), adopted by electorate, 12-13-16; Ord. 30297)

"Small business owner" means a single natural person who owns and operates a small business or owns and operates a small business with his or her spouse or domestic partner, or acts as a trustee or acts as a trustee with his or her spouse or domestic partner, as applicable.

(Measure G (Ord. 2016.2), adopted by electorate, 12-13-16; Ord. 30297)