Supervisors approve amendment to remove $100 minimum penalty for late business registration, effective July 1, 2017

The Budget and Finance Committee on Jan. 31 voted to advance an ordinance to remove a $100 minimum penalty for failing to register with the tax collector, and to remove the fee and administrative requirements for duplicate registration certificates. The Treasurer/Tax Collector’s office argued the $100 minimum creates a disproportionate burden on small businesses and discourages registration.

Amanda Fried of the Treasurer’s Office said the minimum penalty can amount to a very large percentage of a small business’s base tax liability. Using an example of a hairstylist with $65,000 in gross receipts, she said a missed registration could jump from $91 to $245.90 under the existing rules. The office estimated the change would reduce penalty revenue in a static model but projected increased compliance would offset most of the loss; the treasurer estimated a net revenue loss of about $880,000 after compliance gains, down from an initial $1.5 million estimate.

The Budget Analyst recommended treating the ordinance as a policy matter; supervisors asked the Treasurer to return in one year with a report on the ordinance’s impact. Supervisor Tang moved to amend the effective date to on or after July 1, 2017; the committee approved the amendment and forwarded the ordinance with a positive recommendation.

Next steps: The ordinance will go to the full board; the Treasurer/Tax Collector will return in one year with an impact report on compliance and revenue.