Question

Local city tax late notice

Forum|Forum|1 year ago
May 14, 2024
1 reply
0 views

The City of LA hit me with a 'late fee' notice. I discontinued my DBA. Also, my royalty income is with companies that are out of state (Tunecore and Sound Exchange). So, is this right? Should I be owing localized taxes?

Not A Product Question

K

KristinaK

Employee

This is an out-of-scope question, but let me give you some direction.

The city of Los Angeles imposes taxes on persons engaged in any trade, calling, occupation, vocation, profession, or other means of livelihood. Which implies active engagement in an activity. From what you are describing, it doesn't sound like you are actively engaged in a business activity anymore.

Even if the state taxes income from out of its area, it still needs to be an activity you are actively engaged in. But you seem to be describing passive income received in the form of royalties.

I suggest you contact LA Office of Finance (the contact information should be on the notice you received), and explain the situation. Also, make sure that you inform them that the business is closed. Read more about it here.

For the future, be aware, that there are a couple of exemptions from tax that you may qualify for. Read about it here.

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D

DIY_Tax_PersonAuthor

I contacted them with my argument that I'm retired and just receiving royalty money. It seems to take them at least 3 working days to respond to emails. Meanwhile, my late penalties go up in 4 working days, if I'm deemed to still be 'in business' and don't pay up. It's catch-22.

They say that you "must cancel your City of Los Angeles' Tax Registration Certificate by sending a letter OR by completing a Taxpayer Information Update Form". I hope they don't have some Draconian rule whereby it's only considered 'canceled' if you do so before the 2023 tax year or by the end of the 2023 tax year.

Also, I wonder if they consider having a promotional website as being 'in business'. For example, a musician or actor with a website promoting their old work and maybe with external links to where fans can buy their work on Amazon.

K

KristinaK

Employee

I know that CA FTB considers active websites as one of the indicators that the activity is still valid. But I am not sure about the City of LA. It's possible, though. But a reasonable explanation should convey your message.

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