Lingering Questions About the San Francisco Gross Receipts Tax

On November 26, 2013, the San Francisco Board of Supervisors approved amendments to the San Francisco Business and Tax Regulations Code (“Code”), providing for penalty relief for delinquent Gross Receipts Tax (“GRT”) installment payments¹, mandatory combined reporting for Payroll Expense Tax purposes, and the imposition of a new penalty for failure to file returns on a combined basis or failure to provide worldwide payroll or gross receipts information.

Installment Payment Relief

One of the amendments to the Code provides welcome relief to taxpayers for delinquent GRT installment payments, the first of which is due April 30, 2014. GRT installment payments are due every April 30th, July 31st, and October 31st of the current tax year, and the last day of February of the immediately following tax year². A delinquency penalty of 5 percent per month (not to exceed 20 percent in the aggregate) is imposed on any installment underpayment, and interest on such underpayments is imposed on any unpaid or under-paid balance at 1 percent per month.³

As a result of the above amendments to the Code, if a taxpayer makes an installment payment of at least 26 percent of its aggregate GRT and Payroll Expense Tax due in the preceding tax year, the delinquency penalty and interest charges will not apply⁴. Since the GRT is effective beginning in 2014, no penalty or interest will be imposed for any delinquent 2014 GRT installment payments so long as at least 26 percent of the Payroll Expense Tax liability from the preceding year is timely paid with each installment. Given the numerous uncertainties regarding the new GRT and a lack of comprehensive guidance from the San Francisco Office of the Treasurer and Tax Collector (“Treasurer”), this installment payment relief is a critical and welcome change to the law.

Download: Lingering Questions About the San Francisco Gross Receipts Tax This material is not intended to constitute a complete analysis of all tax considerations Internal Revenue Service regulations generally provide that, for the purpose of avoiding United States federal tax penalties, a taxpayer may rely only on formal written opinions meeting specific regulatory requirements. This material does not meet those requirements. Accordingly, this material was not intended or written to be used, and a taxpayer cannot use it, for the purpose of avoiding United States federal or other tax penalties or of promoting, marketing or recommending to another party any tax-related matters.

1. San Francisco Ordinance No. 271-13. 
2. Section 6.9-3(a)(2). All citations are to the San Francisco Business and Tax Regulations Code, unless otherwise stated.
3. Section 6.9-3(b).
4. Section 6.9-3(b).