So, you´ve gotten the letter from the LA City Finance Office informing you that you owe the LA city tax on earnings from a small business from a previous year. Read this post if you need information about the actual letter – including exemption and deadline info. This post deals solely with the art of speaking to the fine folks down at city finance. You didn´t know that you had to pay a city tax and now you have to physically go to one of The City of Los Angeles Finance Offices and get this whole thing straightened out. Here are some tips that might just save you from having to pay extra money.
- Know the following regarding the ¨ignorance of the liability¨ excuse: this is the most common excuse the office hears. No matter how cute or persuasive or nice you are, if you did not send in your exemption form prior to February 28 of the year immediately following your tax liability then you will have to pay the tax itself, no matter what. (If you somehow get out of it, please let all of us know how you did it.)
- Know the following regarding the penalty portion of your liability: you have the right (no matter what the clerk at the window says) to request a one-time penalty waiver due to your ignorance of liability. A clerk adamantly insisted to me at the West LA office that I could not have a penaty waiver.
- Should a clerk refuse to give you a penalty waiver and this is your first time requesting one, then ask for his or her supervisor. Or simply go to a different LA City Finance Office, which is what I did when I was refused a penalty waiver. There are several Finance Offices in LA County.
- A penalty waiver is a request only. It does not guarantee that your penalty will be waived, but you have a much better chance of a successful waiver if you pay the back taxes on the spot.
- Try to go to the LA City Finance Office early in the morning. The people who work there have to deal with all kinds of schmuks all day long. It´s best if you talk to them before the afternoon rush of other people with problems.
- Always be nice, even if you have a bad experience with a clerk, like I did. This particular clerk was annoyed because I arrived just as the office opened and apparently I interupted her coffee conversation with a co-worker. I suspect this is why she lied and told me that I was not eligible for a penalty waiver.
- Don´t be confrontational with a clerk who informs you that you are still liable for the back taxes – the penalty waiver is the best help they can give you. Not even their supervisors can get you out of your tax portion of the liability.
- Spread the word! Inform your friends who run freelance businesses in the City of LA about this issue so that they can get their exemption forms in on time. The City of LA does not inform anyone of their liabilities until after the deadline of February 28. Knowledge is power!
Good Luck! And next year, remember to file your exemption form on time.