Yesterday, David posted a note about Martini Republic’s rant about the City of Los Angeles shaking down its citizens for business taxes. Basically, the city has been sending letters to anyone who had a 1099 last year, saying that said 1099 recipients may owe them money. I was one of the lucky recipients of one of these letters the other day. I had one 1099 that I filed with my tax return last year, which was payment for a talk I gave in Boston. (I have given similar talks for the past 4 years, out of the state, with 1099s every year.) The city sent me a form asking me to either fill out an application for a business tax license or to complete a section on the back of the application that explains why I am not liable for city tax. Their FAQ on the topic pretty much says that I’m not, given that I didn’t perform any service in Los Angeles that I received a 1099 for (note: this is the same section of the FAQ quoted by Martini Republic) – emphasis added:
Q: I receive a 1099 form instead of a W-2 for my work. Am I required to have a City of Los Angeles Business Tax Registration Certificate?
A: Those that work as an “independent contractor” and are paid by 1099 versus W-2 may be liable for City of Los Angeles Business Tax. Persons that perform work in the City of Los Angeles as an independent contractor as defined by LAMC Section 21.00, Subsection (j) are normally considered to be engaged in business and are liable for the City Business Tax.
The kicker is that the section on the back that asks for an explanation of why I’m not liable says that I also need to sign the front of the form. The signature panel on the front of the form says that by signing, I am acknowledging that everything above my signature is correct. On a blank form. That I don’t need to fill out because I am not doing business in Los Angeles.
This seems ever-so-slightly counterintuitive to me. Why would I sign something that says I certify that everything above it is accurate, when everything above it does not apply to me? Seems like a recipe for disaster to me, since anyone who came across the blank, signed form could conceivably fill it out with all manner of damning yet incorrect information. I’m faxing the whole shebang to my accountant to be sure, but I’m planning to put “not applicable” in every single blank space on that form. After all, I definitely certify that everything on the business tax application is not applicable to me!
Anyone else receive a letter like this? Have you responded? If so, or even if not, what was the outcome?