Question about owing money to the Dept of Finance

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Skylamar 14 years ago

Hi. I'm wondering if someone can help me. I live in Los Angeles and today I got a letter from the Office of Finance, Tax and Permit Division of California. The letter says I may owe money for engaging in a business without purchasing a Business Tax Registration Certificate. I've tried calling their offices but I can't get through to an agent. If no one can help me in this group, then I'll have to go to the offices in person.

I'm trying to figure out if I need to purchase the certificate. Last year, 2010, I worked part-time from home for a toy company helping them with their website. My total earnings from them were about $9000 for the year. The only other money I earned last year was from unempoyment insurance.

I may have gotten a W2 from the toy company at the end of the year, but I don't think so. I did look at my 2010 tax forms generated by Turbo Tax and there is a form "Schedule C-EZ (Form 1040)" and a "Schedule SE (Form 1040)" -- which says "Self-employment tax" at the top of the page.

I stopped working for the toy company in November of 2010. Since then, I haven't been able to find any work and I've been living off savings. This entire calendar year I've earned nothing.

I've also never worked as a self-employed worker in about ten years.

So, I'm trying to understand if I need to buy the Business Tax Registration Certificate in order to retroactively pay for the consulting money I earned in 2010. I have no use for buying a Certificate now because, as I said, I'm not working in any capacity so far this year. I'm hoping that I don't need to buy such a certificate.

I am in the midst of writing a letter to the Office of Finance explaining my situation and telling them they are mistaken in thinking I owe them money for the certificate, but I want to make sure before I send them the letter.

I realize that maybe I need to talk to a professional about this instead of trying to use this group for free advice/information. But if you have some thoughts on whether I need the certificate that would help a lot.

Thanks,

Sky

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Pico Rico 14 years ago

"of California"? I think this is for the city of L.A.

The letter says I may owe money for engaging in

I wold think you don't need one for 2011 if you are not operating a business in 2011.

But you would owe them money for 2010.

for the small amount of money involved, it would be cheaper to make a mistake and overpay the city, rather than pay a professional

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steve-o 14 years ago

Its best to pay a pro for an hour of their time. If I want to start a business in my county in NY, you're supposed to get a license and register the business in the county. Collecting sales tax is another story. If I want to sell stuff or engage ina business that requires state sales tax. I have to et a NY state sales tax certificate and pay sales tax if applicable. If I want to be a consultant for a toy company I'm supposed to get an EIN from the IRS or file a Sched C. What you recieved might be an inquiry, and perhaps a fishing expedition. Hence, its a great idea pay a few bucks to ask an accountant. By going kto the tax agency you might be causing yourself more trouble.

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Alan 14 years ago

See the link below as you are probably exempt under two reasons: you are too small a business and if you first started up in 2010 you are exempt. You will probably have to contact the city and claim the exemption to get them off your back.

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ira smilovitz 14 years ago

The exemption doesn't apply in this situation as you can only claim it if you file a timely return. If LA finds you first, there is no exemption. My daughter got nailed on this several years ago when she did some independent contract work between employee positions.

However, one thing the OP should look into is whether the specific business location is truly within the LA taxing district. Sometimes it depends on which side of the street you're located.

Ira Smilovitz Leonia, NJ

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Pico Rico 14 years ago

I think the tax amount for 2010 would be about $46.00, unless they tack on late fees and/or penalties. I bet these could be waived.

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Alan 14 years ago

file a timely return. If LA finds you first, there is no exemption. My daughter got nailed on this several years ago when she did some independent contract work between employee positions.

location is truly within the LA taxing district. Sometimes it depends on which side of the street you're located.

The Small Business Exemption does not require a timely return. It merely requires you contact the city.

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removeps-groups 14 years ago

See

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for thelist of business that require a license. Website, software is not onthe list. It seems unfair that other professions such as pony ridesneed one. But you might be off the hook. After the all the lettersays you "may" owe tax.

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Pico Rico 14 years ago

That is the L.A. COUNTY website. I think he is in the CITY of L.A.

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Question about owing money to the Dept of Finance

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