12-18-2012 CC RPT 26 - Laserfiche WebLink

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City Council Memorandum City �1"Arts&Innovation TO: HONORABLE MAYOR AND CITY COUNCIL DATE: DECEMBER 18, 2012 FROM: FINANCE DEPARTMENT ITEM NO: 26 WARDS: ALL SUBJECT: AMENDMENT TO SECTION 5.04.090.0 OF THE MUNICIPAL CODE TO INCREASE THE THRESHOLD FOR A TAX-FREE BUSINESS TAX CERTIFICATE FOR HOME-BASED BUSINESSES ISSUE: The issue for City Council consideration is adoption of an Ordinance amending Section 5.04.090.U of the Municipal Code to increase the business tax exemption threshold for small, home-based businesses from $2,000.00 to $10,000.00. RECOMMENDATION: That the City Council adopt the attached Ordinance (Attachment "A") amending Section 5.04.090.0 of the Municipal Code to increase the business tax exemption threshold for small, home-based businesses from $2,000.00 to $10,000.00. BACKGROUND: Section 5.04 of the Riverside Municipal Code establishes the City's business license tax and outlines the tax amounts to be collected from various categories of businesses. Tax amounts are typically based on gross receipts or number of employees, with a minimum tax due for the smallest of businesses. Section 5.04.090 specifies the circumstances under which certain small businesses may be exempt from the obligation to pay the business license tax and may instead obtain a tax-tree certificate. Currently, the Municipal Code states that a tax-free certificate may be issued to "any business conducted or carried out from a person's residence located in the City of Riverside, having total annual taxable and non-taxable gross receipts from within and without the City, which do not exceed $2,000.00". Staff has determined based on recent experience that it would be appropriate to increase the $2,000.00 threshold, which was established several years ago, not indexed to inflation, and approved at a time when home-based businesses were much less prevalent than they are today. 26-1