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RYAN BOURQUE, CPA and Principal for Bourque & Associates, Inc. in Irvine
San Clemente leadership tells a story that the City does not have a business tax. The municipal code calls business licenses “Business License Taxes.” City officials expressly claim there is no business tax.
A traditional license fee would be based on a flat dollar amount for a business type, industry, or other criteria.
Taxes, in contrast, are collected by a government agency based on the profits or sales/revenues of a business.
This “fee” system is simply a tax in disguise.
San Clemente specifically taxes professions such as retail, wholesale, manufacturing and telephone services, in addition to professions and occupations based on revenues.
The San Clemente Municipal Code has graduated “tax tables” for businesses to remit their tax to the city on an annual basis.
Complying with the reporting and payment of this tax put an extra layer of burden on small businesses that they don’t need, especially small businesses with multiple offices, employees, or locations.
Unbeknownst to independent contractors working from their homes, the city imposes this tax structure on them as well if the city determines that they have “an established place of business.”
That type of vague language could lead the city to determining that a website or an online ad with a home address for an independent contractor would subject this person to the tax when they may have zero sales inside of San Clemente.
I have personally had a run-in with the city over their taxation system. I have multiple offices and locations where my staff work and where my clients are serviced. That was when I was knee-deep into some overly complex rules for what is supposed to be a fee.
The branch and administrative rules are complex and also place an undue burden on a business to comply with the city’s income tax scheme. A business would need to keep a separate set of books of what are deemed San Clemente sales and nexus based on where employees perform certain tasks.
I’ll be working to repeal this business tax to benefit all independent contractors and small businesses in San Clemente.