there's a phenomenal i not for screen 4 negligent employers will only hire people of one negligent group so they're in the underground economy. we're hoping this legislation that supervisor weiner is sponsoring will put an end to something that is unfair to the vast majority of parking operators playing by the rules >> thank you very much any other members of the public who want to make comment. seeing none, public comment is closed. commissioner dwight >> so for the operator that are let's call them instruck up lose what prevents them from lying on it does not. how do you go about enforcing this some that number that didn't raise a red flag

>> any regulatory regime that i can list a hundred of them in san francisco including taxes people can also try to cheated and provide inaccurate information we have the power to audit. you know, that's a possibility as well. i know that the treasure tax collector over the years has done with starting with susan to really try to rein in the parking lot operators and audit them. but absolutely people can be dishonest and violate the law and we deal with them this is additional information to use in their audit >> that's true in addition to the information. >> any other commissioner comments. do we have a motion?

>> i don't see any fundamental reason to not approve the legislation as drafted i'll move we approve it. second >> and i appreciate what the gentleman from the taerments said. commissioner president adams. commissioner riley >> commissioner riley. commissioner white. the motion passes unanimously with 5 votes >> thank you, supervisor. >> next item is item 7 prelims of the gross receipts tax and we have a staff presentation from the tax collector. >> a change is coming.

>> the first slide. >> thank you. good afternoon. i'm greg i'm with the office of the treasurer and tax collector. i'm spearheading there around outreach and i want to acknowledge a few of my colleagues. what we're doing to get the word out into the business community. many of you have attend my presentations i've been giving on the topic this may not be new information but certainly those who are watching this hearing

and certainly it will be helpful information. so first of all, 3 thing that i really want you to know headed out of this. first of all, business registration fees are changing in 2014. this may every business is going to see a registration fee in almost every case will be higher. that is the big thing to take away every business in san francisco will be paying at least more for their business registration fees. number 2 many businesses will continue to have a small business exemption for the small receipts tax. a number of businesses that that this commission oversees and is

responsible for will continue to have their exemption for the payroll expense tax and i and third our office will be providing forms and instructions throughout this year to help businesses plan for the change for businesses in san francisco. so how do we get here? i were all very well involved in the process in 2012 and i'm sure the processes the decade before that the board and mayor have been grandpa living wit this. the mayor and the board working with the business community came up with a business tax change that was in place before the

voters in november 2012 that passed with 70 percent vote for the change. the final step is for the office of the tax collector to implement what the voters 0 approved. and it's important we only implement with the voters approve there might not be gaps in the law or a fair reading of the law has multiple interpretations we can use our regulatory authority & but if there's something about the law that there's a feeling amongst the constituents and a taxpayers that maybe something needs to change or they don't like the category that's up to the board and voters to decide what the changes of that nature into the law so really we're the

implementers in thoik. the distinction of gross receipts it's quite lengthy but the folks should start with looking at what they consider to the dproes income for their federal tax councilmember price pr and then from there businesses that have different ways of doing business and fail into those different categories they can diva i cannot from the gross none baits that's a good place to start and you can get into deeper when you look at the credits. so first of all, those receipts that are included from gross receipts are your federal state

and local takes. this has the specific language and also gifts, grants and loans are not in gross receipts as well investment and financial instruments as their defined. also amaze from a entity that is related to a taxpayer when you're doing your state taxed the untar i'm going to talk about that later about those types of entities but the receipts between the past entities between they're owners are included in the tax. also 50 percent of receipt from rent control unit are included that from gross receipt as well

as receipts from property sales that were subject to the transfer tax that's where the taxpayers has sold the property. there's also two major credits against tax liability. the first is a constitutional credit which is if you pay a tax on the same engross receipts the same tax everywhere you can take that as a credit the reason i say it's still there's no such tax everywhere else in the state or in the country that you know of but if a taxpayer were able to prove there was another at the time of the accident they paid they can take that as a credit. also we're calling the payroll inclusive taxes are liquor

biotechnology and enterprise zone that existed under the payroll expense tax so they continue to operate in a similar way in the engross tax realm. finally, this is taking the content of the central market street area that was approved a couple years ago and making sure that concept persists. but what we shed i want to make sure everyone is aware of if there's not a specific exemption or exclusion the taxpayer should smoum that's included in the receipt 0 if the taxpayer wishes to include it. there are certainly exempt

entities small businesses with a less than a million dollars in engross receipts are exempted and this is similar to the small business tax under a certain outing amount you're not significant to the tax. and certain tablths organizations like those businesses that are locally known as nonprofits etc. they are exempted from the gross receipt tax to the extent they don't have related business income if the irs treats it as something that's exempted. and then there are unconstitutional legally organizations those are essentially folks under state law we can't tax because the state law prevents them like banks and insurance companies and there are also businesses

that are regulated by the public utilities commissions and those are specific exemptions in the law we can't tax them because they have stated exemptions. i mentioned related entities and annoyed returns so if there recent a taxpayer that is required or permitted by the franchise tax broadway broadway board their locally to five a local return for their tax. this is a state concept that's been implemented so the businesses all report together. and this is a concept where the

businesses if not the owners certain their tax perpers will know this ate that's a small percentage of the taxpayers we've gotten the information they estimated on the order of 5 hundred to a thousand businesses fail into this category. we won't know until the people make their filings. so there are 8 different categories of gross receipts and those range from retail to with wholesale trade to you administrative areas this is specifically defined by the north industry n aic s.

for each of those business activities there are defined by the consensus bureau and that's the tool it that you are to report your taxes under. those rates vary they're from .075 percent for the first million dollars all the way up to have 6.5 percent for the receipts in private education and the administrative and support services. those receipts over $25 million. so it's a wide range but it really is defined by what business activity you're in. and then what businesses will do they have to actually report out their waters edge business engross receipt to our office and they portion or allocate

your receipts by real tangible property or that you apportion your receipts bans our payroll extension divided by your total payroll receipts and a portion of san francisco. and the third method if you're in maximizations or real estate you only have a san francisco receipts those receipts that are related to or derived from property in san francisco if you own property in 70 and oakland i repeat our san francisco receipts and don't have to report our property in oakland that's specifically for real estate. and for many of these business

categories you're either going to have an proirpgs or a 50/50 portion where half your receipts will be allocated based on where your receipts are and the tangible property and half based on your payroll expense. take your total amount for your sales and receipts accrue then half is based upon our payroll expenses. there is going to be a 5 year phase in of this tax. we recognized and the board of supervisors when we drafted this to recognize this was a big change. they didn't know and there's no one anyone can know heading into

this if you picked a certain rate what amount of revenue this is going to generate for the city. so the southerners for the businesses communicate their concerned that the biz businesses in san francisco are getting taxation's too much. the city picked a rate that was too low we won't collect enough forbid the taxing tax and we will end up with a deficit. in order to alleviate those concerns for the first year it's interpret percent of what was approved by voter. you recall i mentioned .075 percent for on the first million in retail sales it's .00575 for

the first million dollars that translates into a tax of '$75 to give you a sense of how much it is for the first retail. at the same time the payroll tax is being cut. after we go through the collection period and we have all taxpayers file next february for this tax year the controler will look at the engross receipts tax and the law has an evaluation. so instead of the 25 percent it you might not 26 percent or 24 percent but it will be adjusted so we're tennessee adjusting

this tax so it will not gather more than we asked for or less. so the anticipation is that this will completely phase out the expense payroll tax by the 5th year and we'll have a tax receipt rates that's lower than what the taxpayers voted on. we'll fully phase in the tax rate but that won't generate enough so there will be a small payroll tax but the city will continue to collect harassing as much revenue as they've anticipated. the registration fees for this fiscal year which means they get collected this may from the

fiscal year july 1, 2014, to 15 they will continue to be based on payroll expense so the maximum registration fee over $35,000. this is a big change pea something you really need as you're out in the community i suggest you tell everyone at every stunt i do. up to this year businesses were paying 25 bays dollars as a registration fee and maximum $500. this is a big, big changed this is going to conspiracy a lot of businesses. as you know when you subcontract with our office you get a notice to log both our website so you

put in how much payroll tax and hit energy and for the last how many years it's been $150 or more so that's what you've been seeing now you're going to energy your information and i'll see $800 and wonder. we want to get the word out enough so the business didn't pick up the phone and ask for clarification. this is a big change and will effect every single one hundred thousand businesses in san francisco. the other thing a that's good evening to be happening this change happens for one year and in may 2015 there will be a

different reckons fee it's 90 dollars and will be based on our enclose recipes. weeping we'll have the gross receipts tax in place. the good news is when businesses file they'll be able to when they come back to pay their registration foe they'll - we'll be able to pull that forward and is you reported $500 so we'll be able to pull that information forward. implicit its not it's so much higher it's based on something different and so again, we want to make sure that businesses are aware of that so when they get the invoice they're not saying to themselves oh, someone did

something wrong this is how the law has changed. if you're whole i didn't in retail or wholesale you have a slightly different fee it's smaller. if a business has billion dollars and you have one hundred thousand employees this is - you're going to be paying between 15 and $35,000. it's only effecting the larger businesses between 15 and 25 businesses but they're going to be paying a different registration fee but most are 90 up to $35,000. for the timeline the payroll tax

expense file for the filing is due at the end of the february. 2 will look the same we are closing anti that fireman year and tax so the same process will apply. the first time the businesses are seeing something different with the april snauchlt both their payroll and gross expense tax businesses will again have to allocate themselves in the system. you might recall if you've done your statute of limitation payment we're incurring the new regime of gross receipts that certainly can be seasonal and certainly there were concerns

from businesses based on last year didn't reflect where you're at today and businesses will enter our system and they'll remit those if you happened for the last quarter you'll do that by april 30th. the rentals fees are due in may and the first maxillofor both the payroll and the gross receipts tax will be february of 2015 that's where businesses will be providing the payroll tax. we'll calculate the tax based on the information they provide and we'll credit those previous installment payments and create a balance or a refund if they've

overpaid. and that will be the process it will continue throughout 9015 based on the receipt and 2016 we will be fully converted. i know i've priority a ton of information. and it's there's a lot of questions and everything. i want to make sure i mentioned and maybe gloria will talk about the outreach we're doing monthly seminaries the first thursday of every month starting this february 6 february 6th at 2 o'clock in the average after that. we'll be providing tax information so you can come in

and get more information about the tax and a great i do know you've been contacting several organizations in the city and having meetings with them. i can't thank you enough for that. i know it's not been easy but the reality of it so i know i entices are talking to organizations right now. so i appreciate that. >> all right. mary ann is going to provide you with information on the overview of the marketing and marketing and outreach and education plan. that both she and gloria caan have been working with the tax and treasurers office with greg providing all the great workshops he's been doing

>> he's been out there, too. >> this presentation is it available on - >> greg is your power point available on line yet connected to your website? >> it's not on our website at the moment but i know there was a link on your agenda today so where folks can go as well. >> good afternoon, commissioners. commissioner president adams director dick. thank you for allowing us to be here today. i hope we actually get some good feedback from you.

so this is just a quick overview and again a lot of this is presented and beginning in 2014 we've started out outreach to businesses small language those businesses that are small and not english proficient. we've been out there. so a couple of things our outreach plan targeting the internal and external resources. we've have our only website sf workshop organizing and we do monthly workshops that was touched on. the community presentations to merchant and merchant groups. i had the pleasure of presenting to fillmore.

media outreach and social media 311, city department and other materials. i want to speak quickly to city reach. we've had a great collaboration with a lot of city departments that have agreed to help us get our information out whether e-mail or facebook or twitter. they have really a lot of departments like the office of labor standards, the kroerlz office have helped us to get information to businesses in a timely fashion. one of the things you'll notice about this plan it's heavily front load. we want to reach businesses ahead of the business