April 18, 2023
Finance Department
DATE: April 18, 2023
TO: Mayor Martinez and Members of the City Council
FROM:
Nicky Mastay, Deputy City Manager, Internal Services
Mubeen Qader, Deputy Director of Finance
Antonio Banuelos, Accounting Manager
Subject:
Resolution Changing the Due Date of Business Tax for
Rental Properties from March 1, 2023 to July 1, 2023
FINANCIAL IMPACT: There is no financial impact with changing the due date from March 1, 2023 to July 1, 2023.
PREVIOUS COUNCIL
ACTION:
December 21, 2021
July 19, 2022
STATEMENT OF THE
ISSUE:
The proposed Resolution will change the due date for the business tax from rental properties from March 1, 2023 to July 1, 2023.
RECOMMENDED ACTION:
ADOPT a resolution temporarily changing the due date
for business tax payments from rental businesses from
March 1 to July 1 for calendar year 2023 – Finance
Department (Nickie Mastay/Mubeen Qader/Antonio
Banuelos 510-620-6741).
DISCUSSION:
City Council placed a measure on the November 3, 2020, ballot that was approved by the voters and changed the Business Tax calculation methodology to be based on gross receipts instead of the prior method based upon the number of employees employed by a business.
AGENDA
REPORT
April 18, 2023
On November 23, 2021, City Council directed City staff to prepare Measure U regulations to allow landlords of four or less residential units to credit their paid Rent Board fees against their gross receipts tax obligation for the same period.
On December 21, 2021, City Council approved a resolution allowing landlords with four or less residential units to credit their paid Rent Board fees against their gross receipts business tax obligation for one year.
On July 19, 2022, City Council approved an ordinance allowing landlords with four or less residential units to credit their paid Rent Board fees against their gross receipts business tax obligation. The approved ordinance codified City Council direction allowing for such Rent Board credit.
Also, on July 19, 2022, City Council adopted a resolution for the Business Tax Amnesty Program that gave residential rental property businesses that had failed to pay their Business Tax by June 30, 2022, additional time to bring their accounts current, and provided businesses that had never registered with the City the opportunity to comply with the Richmond Municipal Code (RMC), Section VII, Chapters 7.04 and 7.88 without the assessment of late fees and penalties.
The processing of business tax renewal notices and payments for rental properties has been very labor-intensive. The Measure U Ordinance has many interrelated sections for residential rentals with many exemptions and credits. The majority of the payments received this year for this classification, where the business owner calculated their own taxes directly without speaking with City staff, have been incorrect. In most cases, the payment received exceeded the actual amount due. Finance staff have been analyzing all payments received and returning overpayments with a revised invoice that shows the correct amount due. The online portal does not work as efficiently as anticipated and requires manual updates from staff to complete the payment process.
Given these issues, City staff is recommending City Council adopt the proposed resolution that will temporarily change the due date from March 1 to July 1 for the business tax due from income generated from rental properties. This updated due date will align with the due date for non-rental businesses.
Next Steps
Finance staff recently began mailing out the 2023 renewal notices for non-rental businesses. During the next few weeks, Finance staff will start mailing out the 2023 rental renewal notices. The Finance Department is providing augmented business tax services to the Richmond business community in person, via phone calls, through our online payment portal, and through virtual online appointments.
Efforts to find replacement software have begun with the Request for Proposals (RFP) released on March 17, 2023. The replacement software will allow for a more efficient online renewal process. In addition, the issue of due dates will be revisited at the time of
April 18, 2023
replacement. The target software selection date is April/May 2023 with implementation commencing thereafter.
The community can leave questions for staff on the business tax hotline at 510-620- 5555 or email to [email protected].
DOCUMENTS ATTACHED:
Attachment 1 – Resolution