The purpose of this Section is to increase the number of jobs within the City and County of San Francisco by providing an incentive for Small Businesses to create new jobs or to relocate existing jobs to the City and County of San Francisco.
Notwithstanding any other provisions of this Article, for purposes of this Section the following terms shall have the meaning set forth below:
“Small Business” means a person whose Base Year Payroll Expense is between $1 and $500,000.
“Base Year” means the 2011 tax year for a person who had Payroll Expense in 2011. If a person did not have Payroll Expense in the 2011 tax year, then the first year that the person incurs Payroll Expense shall be that person’s Base Year. If a person is exempt from filing a Payroll Expense Tax return pursuant to Business and Tax Regulations Code 6.9-2 in the Base Year, the person’s Base Year Payroll Expense shall be $150,000 for the purposes of calculating this exclusion.
“San Francisco Labor Law” means the Health Care Security Ordinance, codified at San Francisco Administrative Code Chapter 14; the Minimum Wage Ordinance, codified at San Francisco Administrative Code Chapter 12R; the Paid Sick Leave Ordinance, codified at San Francisco Administrative Code Chapter 12W; the Minimum Compensation Ordinance, codified at San Francisco Administrative Code Chapter 12P; the Health Care Accountability Ordinance, codified at San Francisco Administrative Code Chapter 12Q; and the prevailing wage requirements, codified at San Francisco Administrative Code
A Small Business may exclude from its Payroll Expense the lesser of $250,000 or the amount of Payroll Expense that is greater than its Base Year Payroll Expense for the 2012, 2013, 2014 and 2015 tax years; provided, however, that in no event shall this exclusion reduce a person’s Payroll Expense Tax liability for any year 2012, 2013, 2014, or 2015 to less than the following: the person’s Base Year Payroll Expense Tax liability, multiplied by the Payroll Expense Tax rate in effect for the year being reported, divided by 1.5 percent.
In order to be eligible for the Payroll Expense Tax exclusion authorized under this Section, persons wishing to claim the exclusion must:
Maintain records and documents in a manner acceptable to the Tax Collector. Such records and documents must objectively substantiate any exclusion claimed under this Section and be provided to the Tax Collector upon request.
Timely file with the Tax Collector an annual Payroll Expense Tax return claiming the exclusion provided for in this Section, regardless of the amount of tax liability shown on the return after claiming the exclusion provided for in this Section. All returns shall be filed by the due date set forth in Article 6 of the San Francisco Business and Tax Regulations Code.
If, after the timely filing of a person’s Payroll Expense Tax return, it is determined that the person was delinquent in remitting any taxes, fees or penalties owed to the City and County of San Francisco at the time of filing, that person shall be ineligible to claim the exclusion under this Section for the period covered by the return.
If, prior to or after the timely filing of a person’s Payroll Expense Tax return, the San Francisco Office of Labor Standards Enforcement determines that a person violated a San Francisco Labor Law during the period covered by the return, or, in response to an investigation by the San Francisco Office of Labor Standards Enforcement, a person paid, or was required to pay, restitution to former or current employees during the period covered by the return, then such person shall be ineligible to claim the exclusion provided by this Section for the period covered by the return.
A person may not use or claim any unused portion of the exclusion available under this Section after the expiration of this Section.
The San Francisco Office of Labor Standards Enforcement shall, no later than the first of December of each year that the exclusion under this Section is in effect, provide to the Tax Collector a list of all persons it determined to have violated a San Francisco Labor Law, including the year the violation occurred.
The Tax Collector shall verify that any exclusion claimed pursuant to this Section is appropriate.
A misrepresentation or misstatement by any person regarding eligibility for the exclusion authorized under this Section that results in the underpayment or underreporting of the Payroll Expense Tax shall be subject to penalties and interest.
The Office of the Treasurer and Tax Collector may adopt rules and regulations regarding the exclusion provided under this Section.
The exclusion provided by this Section may not be claimed concurrently with any other Payroll Expense Tax exclusion.
The Tax Collector shall submit an annual report to the Board of Supervisors for each year for which the exclusion authorized under this Section is available. The report shall set forth aggregate information on the dollar value of the exclusions taken each year and the number of persons claiming this exclusion.
The exclusion set forth in this Section shall expire by operation of law on December 31, 2015, and the City Attorney shall cause it to be removed from future editions of the Business and Tax Regulations Code unless the Board of Supervisors or the voters extend the exclusion prior to December 31, 2015.
The exclusion provided for under this Section may be applied only in calculating a person’s Payroll Expense Tax liability according to the Payroll Expense Tax rate in effect for each of the years the exclusion provided for under this Section applies. The preceding sentence applies notwithstanding whether the voters of the City and County of San Francisco pass any form of gross receipts tax.
The Controller’s Office of Economic Analysis shall issue a report to the Budget and Finance Committee of the Board of Supervisors at the end of the four-year term of the Net New Payroll Exclusion, assessing the effects of the Exclusion on incentivizing job creation and payroll growth among small businesses that applied for the Net New Payroll Exclusion.
(Added by Ord. 160-12 , File No. 120377, App. 7/12/2012, Eff. 8/11/2012; amended by Ord. 233-12 , File No. 120965, App. 11/20/2012, Eff. 12/20/2012)