Frequently Asked Questions
FRANCHISE TAX BOARD BUSINESS ENTITY FILER NOTICES
CORPORATIONS, LLCs, LPs, LLPs
Q: What is the City of Santa Ana Business License Tax Penalty Abatement Amnesty Program?
A: The Business License Tax Penalty Abatement Amnesty is a temporary program authorizing the abatement of penalties assessed for noncompliance with the City’s business license tax to encourage all businesses including, but not limited to: all commercially based businesses, home-based businesses, commercial and residential landlords, and independent contractors, who have not yet obtained their required business license(s) to come forward and fully comply with the City’s business license tax.
Q: What is the Franchise Tax Board (FTB) program?
A: As a result of recent legislation, the State Franchise Tax Board (FTB) is authorized to disclose to local jurisdictions and government agencies certain records related to business activities of residents, corporations, and other entities within the City. By matching the data to our existing records we are able to identify unregistered businesses within the City.
Q: Why did I receive a FTB notification?
A: Our records from the FTB show that you or the named business entity is reporting some type of business activity to the FTB using a City of Santa Ana address. This indicates you may be transacting business or maintaining a registered business office in the City and have not yet obtained a City of Santa Ana Business License Tax Certificate.
Q: Am I doing “business”? What does Santa Ana consider a “business” and why do they think I am operating one?
A: Santa Ana Municipal Code Section 21-3 defines business as including “all activities engaged in or caused to be engaged in within the city, including any commercial or industrial enterprise, trade, profession, occupation, vocation, calling, or livelihood, including rental of residential or commercial real estate, and every other kind of activity whether or not carried on for gain or profit, and whether or not engaged in as a principal or as an independent contractor, but shall not include the services rendered by an employee to his employer.”
State law (Business & Professions Code Section 16300) requires cities to consider the manner in which a taxpayer files their state or federal tax return in determining whether or not a taxpayer is to be considered a business entity.
Q: My business entity (Corporation, LLC, Partnership, LP, etc.) is an active registered Santa Ana business entity but all of the businesses gross receipts are generated elsewhere. Is it required to get a Santa Ana business license?
A: Yes. If your business is an “active” California Business Entity and pursuant to the California Corporations Code is registered with the California Secretary of State as having its principle executive business office in the City of Santa Ana it will need a Santa Ana business license. State law requires California corporations (Cal. Corp. Code - §§ 100 et seq.), LLCs (Beverly-Killea Limited Liability Company Act - Cal. Corp. Code - §17057), LPs (Uniform Limited Partnership Act - Cal. Corp. Code §15901.14), and LLPs (Uniform Partnership Act - Cal. Corp. Code §16952) to register/designate and maintain a business office within the state. This is the business office address registered with, and publically reported by, the California Secretary of State as the business entity’s “Entity Address”. Maintaining a business entity office address within the City, whether it is the principal location at which business is transacted or not, is considered operating a business under the municipal code and a City of Santa Ana Business License is required.
Q: My business entity is dormant/passive and is just paying a minimum tax to the Secretary of State or it exists as a pass-thru entity or holding company and does not directly generate gross receipts. How much is owed?
A: As a pass-thru entity or holding company your business will be assessed a $116 minimum annual tax only for each year located in Santa Ana beginning with the 2007-08 tax year, plus a single $29 business license registration charge.
Q: My business entity generates gross receipts from locations both within and outside of Santa Ana. How is its business license taxes assessed?
A: As a business operating both within and outside of the City, your Santa Ana business license tax will be separately assessed per Santa Ana location based the gross receipts reportable from that location. Sales or other receipts generated at one or more business locations situated outside of the City are not includable.
Q: My Santa Ana business entity location acts as a management & administrative facility or engages in other activity which doesn’t directly generate gross receipts or for which separate gross receipts records are not maintained? How is its business license tax assessed?
A: For facilities engaged in management & administrative activities, or that conduct other activities for which separate sales or receipt records are not keep, the tax is assessed based on “attributable gross receipts” determined on a cost of doing business basis. Contact us by phone or email and ask for an Attributable Gross Receipts Business License Tax Assessment Guide or visit us at http://www.santa-ana.org/TaxAmnesty/ to download the form.
Q: My business operated in Santa Ana in the tax years reported, but doesn’t do so any longer. What do I do?
A: Provide your close-out date & complete the application/worksheet for the tax years your business operated in Santa Ana.
Q: I believe the requested Santa Ana business license is not required in my case or I believe I have received this notice in error. What do I do?
A: You may complete and submit a Request for Business License Tax Review. Contact us by phone or email and ask for a Business License Tax Review Form or visit us at http://www.santa-ana.org/TaxAmnesty/ to download the form. Please see the instructions on the downloadable form for details. In any communication with us include your File Reference # - see notice.
FRANCHISE TAX BOARD PERSONAL BUSINESS INCOME FILER NOTICES
SOLE PROPREITORSHIPS, GENERAL PARTNERSHIPS & INDEPENDENT CONTRACTORS
Q: What is the City of Santa Ana Business License Tax Penalty Abatement Amnesty Program?
A: The Business License Tax Penalty Abatement Amnesty is a temporary program authorizing the abatement of penalties assessed for noncompliance with the City’s business license tax to encourage all businesses including, but not limited to: all commercially based businesses, home-based businesses, commercial and residential landlords, and independent contractors, who have not yet obtained their required business license(s) to come forward and fully comply with the City’s business license tax.
Q: What is the Franchise Tax Board (FTB) program?
A: As a result of recent legislation, the State Franchise Tax Board (FTB) is authorized to disclose to local jurisdictions and government agencies certain records related to business activities of residents, corporations, and other entities within the City. By matching the data to our existing records we are able to identify unregistered businesses within the City.
Q: Why did I receive a FTB notification?
A: Our records from the FTB show that you or your spouse is reporting some type of personal income business activity to the FTB using a City of Santa Ana address. This indicates you may be operating a business or providing independent contractor services within the City and have not yet obtained a City of Santa Ana Business License Tax Certificate.
Q: Am I doing “business”? What does Santa Ana consider a “business” and why do they think I am operating one?
A: Santa Ana Municipal Code Section 21-3 defines business as including “all activities engaged in or caused to be engaged in within the city, including any commercial or industrial enterprise, trade, profession, occupation, vocation, calling, or livelihood, including rental of residential or commercial real estate, and every other kind of activity whether or not carried on for gain or profit, and whether or not engaged in as a principal or as an independent contractor, but shall not include the services rendered by an employee to his employer.”
State law (Business & Professions Code Section 16300) requires cities to use the way a taxpayer reported income to the IRS and FTB to determine whether the taxpayer performed services as an employee or as a separate business entity.
Q: I received cash income from my freelance business activities. Am I required to have a business license?
A: Yes, individuals that receive income in the form of cash, checks, or money-orders for freelance work need to have a City of Santa Ana Business License.
Q: I received a 1099-Misc Form instead of a W-2 from my work. Am I required to have a business license?
A: Yes, individuals that work on an independent contractor or nonemployee basis and are reported on an IRS 1099-Misc. Form instead of a W-2 need to have a City of Santa Ana Business License.
Q: I received a 1099-Misc Form for reportable income (royalties, prizes & awards, civil damages, substitute payments in lieu of dividends or tax-exempt interest) not connected to operating any business or providing independent contractor services. Am I required to have a business license?
A: No. By themselves these types of miscellaneous reportable income, which are not connected to operating any business or providing independent contractor services, do not require a business license.
Q: I self-reported income or received a 1099-Misc Form for reportable income connected to a single instance of providing personal labor or personal services to another person or business. Am I required to have a business license?
A: No. A single non-continuous instance of performing personal labor or personal services to another person, business, or other entity with no expectation or intention of repetition does not require a business license.
Q: I received a non-miscellaneous type of 1099 Form (1099-A, 1099-B, 1099-C, 1099-DIV, 1099-G, 1099-INT, 1099-LTC, 1099-MSA, 1099-OID, 1099-PATR, 1099-R, 1099-S) or I received a 5498 Form for reportable income not connected to operating any business or providing independent contractor services. Am I required to have a business license?
A: No. By themselves these types of non- miscellaneous reportable income, which are not connected to operating any business or providing independent contractor services, do not require a business license.
Q: I received a 1099-Misc Form for reportable rental property income from properties located outside of Santa Ana. Am I required to have a business license?
A: No. Provided you do not maintain a related business office in your home or at another commercial location within the City of Santa Ana.
Q: I received a 1099-Misc Form for reportable rental property income from properties located both in and outside of Santa Ana. Am I required to have a business license?
A: Yes. A separate business license is required for each individual rental property location within the City of Santa Ana. Also, a separate business license is required if you maintain a related business office in your home or at another commercial location within the City of Santa Ana.
Q: I do part-time consulting/independent contractor work from my home. Do I have to get a business license?
A: Yes, businesses both large and small are required to obtain a Santa Ana Business License to be in compliance with the Santa Ana Municipal Code. If the consulting work or other independent contractor work is done from a location within the City limits, such as your residence, you are required to obtain a City of Santa Ana Business License. (Note: part-time businesses making less than $2,300 per year may apply for a reduced gratuitous license fee.) To see if you qualify, contact us by phone or email and ask for an Alternate Business License Application & Flat Rate Schedule (Gratuitous License) form or visit us at http://www.santa-ana.org/TaxAmnesty/. In any communication with us include your File Reference # - see notice.
Q: I engage in hobbyist activity which generates incidental reportable income. Do I have to get a business license?
A: Yes, hobbyists whose hobby activities generate reportable income are required to obtain a Santa Ana Business License to be in compliance with the Santa Ana Municipal Code. If the hobby activity is done from a location within the City limits, such as your residence, you are required to obtain a City of Santa Ana Business License. (Note: hobbyists making less than $2,300 per year may apply for a reduced gratuitous license fee.) To see if you qualify, contact us by phone or email and ask for an Alternate Business License Application & Flat Rate Schedule (Gratuitous License) form or visit us at http://www.santa-ana.org/TaxAmnesty/. In any communication with us include your File Reference # - see notice.
Q: I am an independent contractor performing services in association with a licensed Santa Ana business, or nonprofit organization, or government agency. Do I have to get a separate business license?
A: Yes, engaging in business in association with, or performing services for, or in the name of a licensed Santa Ana business or nonprofit organization, or government agency does not relive separate business entities, independent contractors, independent contractors, consultants or other self-employed individuals from the requirement to obtain a City of Santa Ana Business License.
Q: I live in Santa Ana, but my business is located outside of the city limits. Do I need to get a business license?
A: As long as both your business location and all business activity are conducted outside the City of Santa Ana, there is no need to obtain a City of Santa Ana Business License. However, if you are conducting business based from your residence, or your residence is your business location, you will need to obtain a City of Santa Ana Business License.
Q: I live in Santa Ana and receive reportable income from immediate family members to provide childcare or adult care to members of my own family. Do I need to get a business license?
A: No, as long as the care is provided solely to immediate family members at your residence or at the residence of another immediate family member.
Q: I was a minor at the time I received the income which I self-reported or which was reported on a Form 1099. Do I need to get a business license?
A: No business license is required for reportable income received by a minor. If the reportable income relates to a continuing business or independent contractor activity begun by a minor but carried-on after age 17, then an appropriate business license would be required from age 18 on.
Q: I was engaged in operating a business or performing independent contractor activities from a former residence outside of the Santa Ana, and have subsequently moved to Santa Ana and discontinued these activities, or engage in them wholly outside of Santa Ana. Do I need to get a business license?
A: No. If you filed a W-4 or FTB Tax Return indicating a current Santa Ana address then the FTB will report your 2006, 2007, or 2008 filing status to us based on your current tax filing address.
Q: I operated a business, or maintained a business office, or worked as an independent contractor in Santa Ana in the tax years reported, but don’t do so any longer. What do I do?
A: Provide your close-out date & complete the application/worksheet for the tax years your business operated in Santa Ana.
Q: I believe the requested Santa Ana business license is not required in my case or I believe I have received this notice in error:
What do I do?
A: You may complete and submit a Request for Business License Tax Review. Contact us by phone or email and ask for a Business License Tax Review Form or visit us at http://www.santa-ana.org/TaxAmnesty/ to download the form. Please see the instructions on the downloadable form for details. In any communication with us include your File Reference # - see notice.
RESIDENTIAL RENTAL PROPERTY NOTICES
Q: What is the City of Santa Ana Business License Tax Penalty Abatement Amnesty Program?
A: The Business License Tax Penalty Abatement Amnesty is a temporary program authorizing the payment of the City’s business license tax without penalty to encourage businesses, including residential landlords, who have not yet obtained their required business license(s) to come forward and fully comply with the City’s business license tax.
Q: Why did I receive a notification? What does Santa Ana consider a “residential rental business”?
A: County property tax records indicate that you are the non-resident owner of a residential property in the City of Santa Ana. This indicates you may be operating a residential rental business in the City and have not yet obtained a City Business License Tax Certificate for that location. Municipal Code Section 21-3 defines the business of rental of residential real estate as including every person who engages in the business of leasing, renting, subleasing, subletting, providing, exchanging or trading without loss of ownership or leasehold any residential property within the City for purposes of general residency.
Q: How is the residential rental business license tax assessed?
A: The business license tax for the rental of residential real estate is assessed per property, based on the ownership of the property. A separate business license is required for each separate rental property location. The business license tax assessment is made on a per unit basis and reflects the maximum number of rentable units making up the property.
Q: I am renting to family members is this still considered to be a business? Do I have to get a business license?
A: Renting to family members is considered to be a business and a license is required. If you are renting only to immediate family members and the amount you receive is not more than the “cost of said premises” you may qualify for a “fee-exempt” license. To see if you qualify, contact us by phone or email and ask for a Family Member Rental Exemption form or visit us at http://www.santa-ana.org/TaxAmnesty/. In any communication with us include your File Reference # - see notice.
Q: I believe the requested Santa Ana business license is not required in my case or I believe I have received this notice in error:
What do I do?
A: You may complete and submit a Request for Business License Tax Review. Contact us by phone or email and ask for a Business License Tax Review Form or visit us at http://www.santa-ana.org/TaxAmnesty/ to download the form. Please see the instructions on the downloadable form for details. In any communication with us include your File Reference # - see notice.