If you rented a parking space to a non-occupant of your building, you have six months to take advantage of the Parking Tax Amnesty Program. The amnesty period is from January 1 through June 30, 2013. We have published a number of articles about this legislation, and it is now the law [in San Francisco]. You can read the ordinance at www.sfbos.org/ftp/uploadedfiles/bdsupvrs/ordinances12/o0209-12.pdf.
Anyone who rents a parking space to a non-occupant is required to collect a 25% tax on the gross parking rent collected. Everyone pays this tax: when they go to any of the large parking garages, the tax is built into their rate. However, few small property owners were aware that this law applied to them and, therefore, never collected or remitted the tax to the city. The city has the legal authority to go back many years to collect the unpaid taxes plus penalties and interest. However, during this amnesty period, if you self-report, you are only liable for unpaid taxes back to April 2011. The city will waive all taxes, penalties and interest for periods prior to April 2011. That could be a significant saving.
The city has the legal authority to go back many years to collect the unpaid taxes plus penalties and interest. However, during this amnesty period, if you self-report, you are only liable for unpaid taxes back to April 2011.
The amnesty period is designed to help property owners who were unaware of the tax because there has never been any enforcement. The form to apply for the amnesty is “Application for Relief under Section 609 Parking Taxes,” available at the Treasurer’s Office or online at www.sftreasurer.org/modules/showdocument.aspx?documentid=514.
It’s a simple one-page form, with a second page for your signature. You will owe 20% on the total amount of rent you collected for parking spaces from April 2011 through June 2013. To clarify a point that has caused confusion for many small property owners, 20% of the total amount collected is equal to 25% of the base rent collected. The Tax Collector will send a bill for the back taxes after a review of the form and the close of the amnesty period on June 30, 2013.
To be eligible for the simplified parking tax program, you must rent five or fewer parking spaces to non-occupants, the spaces must be rented on a monthly basis (no hourly,
daily, or weekly rentals), the total rent collected for all of such spaces must be less than $15,000 per year or $4,000 per quarter, and you must be in compliance with the Business and Tax Regulations. These regulations include maintaining records for a minimum of five years and some form of identification, such as a decal or hangtag, for authorized parkers. You are ineligible for the amnesty program if you are delinquent on any taxes or deficiencies with the city.
The qualifying operator must file an annual parking tax report and provide the Tax Collector with any records requested. As discussed in previous articles on the legislation,
small parking operators are no longer required to obtain a police permit, Certificate of Authority, bonding, or to be fingerprinted.
The city is still working out the details of how to report going forward and whether small operators will be required to obtain a Business Registration Certificate. Many of you may already have one. It is required for all residential buildings with four or more units or commercial and mixed used property owners, but not for buildings with three or fewer units.
The Tax is on the Renter, Not the Owner
You will be required to collect and remit on an annual basis 25% of the parking rent collected. The city will send you an annual statement to report your income and pay the parking tax. Note that the parking tax is actually a tax on the renter of the space or garage, not on the owner. It’s similar to a sales tax. Stores collect sales tax and remit it to the state. You, as the parking garage operator, collect the tax and remit it to the city. You should increase your parking rates 25% to cover this added cost. Inform the renter of the parking space that you are now required under city law to collect and remit this tax. If they have a complaint, let them take it up with the city.
A Word to the Wise
We have been informed that the Tax Collector’s Office is actively enforcing the parking tax ordinance to determine if property owners are in compliance by, among other strategies, checking on-line advertisements such as Craigslist to find parking spaces being rented. If you were unaware of the parking tax law and rented parking spaces to non-occupants in the past, now is the time to come clean. You have been warned. Continue to ignore the law at your own peril.
Reprinted with permission of the Small Property Owners of San Francisco Institute (SPOSFI) News. For more information on becoming a member of SPOSFI or to send a tax-deductible donation, please visit their website at www.smallprop.org or call (415) 647-2419.