San Francisco’s COVID-19 Pandemic “Relief”

In addition to the COVID-19 pandemic relief federal and state authorities have provided to taxpayers in the form of delayed tax return filing and payment deadlines (see Pillsbury’s 3/21/20 Legal Alert co-authored by Carley and Mike, among others), San Francisco has also issued some relief in connection with its core local business taxes, including its Gross Receipts Tax, Payroll Expense Tax, Commercial Rents Tax and Homelessness Gross Receipts Tax, or collectively the “San Francisco Local Business Taxes.”

However, unlike the federal and state relief, which applies to all taxpayers, San Francisco has opted only to provide relief for a subset of what it considers to be “small businesses in San Francisco who are experiencing a slowdown in business as a result of COVID-19, the disease caused by novel coronavirus.” Specifically, the San Francisco Office of the Treasurer & Tax Collector is deferring quarterly estimated tax payments of the San Francisco Local Business Taxes that would otherwise be due on April 30, 2020 by taxpayers or combined groups with combined San Francisco gross receipts in calendar year 2019 of $10 million or less. These tax liabilities must instead be paid along with annual tax payments for tax year 2020, which will generally be due by March 1, 2021.

Quarterly estimated tax payments of the San Francisco Local Business Taxes that would otherwise be due on April 30, 2020 by taxpayers or combined groups with combined San Francisco gross receipts in calendar year 2019 of over $10 million still need to make these payments on time. In other words, these taxpayers are not entitled to receive any COVID-19 pandemic relief relative to San Francisco Local Business Taxes.

Not only are taxpayers with more than $10 million in 2019 San Francisco gross receipts excluded entirely from this relief, but the potential relief being offered in connection with the Homelessness Gross Receipts Tax is extremely limited once you take into consideration how the primary component of that tax is triggered (there is also an ancillary administrative office component to the tax that has different triggers). The Homelessness Gross Receipts Tax is imposed on anyone engaged in business in San Francisco that receives or is a member of a combined group that receives more than $50 million in “total gross receipts.” In the Homelessness Gross Receipts Tax ordinance, “taxable gross receipts” is defined to include gross receipts “attributable to the City.” So, the Homelessness Gross Receipts Tax only applies to taxpayers with more than $50 million in San Francisco gross receipts, yet the offered COVID-19 relief only applies to taxpayers with less than $10 million in 2019 San Francisco gross receipts. From a practical standpoint, there are not likely many taxpayers (if any) that were planning to make a quarterly estimated tax payment on April 30, 2020 for the primary component of the Homelessness Gross Receipts Tax that qualify for San Francisco’s COVID-19 relief.

Notwithstanding the above limitations, for any San Francisco taxpayer with less than $10 million in San Francisco gross receipts, they should be mindful of this development.