^^^ OK this is actually 'better' news than my wild guesses. Although any news related to taxes is always bad !!! This inquiry comes from the City of LA. office of Finance. See
http://cityapplications.com/business...osangeles.html
They are apparently seeking ...
- the fees required to register / license your ( former ) LA based 'business' for 2013 ( and will also expect the same for 2014 since you still lived in LA for the majority of that year ). This probably involves a couple of hundred bucks per year.
- an additional income tax percentage being charged on your LA based 'business' earnings for 2013 ( and will also expect the same for 2014 ) in the form of LA city business tax. From what I could find on the internet, the city tax rate for most 'personal service' businesses is 3.56%. So the amount of money involved could be a few hundred dollars to several thousand dollars per year, depending on what your reported earnings levels actually were.
Thus the type of financial info the city of LA is going to want to see involves how much of your business earnings actually originated within LA city limits, versus how much was earned elsewhere in California or in other states. This will determine how much of your reported income will potentially be subject to the additional 3.56% LA city business tax. If you operated a camming business, 100% of your business activities took place from your LA address thus 100% of your earnings will be subject to LA business tax. However, if you operated an exotic dancing business, only earnings from strip clubs located within the LA city limits should be subject to the additional 3.56% LA business tax.
If you haven't kept this type of detailed earnings info, the city of LA is probably going to try to collect their 3.56% business tax on all of the income you previously reported to the Cal FTB. As your letter states, the LA office of Finance will gladly calculate the amount of additional tax money they expect you to pay, and send you a bill for it, based on the presumption that ALL of the income you reported to the Cal FTB is subject to LA city business tax.
What the letter doesn't specifically say is how many years the LA office of Finance is going to 'go back'. If you only started to earn money as an LA resident in 2013, they can't go back further. But if you lived in LA in 2012, 2011 etc. and also reported 'business' earnings to the Cal FTB in 2012, 2011 etc., the LA office of Finance may try to collect business registration / license fees and 3.56% LA business tax for those previous years as well. And there is no doubt that the LA office of Finance will absolutely try to collect registration / license fees and 3.56% business tax on your reported 2014 'business' income ... although this might not happen right away since they have just now received the 2013 Cal FTB tax return based info on which their letter was based.
There's no question that you'll have to complete and submit the LA business registration form and pay the applicable business registration / license fees.
So the first question is whether or not you have kept sufficiently detailed business records, and/or have a sufficient appetite for 'stomach acid', to attempt to prove that some portion of your prior year earnings actually originated outside LA city limits ... thus being exempt from the additional 3.56% LA city business tax. Your answer to that question will determine whether you need to follow the first bullet point in the letter, or the second bullet point in the letter ... depending on whether you're willing to let the City of LA apply business tax to all of your reported income, or whether you're going to 'argue' that some portion of your reported income is exempt from LA business tax because it was earned via business activities which took place outside LA city limits.
As a side note, now I understand better why my accountant advised me to never 'work' in California / LA !!!
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