LA City Tax Filing Requirements
1. Who Must File LA City Tax? (BTRC)
Freelancers & 1099 Contractors: If you receive a 1099, the City of LA views you as a "business of one."
- Home-Based Businesses: Even if you just work from your laptop in your apartment.
Rental Property Owners: Generally, if you rent out 4 or more residential units, or any commercial property, you must file.
Ride-Share & Delivery: Drivers for Uber, Lyft, or DoorDash.
2. The "Physical Presence" Rule
You are considered "engaged in business" in LA if you meet any of these conditions:
- 7-Day Rule: You physically perform work within the city for 7 or more days per year.
- Transaction Rule: You consummate 4 or more transactions within the city per year.
Physical Location: You have a fixed place of business (office, store, or home office) inside city limits.
3. Key Exemptions (The "$100k Rule")
While many people have to file, not everyone has to pay. The most common exemptions are:
- Small Business Exemption: If your global gross receipts (total income from everywhere) are under $100,000, you are exempt from the tax— BUT only if you file your renewal on time.If you miss the deadline, you lose the exemption and must pay the full tax plus penalties.
- Creative Artist Exemption: Individuals doing "creative activities" (writers, actors, musicians, etc.) are exempt on the first $300,000 of gross receipts, provided they file on time.
- W-2 Employees: If 100% of your income is reported on a W-2, you are generally not subject to this tax.
4. Deadlines & Penalties
- Standard Deadline: February 28th each year (for 2026, it is March 2nd since Feb 28 falls on a weekend).
The Penalty: If you don't file, the city eventually sends a "Tax Notice" based on an estimate of what they think you owe. These estimates are usually much higher than the actual tax, and they include a 40% penalty plus interest.
Pro Tip: The City of Los Angeles identifies "non-filers" by cross-referencing State (FTB) and Federal (IRS) records. If you filed a Schedule C on your 1040 and used an LA zip code, they will eventually find you.
LA City Tax: Frequently Asked Questions
1. I received a tax notice from the City of Los Angeles. Am I being audited?
Not necessarily. The City of LA cross-references IRS and State records. If you filed a Schedule C (1099 income) using an LA address but haven't filed a local business tax return, they automatically generate a notice. We can help you respond to these notices and often get the estimated penalties reduced or removed.
2. I made less than $100,000. Do I still need to file?
Yes. This is the most common mistake. While LA offers a "Small Business Exemption" for those making under $100k, it is not automatic. You must file a timely return to claim the exemption. If you don't file, the city will bill you for the full amount plus a 40% penalty.
3. I am a W-2 employee; why did I get a notice?
If you have any side income (1099, freelance, consulting, or even certain rental income) in addition to your W-2 job, you are considered a business owner by the City. If you believe the notice was sent in error, we can help you provide the necessary documentation to clear your record.
4. What is a BTRC?
BTRC stands for Business Tax Registration Certificate. It is essentially your "account number" with the City of Los Angeles. If you don't have one, we can help you register and get compliant in one step.
5. When is the deadline to file?
The annual deadline is February 28th. However, to take advantage of our $99 Early Bird Special, you must submit your information to us by February 10th. After that, our standard filing fee is $199.
6. What happens if I just ignore the notice?
Ignoring the City of LA is a recipe for high interest and aggressive collection efforts. Penalties can climb as high as 40% of the principal tax amount. It is much cheaper to file a return now than to fight a collection agency later.
Need Help?
Don't let tax notices ruin your week. Let the experts handle the paperwork for you.
Related Articles
Tracking Your IRS and CA Tax Refunds
Tracking Your IRS and CA Tax Refunds: Everything You Need to Know Tax season can be a stressful time for many individuals, but tracking your tax refunds doesn't have to add to the anxiety. Both the Internal Revenue Service (IRS) and the California ...How to make Tax Payments to the IRS and CA FTB
Understanding Your Tax Obligations: Before making any payments, it's crucial to understand your tax obligations. This includes knowing the type of taxes you owe (income tax, self-employment tax, etc.), the applicable deadlines, and the amount owed. ...