Last Sunday, I realized that I didn’t get my mail from Saturday so I went downstairs to get my mail from my mailbox. I only had two letters, one from a credit card company asking me to open a new account with them and one from the city of Los Angeles’s Finance Department. I wasn’t sure what it was and I had a feeling that it was important so I opened it right away.
When I saw what it was I had to sit down, gather my thoughts, and try to figure out what the hell I was going to do. The city sent me an estimated tax assessment and bill for $1659.80 for my personal business ownership of Julia Records and Judessa Music. I was lost and confused not knowing where I was going to get the money and where the city got this number from since I haven’t even broke the $200 barrier for cash brought in from my music this year. I read the entire bill and two things stood out: it was due no later than December 8 and, if I didn’t pay it in full, I could be charged with a misdemeanor. I couldn’t believe it! How was I going to get this money and why was I being charged an amount that was nearly $1700? I was furious as I am sure you can imagine.
I went to research the bill on the city’s website and was breaking down each section. Each made sense, except one: the Basis for Tax. In the box for my bill the number was 109,803. I had no idea what that stood for. I wasn’t sure if it was a reason code or a dollar amount. That was the one section/box that was not explained on their website. All the other sections were explained in full detail. I wasn’t sure what to do. I was ready to sell a guitar or two. I couldn’t sleep and was cursing the city and all its rules and greediness. I tried doing other tasks but my mind was focused on the letter. I couldn’t call or contact the city for it was Sunday and I would have to wait until 8am the next morning.
At 830am I called the Finance Department and spoke with a representative. I explained the situation and he told me that the city sent me the bill because when someone is running a business in the city of Los Angeles, you need to pay taxes for the amount the business made that year. I told him I wasn’t aware of that and then asked why am I being charged $1659.80? I explained that made less than $500 last year and that the amount was too much for me to handle. I asked him what the Basis for Tax box was? He looked it over (as he pulled out a copy from his computer) and told me that was the city’s estimate of my income for the year from my personal business. I laughed out loud and told him that I wish I had made that much last year. He told me because it was just an assessment of my income, all I had to do was bring in a copy of my 2007 tax forms and the bill would be adjusted properly. I asked him if he knew what the amount would be and he said it could be from $10 to $150. A wave of relief came over me and I thanked him. I would be happy paying $150 compared to $1700.
On Thursday I went to the Finance Department and showed them my 2007 tax forms. The receptionist looked it over and told me that I would have to pay the city a tax based on $6487 because that was my Gross Receipt total. She showed me the number from my tax return and began to process my bill. I told her that it wasn’t the right amount because I brought in less than $300. She began to get upset and rude with me and said that I was going to have to pay based on that number. I asked her to explain to me in more detail how she got the number. Her voice started to get louder as she was getting frustrated and she showed me a line on one of the forms I gave her an she said this is number from the schedule C, and that is what you will have to pay. I looked it over and told her that was the Schedule SE number not C; she looked it over, smiled and said, “Oh, I must be going blind, I was looking at the wrong line, you owe nothing.”
Of course I wanted to call her a stupid idiot, but I played it professionally so she can save face and told her, “Well the lines and numbers are so small, it is difficult to see. I am just happy we took care of this.” I thanked her told her to have a great weekend and left.
I was relieved that I owed nothing since I really didn’t make anything. It seemed to me that the city tries to take advantage of its business owners, especially in the Basis for Tax section. Why can’t they add a dollar sign to the number? Why isn’t it explained as all the other sections are? I have a feeling that many business owners see the bill and pay it because they don’t want to “fight city hall” or deal with the trouble from the less-than-adequate people working for the city (I know not every employee is inadequate but some just don’t believe they make mistakes). Where did the city get the idea that I brought in $109,803? Though I am not sure what is worse: the “estimated” bill from the city or the receptionist who was giving me a hard time because she thought she was right. How many people has she screwed over for not reading the tax forms right? Who audits them?
The frustration of this manifestation…