Burlingame’s fiscal interests will go toe-to-toe with Peninsula brokers’ and business owners tonight as the city decides whether to tax out-of-town firms and independent contractors for conducting business within city limits.
Burlingame makes nearly half a million dollars by taxing each of its businesses $100 per year for a license to operate in the city. But there are “numerous” businesses that are not paying the tax, said Finance Director Jesus Nava.
Business owners and real estate brokers say they are being targeted unfairly to pay the tariff. The tax would require payment from any business or independent contractor that makes at least one sale in Burlingame during the year, regardless of the location of headquarters.
John Giesaker is a broker who would be subject to the tax despite having his Prudential California Realty office in San Bruno. After a single Burlingame home sale, Giesaker would have to fork over the $100 annual fee. Under fee regulations, each broker in a real estate brokerage company, for example, would be subject to the fine along with the company itself.
“We’re not about avoiding fair taxes we should be paying; we were really concerned we would be taxed unfairly,” said Giesaker, one of roughly 3,600 members of the San Mateo County Association of Realtors, which has been outspoken against taxing brokers.
The council tonight could approve the hiring of an auditing firm that would locate each company doing business in Burlingame that has not been paying the tax.
Businesses would be subject to the $100 fee and a $35 first-time application fee when the enforcement period begins in March, Nava said. If business owners wait longer than 30 days to pay, they must also retroactively pay for taxes in previous years, up to three additional back years for a maximum total of $435.
The city would not know how much money it will earn from the delinquent tax fees until the audit is complete but Nava believes it could roughly double the $480,000 the city currently earns from the tax.
That extra income would be welcome for a city in which officials are contemplating cutting $2 million from its budget to pay for storm drain improvements.
Businesses headquartered in the city do not appear to mind the tax. The Burlingame Chamber of Commerce recently held a meeting with officials from the city and Municipal Auditing Services, a Fresno-based firm that would handle the audit.
Business license tax causing a stir
$480,000: Current city revenue from licensed businesses
$100: Annual fee for anyone doing business in the city
$35: One-time registration fee
3: Maximum years of back-pay that can be enforced
30: Days in amnesty period when businesses could avoid back payments
March 1: Date businesses would have to start paying
3,127: Licensed businesses in Burlingame
1,700: Licensed businesses not in Burlingame
*Source: Finance Department, San Mateo County Association of Realtors.