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HomeMy WebLinkAbout2013-11-19; City Council; 21437; Appeal License Requirement by Financial DataCITY OF CARLSBAD - AGENDA BILL 16 AB# 21.437 DEPT. DIRECTOR MTG. 11/19/13 APPEAL OF BUSINESS LICENSE REQUIREMENT CITY ATTY. DEPT. FIN BY FINANCIAL DATA SOLUTIONS CITY MGR. RECOMMENDED ACTION: Adopt Resolution No. 2013-272 denying the appeal of the business license requirement by Financial Data Solutions. ITEM EXPLANATION: The City of Carlsbad requires all businesses that wish to commence, carry on or engage in any business within the corporate limits of the city to have a valid business license. The Carlsbad Municipal Code does allow for certain companies to be exempt from paying business license taxes. The three areas of exemption are: • Any business exempt by virtue of the United States Constitution or statutes of the United States or of the State of California from the payment of such taxes as are prescribed in this title; • Any business conducted under a written franchise from the city; • Any business which is conducted managed or carried on only for charitable, fraternal or educational purposes, or from which profit is not derived, either directly or indirectly, by any person. Additionally, if a Carlsbad company holds a business license in another city, the Carlsbad tax is reduced or negated by the amount ofthe tax paid to the other city, to prevent double taxation. Financial Data Solutions is appealing the requirement to obtain a business license. In the attached letter John Gill, president of Financial Data Solutions, asserts: • His business is done solely on the internet. • No clients visit his business/residential address. • He is an independent contractor for a software company based in Marietta, Georgia. • His business leaves virtually no footprint in Carlsbad. Even if a business is exempt from paying the business license tax, the business is still required to obtain a business license. Thus, the issue is whether Financial Data Solutions should pay the full licensing fee (estimated at $80 per year), a partial fee (reduced or negated), or no fee (applicable exemption applies). DEPARTMENT CONTACT: Colette Wengenroth 760-602-2468 colette.wengenroth@carlsbadca.gov FOR CLERK USE. COUNCIL ACTION: APPROVED CONTINUED TO DATE SPECIFIC • DENIED • CONTINUED TO DATE UNKNOWN • CONTINUED • RETURNED TO STAFF • WITHDRAWN • OTHER - SEE MINUTES • AMENDED • REPORT RECEIVED ° 1 Page 2 of 2 Further, the Business Ucense Ordinance does not make a distinction whether the business is predominately the traditional "brick and mortar" establishment versus an online activity; or whether the business is carried on by an owner or independent contractor. Staff determined that Financial Data Solutions is required to obtain a business license and that it did not meet any of the exemption criteria for a reduced or no business license fee. Financial Data Solutions appealed this determination to the Administrative Services Director, the city's license collector, to be exempt from the business license requirement. After reviewing this matter, the Administrative Services Director concluded that he could find no sound argument to waive this requirement. Section 5.04.090 of the Carlsbad Municipal Code allows that in the event of a difference of opinion between the applicant and the city license collector, the applicant may appeal to the City Council to hear and determine such matter. The Administrative Services Director recommended this course of action to Financial Data Solutions. FISCAL IMPACT: Financial Data Solutions business license tax is estimated at $80 per year. ENVIRONMENTAL IMPACT: Pursuant to Public Resources Code Section 21065 and CEQA Guidelines Section 15378, this does not constitute a "project" within the meaning of CEQA and, therefore, does not require an environmental review. EXHIBITS: 1. Resolution No. 2013-272 granting/denying the appeal of the business license classification by Financial Data Solutions. 2. Letter from Financial Data Solutions. Exhibit 1 4 7 19 20 21 22 25 26 27 28 1 RESOLUTION NO. 2013-272 2 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, 3 CAUFORNIA, ON THE BUSINESS UCENSE REQUIREMENT FOR FINANCIAL DATA SOLUTIONS ^ WHEREAS, the city has received a request to appeal the business requirement for 6 Financial Data Solutions; and WHEREAS, an appeal hearing was held before City Council; and WHEREAS, City Council considered the argument, evidence and testimony of all persons IQ interested in the matter, weighed the evidence in this matter and after careful consideration of 11 the matter; NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows that: 1. The above recitations are true and correct. 12 13 14 15 15 2. The Council finds that Financial Data Solutions is required to obtain a business 17 license. i: 3. That the appeal of Financial Data Solutions to waive or reduce the amount of the business license fee is denied {granted/denied). II 23 // 24 // // // 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PASSED, APPROVED AND ADOPTED at a Regular Meeting ofthe City Council ofthe City of Carlsbad on the 19*^ day of November, 2013, by the foiiowing vote to wit: AYES: NOES: Council Members Hail, Packard, Wood, Blackburn and Douglas. None. ABSENT: None. ATTEST: BARBARA ENGLESONfCity Cierk City Council April 16, 2013 Cityof Carlsbad Exhibit 2 1635 Faraday Ave Carlsbad. CA 92008 RE: Business License Dear City Council: I am filing this appeal of your requirement for having a business license as I do not fell that a license should be mandatory for all business just because they exist. My business is done sole on Internet software and we have virtually zero client visits to our "residential business" and rarely meet with a client at their office. We have only two clients of some 30+ clients who have locations in Carlsbad and there is little need to visit them ever. I work from my home processing financial data as an "independent contractor" for one software company based in Marietta Georgia. All of my work for them Is done over the internet and I have never had any visitors from them to my "residential office." The closest client ofthe software firm is in Orange County and I have never even met them in person. The vast majority of the software users are on the East Coast. The only reason we are incorporated In California is that my account suggested we do so for tax reasons. My wife also processes financial data using QuickBooks web and desktop software. She also never has visitors to our home, and her clients are all outside of Carlsbad except two. We, therefore, put no stress on the roads, parking, fire, police, or other departments. So, I find it incredulous that I have to obtain a business license as there is not one iota of impact on city services from my work as mentioned in your brochure. If you think about the letter ofthe law vs real life there is a huge absurdity with regard to a business transacted over the internet that solely involves data processing. Let me give two examples of the absurdity. First off, I travel a fair amount and do my work on my laptop. Under the letter ofthe law I should have a business license in Mammoth Lakes when I co skiing for a week. Should I also have a license when I work on the beach in Encinitas using my cell phone as a WiFI hotspot. Or, when we have driven to the Los Angeles Airport, I do work on my laptop again using my phone and by the letter of the law should I have a business license in every city we pass through? Lastly, I certainly can see that a restaurant, a hotel, or a retail store creates work for the city and should have a license, but my business never has and never will. Hopefully the council will agree to an exemption and you will understand that there was no "malice aforethought" regarding our oversight in not getting a business license earlier. Please contact me with anv questions and thank you for your understanding. Johns. Gill President Financial Data Solutions 3045 Via Romaza Carlsbad, CA 92009 760/822/9304 Financial Data Solutions Business License Appeal Colette Wengenroth November 19, 2013 Business License Requirement •All companies conducting business in Carlsbad are required to be licensed •Tax contributes to the city’s infrastructure and public safety •License identifies all businesses legitimately doing business in the city Exemptions •Exempt by virtue of the United States Constitution or the State of California •Under written franchise from the city •Not for profit charitable, fraternal or educational business Financial Data Solutions Business License Appeal •Home based business •Independent contractor for a Georgia based software company •Processes financial data on the internet •No clients visit the business •The business leaves virtually no footprint in Carlsbad Recommendation •Financial Data Solutions indicates its business address to be in Carlsbad •Ordinance makes no distinction between a “brick and mortar” establishment versus online •Fair and consistent application of tax requirement •Staff recommends that the exemption be denied Financial Data Solutions Business License Appeal Questions?