San Francisco’s payroll expense tax will not be phased out this year as originally planned.
Under the terms of the Gross Receipts Tax Ordinance, the payroll expense tax was supposed to be replaced by a gross receipts tax via a phasing process that started in 2014.
The payroll expense tax applies to all compensation paid to employees for services undertaken within San Francisco city limits, which includes wages, salaries, bonuses, and other benefits or property given in exchange for those services. Similarly, the gross receipts tax applies to all of an employer’s gross receipts that are earned from operations taking place within the city.
Under the original plan, as the amount paid in gross receipts tax increased, the payroll expense tax would decrease, with the aim of eliminating it entirely during 2018.
But according to the San Francisco Treasurer and Tax Collector, revenue from the gross receipts tax has been lower than expected, which means the payroll expense tax will now be kept in place during 2018 at a rate of 0.38%.
As a result, tax services and software provider Ryan warned that companies with operations and/or employees who work within the city must continue reporting and paying both taxes as applicable.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
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San Francisco’s payroll expense tax will not be phased out this year as originally planned.
Under the terms of the Gross Receipts Tax Ordinance, the payroll expense tax was supposed to be replaced by a gross receipts tax via a phasing process that started in 2014.
The payroll expense tax applies to all compensation paid to employees for services undertaken within San Francisco city limits, which includes wages, salaries, bonuses, and other benefits or property given in exchange for those services. Similarly, the gross receipts tax applies to all of an employer’s gross receipts that are earned from operations taking place within the city.
Under the original plan, as the amount paid in gross receipts tax increased, the payroll expense tax would decrease, with the aim of eliminating it entirely during 2018.
But according to the San Francisco Treasurer and Tax Collector, revenue from the gross receipts tax has been lower than expected, which means the payroll expense tax will now be kept in place during 2018 at a rate of 0.38%.
As a result, tax services and software provider Ryan warned that companies with operations and/or employees who work within the city must continue reporting and paying both taxes as applicable.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
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