STEP ONE: Cue up this music, then read on:
Congratulations, you have received form AB 63, brought to you by SB 1146 aka The Los Angeles Tax Enforcement Program! They can be reached at (213) 473-5901. What they do is this: they go around calling everyone in Los Angeles who had 1099 income on their tax returns, because the city thinks they are businesses that should pay city taxes!
You: “But I’m not a business, I’m a writer/actor/director/whatever!”
I KNOW THAT’S EXACTLY WHAT I SAID TOO!
Here’s what you have to do: fill out the form they sent you (or find a new application online). For income, ONLY report money from 1099 earnings, and even then, only report money earned from businesses with address in Los Angeles. There are a hilariously small number of companies based in Los Angeles itself. There’s a list of zip codes on the lacity/finance website, but it basically excludes WeHo, Hollywood, Glendale, Burbank, Santa Monica, and anyone NOT LA. So your 1099 income might be… small. It will probably be ZERO.
When you submit your application, be sure to include a letter stating that you are a “creative artist” as defined by LAMC 21.29.(b) There is a $300,000/year allowance for the likes of you, so don’t sweat it.
Mail that stuff in! Relax! Have some Oreos or something!
What happens next is magical. You are registered as a creative artist! They should leave you alone in the future. But the city will send you a bill for BACK TAXES, and depending on your numbers from previous years, that bill might be small or large. Again, it will probably be zero. But no matter what, you must pay this money. Sorry.
But!
If you write them a check for the principle and the interest, and then add a letter that says “I was unaware of these city taxes, so please waive the penalty,” they will waive the penalty! As if by magic! You will save 40 percent! THAT IS CRAZY HOW MUCH THE PENALTY IS, AND HOW EASY IT IS TO NOT PAY IT!
But odds are you earned 0 dollars on those Los Angeles-based 1099s, because corporations are smarter than governments. The End.
Thank you so much for this info! I received the letter, AB63 / SB1146, on September 2011. When I was unemployed, I did some 1099 jobs and attempted to run a laptop repair business ( did not profit! )
Thanks!