Business Licenses and Permits

In an update to a blog story from September 3^rd, the Manhattan Beach, California City Council concluded that realtors will not be required to pay business license tax.

Earlier in the month after considering a recent state report which indicated that real estate agents are considered independent contractors for federal and state tax filings, and a recent audit of independent contractors concluded that a large percentage were not paying business license tax; the City Finance Department proposed that the council consider extending the tax to realtors.  The council decided to conduct further research, reach out to the community to gather input, and decide the issue on September 21^st.

Thursday’s edition of the Manhattan Beach Patch reports that despite a large turnout from the real estate community, the matter was decided virtually without public debate.  As city finance director Bruce Moe took the podium to answer questions from the council, Mayor Mitch Ward quickly ratcheted down the palpable angst and emotion in the packed chamber by stating “We don’t think you’ve reached out enough…to the Realtor community.”  Councilman Nick Tell quickly commented, “Unless there is a desire to take it further, we can just keep the tax the same.”  After a second from Councilwoman Portia Cohen, Mayor Ward brought closure to the issue by directing his staff not to collect the tax.

David Kissinger, director of government affairs for the South Bay Association of Realtors told the Patch that realtors in attendance may have been disappointed that they were denied the opportunity to comment.  However, realtors were pleased with the outcome.

The events in Manhattan Beach are a prime example of the debate raging between politicians and the business community about how to (re)establish a close symbiotic relationship.  Ultimately, I personally believe the council reached the correct conclusion.  When either businesses or government act only in their self interest, the outcome is often negative for both.  While government agencies must continue to seek ways to balance budgets and remain viable, the community suffers if their plans suffocate local businesses.  Conversely, businesses must recognize the benefits they enjoy from their location; and, therefore should expect to support and contribute to their communities.

Steve Elias, Team Leader-Business License Research Team, Corporation Service Company