SAN JOSE -- The San Jose City Council on Tuesday unanimously approved dropping a $38 annual business tax exemption fee that youth sports officials had called burdensome.

But while the city will drop the fee starting in June, it still plans to collect up to four years' worth -- $148 -- from those who haven't been paying it. San Jose officials said that waiving the fee retroactively could subject the city to refund claims totaling more than $1 million from those who already had paid it.

Still, Councilman Sam Liccardo said the move would ease the city burden on youth sports officials, umpires and others who do "good things in the community" for very little pay.

"We do have a way of getting in the way," Liccardo said. "This is a great step forward."

San Jose charges an annual business tax that starts at $150 for those with up to eight employees. Business taxes, which also include special levies on card room and marijuana dispensary receipts, generated about $39 million in city revenue last year. By comparison, the annual library operating budget is $32 million.

The city allows exemption from paying the tax for people with part-time or side jobs such as home music teachers or day care operators, craft peddlers, flea-market sellers or any others earning less than twice the federal poverty level in a year, about $22,000. But to qualify for the exemption from the $150 tax, San Jose has required them to file a request and pay a $38 processing fee.


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The latest issue over the tax arose in the midst of a city business tax "amnesty," aimed at encouraging delinquent filers to register and settle up with the city by waiving past-due penalties. The City Council recently extended the amnesty sunset date from late March through May. The city had sent notices to those believed to owe business taxes based on information from state tax authorities.

But the notices alarmed and upset many youth sports officials and umpires who complained that even the $38 annual exemption processing fee was too much for a side gig they described as practically volunteer work for which they might net no more than a few hundred dollars a year after subtracting transportation, training and other out-of-pocket expenses.

San Jose officials said dropping the fee would cost the city about $235,000, but that they expect additional business tax revenues from the amnesty program will offset that loss. They said the city would prefer to have exempt businesses register their activity with the city at no cost in order to capture the number of self-employed individuals doing business in San Jose.

Contact John Woolfolk at 408-975-9346. Follow him at Twitter.com/johnwoolfolk1.

SAn Jose Business Tax
  • San Jose charges a business tax starting at $150 a year for up to eight employees.
  • The tax generated about $39 million in 2012; by comparison the library operating budget is $32 million.
  • Individuals with side jobs earning less than twice the federal poverty level, about $22,000, qualify for exemption from the tax, but still had to pay a $38 annual processing fee and file business income paperwork with the city.
  • The City Council has extended a business tax amnesty through May in which delinquent filers may settle up without paying penalties.
  • The City Council on Tuesday approved dropping the tax exemption fee starting in June, but those who hadn't paid it still owe for the previous four years, as much as $148.