L.A.’s Home Businesses Show Their Clout

Cynthia Loy Darst expected to become a legal city business by handing over a check for $1,000 in back taxes during a ceremony Thursday in her North Hollywood backyard.

Instead, Loy Darst only had to fork over $131.43.

The unexpected tax break came about after city officials, berated by angry business owners, changed their position on the city’s controversial new home-based business registration.

“We really want to succeed in making sense,” Councilwoman Laura Chick told home-office advocates gathered around Loy Darst’s pool. “What you’re witnessing is your voices were heard and were responded to.”

Instead of requiring newly legal home-based businesses to pay up to three years’ back taxes to register, the city now wants to waive all past taxes, penalties and interest. Under a motion to be introduced at the City Council meeting today, the deadline for the penalty-free registration would also be extended to Sept. 5.

Loy Darst, a career and life coach whose 5-year-old business is called Limitbusters, was given a minimum tax bill until the council can vote Tuesday on the changes proposed by Chick.

For more than two years, the San Fernando Valley councilwoman battled City Hall opposition to legalization of home businesses in residential neighborhoods. Her work paid off in November when the City Council finally agreed to recognize home-based businesses.

Such firms would be charged a $25 yearly registration fee plus the city business tax. That tax is tied to the previous year’s gross receipts and a rate based on the type of business in which the company is engaged.

But home-based business owners howled when they learned that, like other businesses, they would be assessed for up to three years’ past unpaid taxes. That’s unfair, they argued, because home-office firms were prohibited from being in business during those years.

Chick immediately proposed a motion to remedy what she called the Catch 22. She is also drafting a motion to be introduced within a week that would address writers.

“Quite honestly, I thought writers were exempted because they were protected by 1st Amendment rights” of free speech, Chick said Thursday.

City Clerk Mike Carey, who attended the poolside ceremony along with Mayor Richard Riordan, said city officials believe writers can be taxed. The city attorney’s office is researching the issue, he said.

Meanwhile, Chick said the grumbling she has heard from some home-office owners over payment of a gross receipts tax is out of proportion to the actual tax. An individuals grossing $100,000 would probably pay only $150 in city taxes, she said.

The truth, Chick said, is that “the city of Los Angeles is never going to be, in our lifetime, a city where no one pays taxes.”

For more information on home-based business permits, call the Los Angeles City Clerk’s Tax Amnesty Office at (213) 368-7000.