Alatorre Proposes Exempting Home-Based Writers From Tax

Eager to forestall further lawsuits by writers who are angry over new city laws that would force them to pay city fees and taxes to work at home, the chairman of the City Council’s Budget and Finance Committee proposed Tuesday that the statute be amended.

Councilman Richard Alatorre told his committee that Los Angeles’ home occupation and business tax laws should specifically exempt writers and others who work out of their homes without any impact on their neighborhoods.

“I think the writers made some fairly good arguments about this,” Alatorre said. “All we’re talking about is equity. . . . I think this should be debated. It’s healthy.”

The home-based business law, which was introduced by Councilwoman Laura Chick, was intended to legalize home-based work by changing zoning laws. People who work at home also are required to pay city business and professions taxes.

But the home-based business law, which took effect in January, sparked an angry backlash by a coalition of entertainment and literary groups, including screenwriters, actors, artists and musicians, who argue that they should be exempt from fees and some city taxes.

The Writers Guild of America West sued the city in federal court, but that lawsuit was dismissed. After Alatorre introduced his motion Tuesday, writers’ representatives said they would postpone filing suit in state court pending the council’s actions.

“I think this is a turning point in our dialogue with the city on this issue,” said Mark Ryavec, who is lobbying the council for the Writers Guild. “It’s a very positive development. It’s encouraging.”

The coalition has pressured council members and mayoral aides, seeking their intervention. Alatorre’s motion, in fact, was based on the coalition’s proposals.

But although Chick, who has come under fire for her efforts on the home occupation ordinance, said she will be interested to learn more about possible exemptions, she said she wants to understand the financial implications of such a move.

“I think it’s premature for me to say it’s a great idea,” Chick said. “I think there are some broad implications here. It would be very business-friendly for us to tell all of our businesses they didn’t have to pay taxes.”

Under Alatorre’s motion, which was co-sponsored by Hal Bernson, chairman of the Planning and Land Use Management Committee, anyone working at home who meets four conditions could be exempt from the fees and taxes. That includes people who don’t have frequent clients or deliveries coming to their homes, who don’t employ more than one person who doesn’t live in the home and who don’t advertise to the public.

The proposal seeks draft language to amend the laws within a month. Both the Budget and Finance and Planning and Land Use committees are likely to review the issue before it goes before the full council.

The mayor’s office, which also has been involved, supports the concept of treating writers differently, said Deputy Mayor Rocky Delgadillo. “However, we do believe that writers who are writing for a profit should be taxed . . . it’s an issue of what rate and what level,” Delgadillo said. “That’s where we’d like to enter the dialogue.”

If a writer based at home makes $1 million on a movie script, for example, Delgadillo said, “We’d like to capture some of that.”

But writers’ lobbyists say those people earning large amounts for their work already are paying taxes on it. They say the ordinance and taxes are unfair.

For most of the coalition members, the money isn’t significant, Ryavec said. “We’re not in this for the money,” he said.

About 5,000 screenwriters are registered in the city, Ryavec said, adding that about half make no money through scripts in a year. But he said they still would be required to pay $175 to the city to work in their homes.

And, the city could send inspectors to check on permits, taxes and even review work files and other materials.

“There will be inspectors on people’s front doorsteps,” Ryavec said. “Neighbors could turn in neighbors.”