Business Tax Frequently Asked Questions

 

Who needs to pay the Business Tax and where do I register my business to pay the Business Tax?

All Non-Exempt businesses operating in the City of Palo Alto are required to file a quarterly business tax return and pay all applicable taxes.

The online filing and payment portal is available to create your Business Tax account and to submit your tax return. If your business is already registered with the Business Registry Certificate program, you can verify your credentials to create an account. 

Please visit paloalto.hdlgov.com to log in.

Do I still need to register annually with the City’s Business Registry?

Yes, all businesses that operate in a fixed place of business are required to register with the City in the Spring each year. The Business Registry, Business Tax, and Downtown Business Improvement District (if applicable) are merged into one platform. Please visit PaloAlto.hdlgov.com.

Is my business exempt from paying the Business Tax? If so, do I still need to file a tax return?

Businesses that are exempt (PAMC 2.37.070) must still file to note an exempt status for the Business Tax and register in the City’s Business Registry Certificate Program, exempt businesses include:

  • Non-profit entities (including medical and educational institutions)
  • Banks and financial institutions that pay the California in-lieu tax
  • Grocery stores
  • Businesses that occupy or use 10,000 square foot or less of operating space
  • Transitory businesses, operating for less than 90 days in one calendar year (not required to file Business Tax or Business Registry)

My business is a residential property management company or owns an apartment building. How do I determine square footage?

Square footage that is used as residential dwelling is exempt from the Business Tax. For businesses that rent or lease property, the square footage that is used primarily for the business operator’s offices and operational facilities are taxable.

Does my business qualify for a Business Tax offset?

Businesses that are eligible for a dollar and/or square footage Business Tax offset are listed below. Business Tax offsets are detailed in PAMC 2.37.080:

  • Hotels, for the amount equal to TOT remitted to the City per PAMC 18.04.030 and PAMC 2.37.080(a)
  • Discretionary sales and use tax, allotted to the City, on a 2:1 basis, up to 75% of the business tax assessment per PAMC 2.37.080(b)
  • Residential space
  • Vacant square footage, where space is being offered for immediate sale or rent, per PAMC 237.080(c)

What if I move my business location in the middle of the quarter, will that effect the Business Tax owed?

The amount of the business tax owed will be pro-rated to each location and each location’s square footage for the amount of time the business was operational in each location.

What if my business operates out of multiple locations?

The business tax will be measured and collected based on the aggregate square footage for all locations.

My business has multiple, separate, legal entities. Do I file one or separate Business Tax filings and payments?

A separate return for each business that are separate, legal entities (i.e. entities with separate Federal EIN numbers and/or State Business Licenses).

Where can I find the Palo Alto Municipal Code Business Tax section?

The Business Tax ordinance is outlined in the Palo Alto Municipal Code, under PAMC 2.37

Is there a basic Business Tax return form online that I can use?

ShapeThe Business Tax filing and payment portal is open. Please visit paloalto.hdlgov.com to create a profile. If you choose not to file online, please email PaloAlto@hdlgov.com or call (650) 838-2882 for assistance.

Who can I contact with questions related to the City of Palo Alto Business Tax?

Questions regarding Business Tax, Business Registry Certificate program, and Downtown Business Improvement District fees can be directed to PaloAlto@hdlgov.com or call (650) 838-2882

 

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