Landlords who've been pocketing extra cash by renting out their parking spots have until the end of this month to start complying with San Francisco's parking laws, which says they must give a cut of earned parking fees to the city.
Last year, the city created a parking tax simplification law meant to make it easier on landlords to rent out unused parking spaces. Under the law, owners who rent fewer than five monthly parking spaces and earn less than $15,000 a year from their side parking business can register for the city's tax simplification law, which says they only have to pay taxes owed from April 2011 onward.
Just like their customers, lot owners must pay to park (their business).
The city will evaluate each applicant and determine who qualifies for the grace period. If they don't qualify or you fail to register, then they will be on the hook for taxes dating back to the start of their business, which could be 40-plus years (ouch!).
"Unfortunately, if they don't come forward, and they are found it can be significant," said Greg Kato, Policy and Legislative Manager in the Office of the Treasurer & Tax Collector. And, if after registering, people still fail to pay the assessed back tax they'll be sent to collections.
Janan New, Executive Director of the SF Apartment Association, who helped push for the tax simplification law, says that the real reason many small parking lot operators hadn't been paying taxes to the city is that they didn't realize they had to. Many presumed that since they were only renting one or two spots, it wasn't necessary for them to pay taxes to the city on those rentals.
In fact, not even New herself really considered it an issue until city officials "in search of revenues" started cracking down on these smaller operators through tax audits.
But even with the new tax simplification law, which went into effect last September, the same challenge remains: convincing owners that they indeed have to pay their fair share.
"It's not always intriguing to talk to people about this -- a lot of people tune out when you talk about taxes," she said.
If you haven't "tuned out" already, have a quick read of the new law: