April 22, 2009
ACADEMIC SENATE MEMBERS
The Committee on Faculty Welfare was alerted to a law passed by the City of San Diego that taxes city residents who run small businesses in the city. The definition of "business" is broad and could include anything that generates a 1099 form, including providing consultation and receiving honoraria.
The definition of "in the city" is open to interpretation. Arguably, a small business is not practicing in the city when consultations are provided or honoraria received from out of town activity. On the other hand, reimbursed activities provided in the city limits may well be considered "small businesses" by the city.
The City is auditing tax returns from the Franchise Tax Board and has notified a number of UCSD faculty members that they must not only apply for a small business license, but also pay a penalty for not paying the license fee.
Faculty members may wish to consult with their tax advisors to determine if they should apply for such a license or if they should petition the city for exclusion from the license requirement. Further information from the city is available at the following sites: