LA’s Sales Tax Rise to Take Effect in July

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A liquor store owner in Los Angeles, only identified by his last name Park, is confused. He initially was informed that the sales tax would decrease by 0.25 percent starting next year, but the plan seemed to have changed since the November elections when it was decided that the rate would actually increase by 0.5 percent.

For obvious reasons, applying a wrong sales tax rate on customers could cause consequences.

Park is not the only business owner who remains confused. The message from the government has not been clear for them, leaving them wondering when exactly the newly changed sales tax rate should be imposed when customers make purchases.

When the Korea Daily contacted a number of Korean-American businesses in and around L.A., not many had develop a thorough understanding of the changing sales tax.

A small market owner in the city, only identified by his last name Lee, thought the sales tax rate was changing to 9.75 percent from the current 9 percent. Another Japanese restaurant owner sounded assured when he told the Korea Daily that the new rate is 9.5 percent. A deli owner in South L.A., on the other hand, said that it is 9.25 percent.

“I’ve been receiving a lot of inquiries about the new sales tax,” said Joo-ho Yoon, a certified public accountant in Southern California. “A lot of small business owners are confused about the change. Many actually believe that they’re just supposed to adjust it to 9.5 percent once 2017 begins.”

So how exactly is the new sales tax supposed to be imposed?

According to California’s Board of Equalization (BOE), sales tax will actually decrease by 0.25 percent to 8.75 percent starting on Jan. 1. However, the rate may vary depending on the city. For example, sales tax rate in La Mirada will be 9.75 percent on Jan. 1.

In L.A., though, sales tax rate will drop to 8.75 percent and rise to 9.25 percent from July 1. Put simply, the sales tax rate in L.A. between Jan. 1 to June 30 will be lower than the current figure at 8.75 percent, but will reach a new high at 9.25 percent from July 1.

The drawback of the change is that business owners who remain oblivious about when and how the new tax law should be imposed will not properly apply the changing rate. There is no system in place to monitor how the new sales tax is applied at every small business, creating a loophole for business owners to impose wrongly rated sales tax when customers make purchases at their stores.

“Business owners have the responsibility to abide by the changing sales tax rates,” said one US Bank employee. “But many business owners aren’t aware of the changing rates, so we’re trying our best to educate our business account holders.”

☞ Measure M was on the ballot for Los Angeles County, which passed on Nov. 8 after 69.8 percent of the voters voted yes on. The purpose of the increase in sales tax was for the city government to raise funds for the extension of the city’s public transportation. The city of L.A. expects to generate approximately $860 million every year once the increased sales tax rate takes effect.

By Sung Cheol Jin

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