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BACKGROUND Business license taxes are a revenue and regulatory measure that have been in place since about 1919 (Ord. 113). Amounts due are based on the gross receipts of companies and persons doing business in Pleasanton, as provided in Municipal Code section 5.24.040 (Gross receipts) as follows: LICENSE TAX SCHEDULE $0-24,999 $25.00 25,000-99,999 50.00 100,000-249,999 75.00 250,000 and above $0.30/$1,000 of gross receipts There are over 7,000 businesses in Pleasanton, and the most common category of business has gross receipts of$0 $24,999 and the business license tax is $25.00. Renewal notices are mailed out to each Pleasanton business approximately 45 days prior to annual expiration date. Business license tax renewals are due on or before January 1 of each calendar year (see Municipal Code section 5.08.030). However, a 5% ($1.25 for the $25.00 business category) penalty for late payment is not assessed February 1, thereby allowing a 30-day grace period per Municipal Code section 5.24.020.A. Currently, per Municipal Code section 5.24.020.A, the penalty structure for delinquent payment of the annual business license tax renewal accumulates at 5% of the business license amount due each month up to a maximum of 50% of the business license tax due. At this rate, a business can operate up to 10 months (until November 1) before reaching the maximum 50% penalty assessment ($12.50 for the $25.00 business category). In an effort to collect such delinquent business license taxes, a first business license delinquent tax notice is mailed in February followed in March by a second delinquent notice sent; no further notices are mailed out. DISCUSSION While I3usiness License Division staff has been working with the existing municipal code penalty structure and the delinquency notice timing for several years, there are several reasons why amending the municipal code to change the penalty structure would be beneficial. To this end, the recommendation is to assess a penalty of 25% ($6.25 for the $25.00 business category) of the business license tax due at the time the first delinquency notice is issued in February, and a penalty of 50% ($12.50 for the $25.00 business category) of the business license tax due at the time the second, and final, delinquency notice is sent in March. As there are no additional delinquency notices Page 2 of 4