Central Market Street and Tenderloin Area Payroll Expense Tax Exclusion

The 2017 application period for the Central Market Street and Tenderloin Area Payroll Expense Tax Exclusion is now open. To apply, please download the Central Market Street and Tenderloin Area Payroll Expense Tax Exclusion Application 2017 (found below in the Downloads section on this page) and follow the instructions provided.

The Central Market Street and Tenderloin Area Payroll Expense Tax Exclusion (the “Exclusion”) permits persons maintaining a fixed place of business within the Central Market Street and Tenderloin Area (the “Area”) and that meet the requirements of section 906.3 of the Business and Tax Regulations Code (the “Code”) to exclude a portion of their payroll expense from the payroll expense tax base for up to six years from the later of May 20, 2011, and the date the person commenced business in the Area. However, the Exclusion expires on May 20, 2019, and may not be taken after that date.

 

Office Market Within the Area

 

  • 3.3 million square feet contained within 73 office buildings
  • Select large buildings included in the Area: 1355 Market Street, 1 Tenth Street, 25 Taylor Street, 1035 Market Street, 995 Market Street, 979-989 Market Street, and 982-998 Market Street (the Warfield)
  • Large building excluded from the Area include: 1455 Market Street, 1275 Market Street, 1145 and 1155 Market Street, and 10 UN Plaza

 

Summary of Certain Requirements for the Exclusion

 

  • Eligible persons may take the Exclusion for up to six years from the later of May 20, 2011, and the date the person commenced business in the Area. However, the Exclusion expires on May 20, 2019, and may not be taken after that date.
  • Any person subject to the payroll expense tax and that meets the requirements in Code section 906.3 is eligible. Code section 906.3 requires that, among other things:
    • The eligible person maintain a fixed place of business in the Area (click here for a pdf of the map);
    • The eligible person timely submit all forms, applications, affidavits, and declarations with the appropriate agencies;
    • The eligible person participate in the City’s First Source Hiring Program and enter into a First Source Hiring Agreement with the First Source Hiring Administration;
    • The eligible person timely file its payroll expense tax return, regardless of the amount of tax liability, if any, shown on the return after claiming the Exclusion;
    • The eligible person maintain records and documents in a manner acceptable to the Tax Collector that objectively substantiate the Exclusion; and
    • The eligible person negotiate a Community Benefit Agreement with the City if the eligible person has annual payroll expense over $1 million.
  • The Exclusion is limited to payroll expense attributable to the eligible person’s fixed location in the Area, provided that the exclusion cannot reduce the eligible person’s tax liability to less than the eligible person’s “Base Year” tax liability. “Base Year” means:
    • 2010, if the eligible person maintained a fixed place of business in the Area on May 20, 2011 and for all of 2010;
    • The first full year the eligible person maintained a fixed place of business in the Area, if the eligible person did not maintain a fixed placed place of business in the Area on May 20, 2011 and for all of 2010, and did not move from another part of San Francisco after doing business in San Francisco for the entire tax year prior to moving into the Area; or
    • The eligible person’s full tax year for the year prior to entering into a lease agreement or buying real property in the Area, if the eligible person moved to the Area from another part of San Francisco and the person was doing business in San Francisco for the entire tax year prior entering into the lease agreement or buying real property in the Area.

The Transition to the Gross Receipts Tax (the Central Market Street Limit)

Under the Central Market Street Limit, persons that qualify for the Exclusion in a given year will not pay more in combined gross receipts tax and payroll expense tax than they would have paid if the gross receipts tax had not been enacted and the payroll expense tax had remained in effect at a rate of 1.5 percent.
 

Information regarding Gross Receipts Tax from the Treasurer and Tax Collector Office

Downloads

 

Need Assistance?

 

Contact us at 415-554-6969 or centralmarketapplications@sfgov.org