In November 2024, voters approved Proposition M which provided for an overhaul of San Francisco’s gross receipts tax. (See our prior coverage here.) Proposition M changed the allocation and apportionment rules for most industries, generally requiring that three quarters of a taxpayer’s total receipts are allocated to the city on a market basis and one quarter are apportioned to the city using a payroll factor. On February 28, 2025, the Office of the Treasurer & Tax Collector released a draft market-based sourcing regulation (Proposed Regulation No. 2025-01) in the first step to provide official guidance on how to determine when receipts are allocated to the city. It was also announced that a public hearing held will be held on Tuesday, April 8, 2025 at 2:00 PM PST. The effective date for the proposed regulation is for tax years beginning on or after January 1, 2025.
Read the full Legal Alert here.