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City business license for out of town architects

  • 1.  City business license for out of town architects

    Posted 04-27-2017 23:16
    In what situations have you found that out of town architects need to file for a City business license?

    I am a sole proprietor architect with no employees that works from my home office.  I have a City business license from the City where my home office is located.  The majority of my work is done at my home office.  Occasionally I take site measurements or meet with a client in other Cities.

    I have received letters from a neighboring City stating that I need to have their business license to conduct business in their City.  Speaking with them they said taking site measurements would require the license.  The City said they went online to look at out of town architect websites and sent letters to architects that had projects located in their City.  I had no idea that any City required this.  The local AIA office located in this City was not aware of this requirement.

    I anticipate that I may spend 1 or 2 hours taking site measurements every other year of so for small tenant improvements.  I just applied for the $110 license and the City sent me 10 years of back applications with significant late fees and 10 years of City business and occupation tax forms, and no business license.

    My income is low enough to be exempt from their tax but most architect firms would not be.  Tax based on "world wide gross income" could be sizable.

    I do not know how to respond to the license requirement.  I can send the tax forms back stating my exception.  Has anyone else dealt with this?

    Stephen Dorsey AIA
    Puyallup, WA

  • 2.  RE: City business license for out of town architects

    Posted 04-28-2017 17:44
    Here in the Bay Area, where government is King, I've never heard of this, though it is not uncommon for general contractors to have a business license to pull a permit.  It sounds dodgy to me.  I wonder whether State law would conflict.  Think about all the business that can happen in a city.  Does UPS have to have a license to drive in your town?  Does the car dealer in a neighboring city have to have a license to run an ad in the local paper?  Does the New York Times have to have a business license to mail their newspaper to your town?  Does Amazon have to have a license to to sell on-line in your town?  Does a marketing research company have to have a license to do a survey of people in your town?

    The question of what a city or county can legally do comes up all the time in my work.  What I have come to realize is that the rules that apply, in particular various building codes and zoning ordinances, have become so complex that the people entrusted to implement them can't keep them straight.  What I've also realized is that if those people are dealing with lay people, they are not as careful about applying the rules with a strict correctness.  If on the other hand, I/we show them we know how to read the ordinances, they are much less likely to be careless or ad lib or go out on a limb.  We show them we understand things like "applicability" and "definitions."  They live and die by their own rules.

    If I were Stephen I'd dig into the city ordinance like any other code.  I certainly would not acquiesce to a ridiculous rule without doing my homework and if I found anything in what the city was doing was beyond their authority, I would know I had the knowledge to put a stop to it and I would.

    Donald Wardlaw AIA

    Donald Wardlaw AIA
    More Than Construction, Inc.
    Oakland CA

  • 3.  RE: City business license for out of town architects

    Posted 04-28-2017 18:54
    I have never heard of such a thing here in Colorado.  I pay a "Denver Occupational Privilege Tax" for having my office in the City of Denver.  I do work all over the metropolitan / Front Range area which includes lots of suburbs.  I've never encountered needing a "business license" in any of those places.

    Robert Larsen AIA
    Robert R. Larsen, A.I.A.
    Denver CO

  • 4.  RE: City business license for out of town architects

    Posted 05-01-2017 13:25
    No cities in Indiana, that I'm aware of, require a business license for architects.

    If your neighboring city is sending letters to architects seems they are fishing for fees, or working to limit work to their local architects only.  Why should you have to pay 10 years of back fees if they didn't require it in the past.  Maybe you did some work there in the past, but apparently they didn't require the license then, so there is no way it should be retroactively applied.

    I understand as a sole proprietor you don't have a big budget for legal fees, but I would fight this...at least the past stuff.  Maybe you can band with other local "out of town" architects to get a lawyer who can research the legality of their license requirement and fight it on all of your behalf.  Who knows, maybe a stern letter from a lawyer representing multiple architecture firms threatening to sue them (and give them lots of bad publicity) may be enough to relax the requirement.

    Timothy Wall AIA
    Director of Design Services
    Nuway Construction
    Goshen IN

  • 5.  RE: City business license for out of town architects

    Posted 05-01-2017 17:55
    Philadelphia requires one.  They will potentially even reject permit applications if you don't have one.  What's more, they require us to pay a "Business Income and Receipts" tax.  I have no physical presence in the city, but do a number of projects there and have to pay that tax.  It can get substantial depending on your revenues collected on projects based in the city.  I would love to fight it, but it would require much more resources than I have available.  Every year, I have to tally up my income on projects from the city, file a return, and pay prorated estimates for the following year.  My accountant loves that extra work.

    Michael Cole AIA
    MC Architectural, LLC
    Spring City PA

  • 6.  RE: City business license for out of town architects

    Posted 05-02-2017 18:10
    This is remarkable. I've never experienced it. I would think that your local or state AIA chapter, or both, should think about a legal challenge, perhaps with some advice from National.

    If it applies to architects, does it apply to the out-of-town contractors and subs?
    How about suppliers who come to the site to confirm conditions and details? Or who come to your office to market their products to you?

    What about the out-of-town accountant who comes to my office once a month to work on my business accounting?

    Home health care workers? Fence installers? The cable guy?

    Are they just pursuing professionals who are part of the building permit process because they are easy to track? That seems to unduly burden one profession while other professions are unaffected. It's an extremely unfair practice.

    Carol De Tine AIA
    Carriage House Studio architects LLC
    Portland ME

  • 7.  RE: City business license for out of town architects

    Posted 05-02-2017 18:26
    A number of years ago, a couple of cities here in California attempted to do the same thing. (Los Gatos and Hillsborough were a couple that I remember.) This affected a fair number of the local architects, and as I recall, the California Council of the  AIA intervened and the issue sort of "went away." You might try that as first option. This taxation policy is highly anti-competitive, since it favors architects who are already in that city, and puts outsiders at a disadvantage in needing to pay double business taxes. It might be that the state DA or U.S. Justice Department would be interested in such anti-competitive taxation schemes and restraint of trade. Is the city also collecting revenue from out of state plan services? All deliveries that come in from businesses outside of the city? All Uber drivers that occasionally cross the city's border? Out-of-city attorneys who appear in court? It might be that your own attorney's letter to the City Attorney suggesting the possibility of a class action suit could get results.

    At the time of this area's hoopla, I was also exploring the option of raising my rates and offering (in writing) all "on site" services for free, thus establishing that no revenue was being generated in that city. Other options included taking my name off of the plan set and having the Owner or the Contractor submit the plans as a design-build project. In any event, I added a clause to my contract that any City-required expenses or taxes that were attributable to a specific project were reimbursable. I've never had a client question this clause.

    Best of luck!

    Richard Morrison
    Architect-Interior Designer
    Redwood City CA

  • 8.  RE: City business license for out of town architects

    Posted 05-03-2017 19:43

    Our firm experiences this all the time. As a specialty design firm we work all over the country. Between me and my partners we're registered in 46 states, DC, and previously two Canadian provinces. What we've learned is each location has unique rules. Some states require a professional firm registration in addition to the individual, some also have business license requirements. Some counties, cities, and towns do too. Last year we filed tax returns in 23 localities. What we've learned is that before working in a place for the first time we define regulatory requirements. If they are substantial and the project small we decline the work. We average those expenses and add it to the overhead component of our fees.

    Paul Gladysz AIA
    BDA Architecture

  • 9.  RE: City business license for out of town architects

    Posted 05-03-2017 19:31
    Ironically, I was just asked to obtain a business license in a different city from which I practice here in CA.  I have never been asked to do so in the past.
    I am wondering if the State of CA is preparing for the cutoff of Federal funds once it becomes the "Sanctuary State"?  Why did this fee suddenly appear?
    More fees make it more difficult to be competitive, that is the bottom line.

    Regina Konet AIA
    Konet Architecture
    Folsom CA