Creators Syndicate has filed a lawsuit against the city of Los Angeles after the city reset the syndicate’s tax classification. At issue is whether Creators is an “occupations and professions” or a “wholesale and retail” business with the former being taxed at a much higher level. The syndicate and the city fought this battle 15 years earlier and Creators won the right to be considered a wholesale and retail business. According to Creators president and founder Rick Newcombe, Los Angeles reset their status in 2007 and demanded payment of taxes at the higher rate with interest and penalties back to 2004.
Everything was fine until the city started running out of money in 2007. Suddenly, the city announced that it was going to ignore its own ruling and reclassify us in the higher tax category. Even more incredible is the fact that the new classification was to be imposed retroactively to 2004 with interest and penalties. No explanation was given for the new classification, or for the city’s decision to ignore its 1994 ruling.
Their official position is that the city is not bound by past rulings — only taxpayers are. This is why we have been forced to file a lawsuit. We will let the courts decide whether it is legal for adverse rulings to apply only to taxpayers and not to the city.
Newcombe also mentions that the company is preparing to move out of Los Angeles should court ruling be unfavorable to their business.