Coblentz, Patch, Duffy & Bass LLP v. City & County of San Francisco
Opinion
Opinion
Jenkins, J.
— By its lawsuit Coblentz, Patch, Duffy & Bass LLP, a limited liability partnership practicing law, challenges the validity and scope of Proposition Q, which amended the Payroll Expense Tax Ordinance of the City and County of San Francisco (the city) (S.F. Bus. & Tax Reg. Code, art. 12-A, § 901 et seq.). Plaintiff paid the payroll expense tax calculated pursuant to Proposition Q, and the city rejected its administrative claim. Plaintiff now seeks a refund of that portion of the tax that it paid on the profits distributed to the law firm’s equity partners. After a review of Proposition Q and the arguments of the parties, we conclude the trial court correctly determined that some portion of plaintiff’s profit distributions to its equity partners represents “compensation for services,” which sum is to be included in the payroll expense tax base. We further conclude Proposition Q does not violate either article XIII C of the California Constitution (added by Prop. 218) or Revenue and Taxation Code section 17041.5. Accordingly, we affirm the judgment entered in favor of defendants city and its treasurer and tax collector Jose Cisneros.