The Petersen Automotive Museum, the Wilshire Boulevard showcase for spectacular cars, has been hit with a spectacular parking ticket: $121,000, and the meter is ticking.
The problem has nothing to do with the rare and historic vehicles in the Miracle Mile museum's collection and everything to do with the adjoining garage where visitors park. At issue is the 10% tax the city of Los Angeles imposes on the fees that parking lots and garages charge for each vehicle. .
Last month, the city sued the museum to collect $92,000 in taxes, plus interest and penalties, that it says were owed from July 2004 through June 2007.
Dick Messer, Petersen's executive director, said this week that the museum had long operated under the understanding that it's exempt from the parking tax because the garage is part of the museum's regular operations.
He said the museum pays parking taxes on income earned from monthly parkers, but that it considers the $2-$8 it collects from museum-goers who use the garage to be tax-exempt."
"You'd think the city would want to encourage nonprofits to be self-sustaining and have streams of revenues to keep them open and going. Apparently not," Messer said.
The museum wanted to straighten out the problem in 2004, when it was first billed for parking taxes, Messer said.
He said museum managers wrote to the city's Office of Finance in response. The museum never heard back, Messer said -- and the same thing happened when another bill came years later, demanding the $92,000. More recently, he said, the museum learned that the finance office employee who was supposed to be handling the matter had retired, leaving it unresolved.
Frank Mateljan, a spokesman for the city attorney's office, said Thursday that though museums and other nonprofits were exempt from regular city business taxes, the parking tax is another matter. Mateljan said it's like a sales tax, in that the person who parks owes the tax, not the parking lot operator. But, as with retailers and sales taxes, the parking operator is required to collect the tax from its customers and forward the money to the city.
City Councilman Tom LaBonge, whose district includes the Petersen, said he was trying to address the problem in meetings involving the finance office, the museum and the city attorney.
"They did not realize that they should have been collecting this tax. We're working . . . to find a method which would not cripple the museum but would resolve the problem," LaBonge said. The Petersen's budget was about $5 million in 2007-08, according to its most recent available federal tax return.
Messer said that even if the Petersen were in fact legally obligated to pay its visitors' parking taxes, City Hall's failure to respond to its letters about the bill means that it nevertheless should not have to come up with the $121,000 sought in the suit -- or the additional 2 1/2 years' worth of taxes and penalties that presumably have been mounting since the assessments covered by the suit.
"I still say we don't owe it, but if we do, let's start [paying] in 2010. We've made every conscious effort we could over the last six years to get this resolved."
The Petersen's federal tax statements show that its parking revenue averaged $646,000 a year from 2004 to 2008, which would translate to about $65,000 a year in parking taxes.
The J. Paul Getty Trust, which owns and operates garages for visitors' parking at the Getty Center and the Getty Villa, sends about $700,000 a year to City Hall to cover the 10% parking tax. "We think it's our legal obligation to do so," said spokeswoman Julie Jaskol. An outside contractor handles parking at the Los Angeles County Museum of Art and pays the parking tax, a spokeswoman said.