GM sues San Francisco, seeking $121 million in back taxes, penalties

By Greg Bensinger

SAN FRANCISCO (Reuters) – General Motors (NYSE:) has sued the city of San Francisco, seeking to recover more than $100 million, alleging that it was charged a higher tax bill than warranted because its Cruise self-driving car unit was improperly used to make the calculations.

In the case filed in California Superior Court in San Francisco, GM is seeking $108 million in back taxes over the course of seven years, as well as $13 million in penalties and interest, according to the complaint. The Detroit automaker said San Francisco-based Cruise is operated separately from GM, generates only a minimal amount of sales and should not be used to calculate GM’s liabilities in the city where the parent company has a limited presence. GM said in the lawsuit that it sold only about $677,000 worth of goods in San Francisco in 2022.

The lawsuit was filed on Friday. Bloomberg reported the news earlier on Wednesday.

Neither the San Francisco city attorney’s office nor GM immediately responded to requests for comment.

While the funds would represent a small portion of GM’s reported $156.7 billion in sales in 2022, the lawsuit comes as San Francisco is projecting an $800 million budget deficit over the coming two fiscal years amid a pandemic recovery that has stalled. Mayor London Breed has asked city agencies to cut their budgets by 10% to help close the gap.

“The California Government Code mandates that the city taxes must fairly reflect the proportion of activity actually carried on within the city, and they do not, either generally or as applied to GM,” the company wrote in its complaint.

The Cruise unit at issue is contracting after an October accident in San Francisco that caused a furor in the city and caught the attention of regulators. The incident has caused Cruise to pull its U.S. cars off roads, undergo a safety review and cut nearly a quarter of its staff nationwide.