General Motors has filed a lawsuit against San Francisco, accusing the city of unfairly taxing the company $108 million over seven years. The Detroit-based automaker believes that assessment is wrong given its limited sales and headcount in the city.
GM argued that the city wrongly tied its tax liability to its San Francisco-based Cruise self-driving car unit, tying it to $3 billion in global revenue. GM claims that Cruise, its autonomous vehicle technology software company, operates as a separate commercial entity.
In a complaint filed last week in state court in San Francisco, GM emphasized that its "core automotive operations do not employ anyone in the city, have no factories or other physical locations in the city, have no dealers in the city, and sell only a very small amount of retail merchandise in the city (approximately $677,000 in 2022)."
The company did not say why it is taking until now to challenge the previously paid assessment. The San Francisco City Attorney's Office did not immediately respond to a request for comment. Bloomberg News first reported the lawsuit.
GM is seeking refunds totaling nearly $108 million in taxes and nearly $13 million in interest and penalties, claiming it overpaid taxes from 2016 to 2022. The lawsuit contends that the California Government Code provides that city tax revenue should be fairly reflected in proportion to the activities conducted within the city.
The lawsuit contends that in GM's case, the Code improperly considered Cruise's salary when determining apportionment, resulting in "general Motors revenue attributable to San Francisco tens of thousands of times greater than it would have been had Cruise's salary not been factored into GM's payroll."
GM emphasized that in the years in question, it sold vehicles through approximately 4,200 independent dealers across the country, none of which were located in San Francisco. The company also noted that during the period covered by the lawsuit, Cruise primarily engaged in research and development activities in San Francisco and had limited revenue from its ride-hailing business until June 2022.
GM's relationship with San Francisco was in trouble in October after its Cruise self-driving car struck and dragged a pedestrian in San Francisco. Earlier this month, General Motors laid off 24% of Cruise's workforce, or about 900 people, as part of a restructuring plan. The crash also shut down the company's operations in California.
General Motors subsequently halted all self-driving car trips in the United States while it investigates the crash and Cruise's response.