As we enter the 2024 tax season, remember to file a complete Business Income & Receipts Tax (BIRT) return if you intend to carry forward net operating losses (NOL) from a prior tax year.
A recent City Council legislation allows net operating losses incurred in tax years 2022 and thereafter to be carried forward 20 years. This means that if your business suffered a net loss in 2022, you could deduct the loss from profits generated in later years.
We recommend filing a complete BIRT return if you intend to deduct losses incurred in tax year 2022 from profits generated in tax year 2023. This is the best way to keep track of your net operating loss carryforwards. Be aware that losses incurred in tax years prior to 2022 may only be carried forward for three years.
File BIRT return online
It’s easy to file and pay the BIRT online. Simply log into your Philadelphia Tax Center profile to access your BIRT account. Next, select “Filing, viewing, or amending returns”. Pick “File now” from the “Returns” screen. Enter your liability amount on the “Tax liability” screen and hit “Next.” Follow the on-screen instructions to complete the process.
The current net income rate of the BIRT is 5.81%. All businesses operating in Philadelphia, including those engaged in commercial or residential real estate rental activity, must file a BIRT return or a “No Tax Liability” form. Even if you didn’t earn a profit, you must still file this tax, but you only need to pay if you had gross receipts or profits over $100,000.
Exemptions may apply
If your Philadelphia taxable gross receipts are less than $100,000, you do not need to file the BIRT return. If this is your case, you must file the one-page No Tax Liability (NTL) form through your BIRT account on the Philadelphia Tax Center. Follow these steps to complete the process online:
- Visit tax-services.phila.gov to access your Philadelphia Tax Center profile
- Find your BIRT account, and select “File, view, or amend returns.”
- Pick “File now” on the “Returns” screen
- Review your tax information carefully and hit “Next.”
- On the “Tax liability” screen, enter your liability amount and select “Next.” If your liability amount is less than $100,000, you will be prompted to file a No Tax Liability form. Follow the onscreen directions to complete the process.
We’ve also published paper versions of the 2023 BIRT return and No Tax Liability forms on our website.
You should file the NTL each year your business generates less than $100,000 in Philadelphia gross receipts. If you plan to carry forward your losses, make sure you file a complete BIRT return to help you keep track of your net operating loss “carry forwards”. Call us at (215) 686-6600 with any questions or for more information.
