Philadelphia’s commercial activities license allows you to conduct business in the city. You must, however, comply with the City’s tax filing and payment rules to avoid losing your license. Here’s what you need to know about keeping your business tax-compliant:
Non-compliance leads to revocation
The Department of Revenue’s goal is to create a thriving business environment, but delinquent taxes can cause a business to close its doors. Taxes fund important City services, including many that directly benefit Philadelphia businesses.
If your business is not a corporation and you do business in Philly, you must file and pay the City’s Business Income and Receipts Tax (BIRT) and the Net Profits Tax (NPT). The BIRT is calculated on your gross receipts and net income from business activity in Philadelphia. The NPT is based on the net profit you earn from your business – think of the Wage Tax but for sole proprietors and small business owners.
Both taxes are due on April 15 for prior year business activities. Depending on your type of business, you may be required to file and pay other taxes, such as the Liquor Tax, Wage Tax, or Use and Occupancy Tax.
Your business license may be revoked if you fail to comply with these tax rules, which can affect your ability to operate in the city. A revoked license will also limit your access to some payment agreement options.
Pay attention to the notices in the mail!
Before you lose your license, you will receive two warning letters; one is mailed to the address on file, and the other is hand-delivered. The first, “Notice of Intent to Revoke License,” outlines your business entity’s unfiled and unpaid taxes. You must pay your delinquent or past-due taxes or enter into a payment agreement within ten days of receiving this notice. What you shouldn’t do is ignore it.
The letter provides the name and contact details of a case worker with whom you should work directly to resolve your tax debts. It also provides instructions on how to contest the revocation. The second letter will be hand-delivered after the 10-day deadline, notifying you that your business license will be revoked. The letter will also state the revocation date.
What to expect
You cannot conduct business in the city after receiving the second Notice of Revocation. The City may fine you $300 per day if you continue operating your business without a license.
A Cease Operations Order will also be posted at your business location—meaning your business cannot be open or serve customers. The Philadelphia Police Department will assist in enforcing the closure if necessary.
How to avoid revocation
Paying city taxes on time is the best way to prevent revocation. The Department of Revenue website provides a list of Philadelphia tax types, rates, and associated due dates and filing requirements.
You can pay all taxes on the Philadelphia Tax Center without a username or password. To file returns on this website, you must create a username and password. If you pay with an eCheck, there is no service fee, but you will be charged a processing fee if you pay with a debit or credit card.
Remember to always contact us if you cannot resolve your tax debts in full. We offer a variety of payment agreement options with flexible terms.
