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New Annual Minimum Occupational and License Tax Imposed on Entities Doing Business in Lexington-Fayette Urban County

The Lexington-Fayette Urban County Government (LFUCG) recently revised Chapter 13 of the Code of Ordinances (Code) to provide for a new annual minimum occupational license and license tax.

The Code now provides that every entity doing business in the LFUCG must obtain an occupational license each year and that a separate license must be obtained for each additional location.  For retail or manufacturing businesses, a separate license is required for each physical location from which business is conducted.  For service-type businesses, a separate license is required for each office location within the LFUCG.  The business license must be posted in a prominent manner and in an area that is viewable by the public.  For home-based businesses, this may be inside the home (i.e., in an office area). 

The Code requires payment of an annual minimum license tax of one hundred dollars ($100) for the first business location and twenty-five dollars ($25) for each additional location.  However, the annual minimum license tax may be used as a credit against the business’ occupational license tax liability.  The LFUCG occupational license tax is imposed at the rate of 2.25 percent of:

  1. All wages of compensation paid or payable in the LFUCG for work done or services performed or rendered in the LFUCG by every resident and nonresident who is an employee; and
  2. The net profit from business conducted in the urban county government by a resident or nonresident business entity. 

Every business entity is required to pay the $100 annual minimum license tax, even if there is no physical location in LFUCG.  This $100 annual minimum license tax is designed to require “everyone [to] contribute a minimum amount to the general fund [and] assist in the enforcement programs [that] ensure everyone [has paid] their fair share,” according to information provided by LFUCG’s Department of Revenue (Department).  The Department has also indicated that under the previous version of the Code, 15,000 of the 27,000 licensed businesses in LFUCG paid occupational license taxes.   

Business entities doing business in the LFUCG should complete Form 09BML, Business Minimum License Fee.  Failure to obtain and pay for a license may result in penalties and possible enforcement action.  

If you have questions concerning the Occupational License Tax, please contact any member of Greenebaum’s State and Local Tax Team


 

Even though the content of the above Greenebaum Doll & McDonald e-bulletin is primarily informative, state and federal law obligates us to inform you that this is an advertisement. You have received this advisory because you are a client or friend of the firm.

 

As a result of perceived abuses, the U.S. Department of the Treasury recently has promulgated Regulations for practice before the Internal Revenue Service. These Circular 230 Regulations require all attorneys and accountants to provide extensive disclosure when providing certain written tax communications to clients. In order to comply with our obligations under these Regulations, we would like to inform you that, because this communication does not contain all of such disclosure, you may not rely on any tax advice contained in this communication to avoid tax penalties, nor may any portion of this communication be referred to in any marketing or promotional materials.

About Greenebaum Doll & McDonald PLLC
Greenebaum Doll & McDonald PLLC is a widely-respected business law firm with approximately 200 legal professionals in six offices, serving local, national and international clients in virtually every industry. A forward-thinking business law firm, Greenebaum is committed to the practice of Breakthrough Law®. For more information, visit www.greenebaum.com.

 

Copyright 2009 Greenebaum Doll & McDonald PLLC.  All Rights Reserved.

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