Frequently Asked Questions
Click here for a list of frequently asked questions and answers pertaining to the changes in the Business Privilege Tax regulations.
For Technical Staff answers to questions posed by the PICPA in November 2002, click here.
Q. Can I use a tax preparation software from a vendor, such as Turbo Tax, to prepare my tax returns?
A. Tax Preparation Software Must Be Tested and Approved by the Philadelphia Revenue Department. The Department of Revenue?s imaging system can only accurately read computer-generated tax returns produced on software from Department approved vendors. Tax returns and refunds could be delayed or rejected if they are submitted on computer-generated forms that have not been tested and approved by the Department.
Before using computer-generated forms to prepare Philadelphia Tax returns, please click here to see if the company?s software has been approved by the Philadelphia Department of Revenue.
Q. Does the City of Philadelphia have a personal income tax, similar to the state and federal personal income taxes?
A. Philadelphia does not impose a personal income tax. There are business taxes if you are self-employed and there is a wage tax on compensation earned by non-residents working in Philadelphia and on residents of Philadelphia working anywhere. Normally, if wage tax was withheld from your compensation, you do not need to file any tax return for your earned income. Visit the "Plain Talk Tax Guide" section of this web site for a detailed explanation of the various taxes.
Q. I plan on starting a business in Philadelphia. What taxes would I have to pay and how do I register?
A. Corporations are liable for Business Privilege tax. Individuals and partnerships are liable for Business Privilege and Net Profit taxes. All entities operating in Philadelphia and having employees must withhold and remit wage tax on the compensation paid to employees. If the business is located in Philadelphia, it would also be liable for Business Use & Occupancy Tax. Visit the ?Tax Guide? section of the web site for a detailed explanation of the various taxes. To register for a business tax account, click here. After registering for a tax account number on-line, you can pay the $250 Business Privilege License fee via credit card.
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Q. Does Philadelphia have any reciprocal agreements with any other states or other jurisdictions within Pennsylvania relating to the remittance of Philadelphia Wage Tax?
A. Residents of Philadelphia are required to pay Philadelphia Wage Tax on all salaries, wages and compensation regardless of where that compensation was earned. Philadelphia residents employed in other localities in Pennsylvania should instruct their employers not to withhold other local income taxes from their compensation. Non-residents of Philadelphia residing in Pennsylvania and employed within the City of Philadelphia must pay the Philadelphia Wage Tax on all compensation earned in Philadelphia. Non-resident compensation not subject to Philadelphia Wage Tax (due to services rendered outside of Philadelphia) may be subject to taxation in the employee?s home jurisdiction. The City of Philadelphia is not a party to any reciprocal tax agreements with any other State or political subdivision thereof. Non-residents of Pennsylvania cannot claim a tax credit against Philadelphia Wage Tax for income taxes paid to any other State or political subdivision thereof. Residents of Philadelphia employed outside of Pennsylvania may be required to file and pay a local income tax in that jurisdiction in addition to Philadelphia Wage Tax.
Q. Does Act 166 affect Philadelphia Wage Tax or Net Profits Tax?
A. No. For more information, click here.
Q. Does Philadelphia allow as a deduction the special first year depreciation allowance on certain property acquired after September 10, 2001 and before September 11, 2004?
A. No. This special allowance depreciation is not allowed as a deduction in determining taxable net income for Business Privilege and Net Profits tax purposes.
Q. Does Philadelphia have a job creation tax credit against Business Privilege Tax (BPT) liability?
A. Yes. Under the job creation tax credit program, eligible taxpayers may claim a BPT credit of $1,000 for each qualified new full-time job created in Philadelphia. You must apply and be accepted into this program before any job creation tax credit may be taken. For more information on this program, call 215-686-6432.
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Q. I lost the Wage Tax coupon book used to remit wage tax on my employees. How do I get another book?
A. Call 215-686-6600 to request another coupon book. Please have the account number and identify which tax is needed when you call. You can also e-mail this request to revenue@phila.gov.
Q. Do I need to send the Philadelphia Department of Revenue a listing of 1099?s I have distributed and, if so, is there a transmittal form required?
A. There is no transmittal form but 1099?s should be sent to:
Philadelphia Department of Revenue
Forms Processing Unit
Concourse ? Municipal Services Building
1401 John F. Kennedy Boulevard
Philadelphia, PA 19102
Q. I received a delinquent business tax bill but I can?t afford to pay the entire amount now. Can I make periodic payments on it?
A. Yes. Please call 215-686-6600 to arrange a payment agreement.
Q. I need to speak to someone about a problem but I can?t get through on the phone. What can I do?
A. Try calling during non-peak periods, before 10 a.m. or after 3 p.m. Monday?s, especially Monday mornings in tax season, are an especially busy time. You can also e-mail your request to revenue@phila.gov
Q. My business closed last year but you still sent me a tax booklet. Why?
A. Evidently, our records had not been updated. Please use the Change Form in the booklet you received to notify us that you are no longer in business. Non-corporate entities would still be liable for a termination year Net Profit Tax return. Corporate entities may be entitled to a partial refund of the prior year Business Privilege Tax paid.
Q. Can I send one check for the Net Profits Tax, Business privilege Tax and estimated Net Profits Tax returns?
A. Yes. Write your account number on the check and include the appropriate coupon(s) in the postage paid envelope provided in your tax package.
Q. If I have incurred an overall loss and no tax is due, must I file a Net Profits Tax return?
A. Yes. A return must be filed even if an overall loss is incurred. If no return is filed, non-filer penalties could be imposed.
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