Occupational License Tax on Gross Receipts
Pursuant to City Ordinances all persons doing business within the defined city limits of the City of Elkton, Kentucky must apply for an Occupational License prior to doing business in the city.
Application for New License
For a new business that has never worked in the city limits of Elkton before, an Application for New Business License must be submitted with the appropriate fee.
Annual Occupational License Tax Return
Annually, each business must file an Occupational License Tax Return based on work performed during the preceding year. The license fee is equal to 0.125% (.00125) of gross receipts from sales, services rendered or work done in the city. Please note that this License Fee is based on GROSS receipts, not net profits. Payment of the License Fee, along with the completed renewal form with attached federal tax return forms is due on or before April 15th of each year for businesses operating on a calendar year. If the business entity operates on a fiscal year other than calendar year, then the return is due on or before the 15th day of the fourth month following the close of the business entity’s fiscal year.
Occupational License Tax Return & Instructions – Can be used to file for any calendar or fiscal year.
The City of Elkton will also accept Form OL-S, Single Tax District, Occupational License Fee Return in lieu of the city’s return form. You can find this standard form HERE.
Application for Extension of Time to File Occupational License Tax Return
An extension of time to file the Occupational License Tax Return can be granted for up to 6 months unless a longer extension is granted by the IRS. If you have filed for an extension of time to file with the IRS, you must attach a copy of the federal extension. City Ordinance requires that any business requesting an extension must also pay an estimated tax by the due date. The Application for Extension and estimated tax are due on or before the due date of the Occupational License Tax Return.
Request to Close Business License Account
The Occupational License Tax Return must be filed every year until a Request to Close Business License Account form is filed with the City. This form certifies that all operation of business in the City has ceased. However, closing the account shall in no way relieve the business from any business license fees due to the city currently, or in the future, from being paid. When a business is closed, a Occupational License Tax Return based on gross receipts earned for work done in the year the business closed must be filed with the Request to Close Business License Account. Please note, if you worked in Elkton during any calendar or fiscal year, you must file a return for the following year. For example, if you worked in Elkton in the year 2014, you must file a 2015 return, even if you plan to cease operation in Elkton in the year 2015.
Occupational License Tax on Gross Payroll
Pursuant to City Ordinances there is also a license fee equal to 2.0% of all gross salaries, wages, commissions and other compensations earned for work done or services performed in the city by every employee, officer or agent of the business.
Employer’s Quarterly Return of Occupational License Fee Withheld
It is the duty of each employer to deduct the license fee from each employee, officer or agent at the time of payment. The license fee withheld shall be submitted with the Employer’s Quarterly Return of Occupational License Fee Withheld on a quarterly basis and is due to the City by the last day of the month following the end of the quarter.
Annually, each employer must also file an Annual Reconciliation of occupational license tax on payroll and submit a copy of all W-2s issued and totals page form W-3. In lieu of copies of W-2s, a payroll listing that shows each employee’s gross wages and occupational tax withheld may be submitted along with a copy of form W-3. The Annual Reconciliation is due to the city by the last day in February.
Annual Occupational License Tax on Gross Payroll Filers
Some individuals and businesses choose to submit the Occupational License Tax on Gross Payroll if their annual payroll tax liability is smaller. THis option must be approved by the city. If this option is chosen, the annual filer can file and submit the annual payroll tax form with payment and file the Annual Reconciliation all on one form.
Statement and Transmittal of Non-employee Compensation
Occupational License Forms Checklist & Information
Download and print the Occupational License Checklist for helpful information and a checklist of forms that are due to the City.
Starting a New Business in Kentucky?
The Kentucky Secretary of State has created a “One Stop Shop” website to help with the start up process of a new businesses. Visit their website HERE.