Frequently Asked Questions (FAQs)

  1. What is the “Louisville Metro Revenue Commission?  [ ANSWER ]
     
  2. What are the requirements in Metro Louisville or Jefferson County to start a new business?  [ ANSWER ]
     
  3. Must an employer in Metro Louisville withhold occupational fees/taxes from an employee that does not reside in Metro Louisville?  [ ANSWER ]
     
  4. What is the occupational tax rate for ordained ministers?  [ ANSWER ]
     
  5. What do I do if I am filing late?  Will I be charged penalty and interest?  [ ANSWER ]
     
  6. What is the penalty for failure to file Form OL-3 timely?  [ ANSWER ]
     
  7. What is the penalty for failure to file Form W-1 timely?  [ ANSWER ]
     
  8. Are Section 125 Plans subject to the occupational tax?  [ ANSWER ]
     
  9. Will the Revenue Commission accept a copy of the federal extension?  [ ANSWER ]

  10. Is it necessary to file Form OL-3 if activity ceased prior to the date printed on the tax return?  [ ANSWER ]

  11. Who is required to file an Occupational License Tax Return?  [ ANSWER ]

  12. Are Homeowner's Associations required to file an Occupational License Tax Return (Form OL-3)?  [ ANSWER ]

  13. What legal holidays are recognized by the Louisville Metro Revenue Commission  [ ANSWER ]

  1. What is the “Louisville Metro Revenue Commission?

    The Louisville Metro Revenue Commission, formerly known as the "Commissioners of the Sinking Fund", is a municipal corporation that was created in 1851 by act of the Kentucky General Assembly as the bond servicing agent for the City of Louisville’s general obligation debt.  It has been in continuous service since that time. The term ‘SINKING FUND’ is an accounting term used to describe an account in which money is accumulated in order to pay off the debt on general obligation bonds when the bonds mature. The amount of bonded indebtedness “sinks” as the account grows in value.  

    The Louisville Metro Revenue Commission still services the City’s bonded indebtedness, but its most important function is to collect occupational license fees/taxes on behalf of Louisville Metro Government, the Jefferson County Board of Education, the Anchorage Board of Education, and the Transit Authority of River City (TARC). The Revenue Commission also issues various special licenses and collects the tax imposed on transient rooms and insurance premiums on behalf of Louisville Metro.
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  2. What are the requirements in Metro Louisville or Jefferson County to start a new business?

    The individual or business entity must be registered with the Louisville Metro Revenue Commission.  Registration should take place BEFORE earning income or business activity begins. If income is received which has not been reported, registration should occur AT ONCE.  The registration process consists of completing and submitting a Registration Application for a Tax Account Number. The individual or business entity is required to state the nature of their business; the legal name of the individual or business entity; mailing addresses, telephone numbers, and social security number and/or federal identification number associated with that individual or business entity.

    You can register your business online by clicking on the "Register Your Business" icon or download and print the Registration Application by clicking on the "Forms and Publications" icon.  You may also contact our Taxpayer Service Division at 502-574-4860, Monday-Friday, from 8:00am-5:00pm (EST) to request a Registration Application be mailed to you through the United States Postal Service.
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  3. Must an employer in Metro Louisville withhold occupational fees/taxes from an employee that does not reside in Metro Louisville?

    Yes.  Employers are required to withhold occupational license fees/taxes from every employee whose physical work location is in the Louisville Metro jurisdiction. The tax rate is determined by where the employee lives.  For employees who work in Louisville Metro, but live outside of Louisville Metro, the occupational fee/tax rate is 1.45% (.0145).  For employees who both work and live in Louisville Metro, the occupational fee/tax rate is 2.2% (.0220).  The only exception to this tax rate is for ordained ministers.  (See Question 4 for information regarding  ordained ministers).  Employees who live in, but do not work in Louisville Metro, are not subject to the occupational tax.
     
    Help in determining employee residency can be found by entering the employee's address and clicking "Map It" inside the "Map City Services" icon on this web site page. 
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  4. What is the occupational tax rate for ordained ministers?
     
    The tax rate is .75% (.0075) for ordained ministers who both work and reside in the Louisville Metro jurisdiction.  Ministers who work in Louisville, but reside outside of Louisville Metro, Kentucky, are not subject to the occupational tax.
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  5. What do I do if I am filing late?  Will I be charged penalty and interest?

    If the due date for the filing of a return has past, file the return as soon as possible to avoid any further penalty or interest.  You will be charged a minimum $25.00 penalty for late filing.  Additional penalties for the late filing and late payment and interest on any unpaid tax that is not paid by the original due date may be assessed.
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  6. What is the penalty for failure to file Form OL-3 timely?

    There is a five percent (5%) penalty per month, or a fraction of a month, to a maximum of twenty-five percent (25%) of the total license tax liability for failure to file and/or pay a tax return by the regular or extended due date.  Pursuant to KRS 67.790, there is a minimum $25.00 penalty for failure to file and\or pay any return or report by the due date. Interest is computed at twelve percent (12%) per annum from the original due date until the date of payment.  
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  7. What is the penalty for failure to file Form W-1 timely?

    Employers are subject to a penalty of five percent (5%) per month, or a fraction of a month, to a maximum of twenty-five percent (25%) of the total license tax liability, plus interest at a rate of twelve percent (12%) per annum from the due date until paid.  The penalty and interest charges are assessed against amounts not paid by the due date.  Pursuant to KRS 67.790, there is a minimum $25.00 penalty for failure to file and/or pay any return or report by the due date.  
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  8. Are Section 125 Plans subject to the occupational tax?

    Contributions by employees to Section 125 Plans are subject to the occupational tax.  An employer must withhold the occupational license fee on amounts contributed by an employee to any welfare benefit, fringe benefit, or other benefit plan made by salary reduction, or other payment method which permits employees to elect to reduce federal taxable compensation under the Internal Revenue Code, including, but not limited to, Sections 125 and 132 of the Internal Revenue Code.
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  9. Will the Revenue Commission accept a copy of the federal extension?

    A standard extension request form (Form OL-3E) is available through the Louisville Metro Revenue Commission's website. However, a copy of your federal income extension request for the same year, is acceptable.  Your Louisville Metro Revenue Commission account number needs to be clearly marked on the federal extension for proper posting to your account. The extension request must be postmarked or hand delivered to the Revenue Commission on or before the original filing due date of the tax return.

    If the Revenue Commission grants an extension of time for filing a return, any balance unpaid when payment is due, without regard to the extension granted, shall be assessed interest at the rate of twelve percent (12%) per annum from the date first due until paid and a late payment penalty of one percent (1%) per month, or fraction of a month, to a maximum penalty of five percent (5%) shall also be assessed upon the balance of the tax, as finally determined, not paid when originally due, unless the extension granted is for no more than thirty (30) days or unless the application for extension is accompanied by payment of an estimated tax in an amount equal to ninety percent (90%) or more of the total tax as finally determined.
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  10. Is it necessary to file Form OL-3 if activity ceased prior to the date printed on the tax return?

    Yes.  The Revenue Commission must be advised in writing that there was no activity conducted within Louisville Metro, Kentucky, or Jefferson County.  Check the box on Form OL-3 that indicates “No Activity”.  If you plan to conduct no activity within this jurisdiction in the future, also check the “Final Return” box and indicate the date activity ceased in this jurisdiction.  The Revenue Commission will then close your occupational tax account.
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  11. Who is required to file an Occupational License Tax Return (Form OL-3)?

    Any individual (resident or non-resident) or business entity (partnerships, corporations, or S-Corporations) who receive taxable compensation are required to file a Form OL-3 and pay the occupational tax to the Revenue Commission, if due. If taxes are not withheld by your employer or you are engaged in a business, you must file a Form OL-3 each year whether or not tax is due.  Business activity includes rental property, sole proprietorships (Schedule C), partnerships, and corporations.  Even if your business has a loss for the year, you are still required to file Form OL-3.
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  12. Are Homeowner's Associations required to file an Occupational License Tax Return (Form OL-3)?

    If a Homeowner's Association reports taxable income on their federal tax return (Form 1120-H) for any tax period, a Form OL-3 must be timely filed and occupational license fees must be timely paid for that tax period. A Homeowner’s Association is exempt from occupational license fees only if it is properly organized as a non-profit corporation under Kentucky state law, adopts bylaws fairly setting forth the right, powers, and privileges of homeowners, makes a timely election under Section 528 of the Internal Revenue Code, and annually submits a copy of the federal tax return (Form 1120-H) reporting no taxable income. A copy of the Homeowner's Associations' federal tax return (Form 1120-H) must be submitted to the Louisville Metro Revenue Commission annually, with no taxable income reported, to prove the tax-exemption for that tax period.
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  13. What legal holidays are recognized by the Louisville Metro Revenue Commission?

    The following legal holidays are recognized by the Louisville Metro Revenue Commission:

         • New Year’s Day
         • Martin Luther King, Jr. Day
         • Memorial Day
         • Independence Day
         • Labor Day
         • Thanksgiving Day
         • Friday after Thanksgiving Day
         • Christmas Day

    The observance of these legal holidays will delay a tax return’s due date until the next official business day. Please refer to the Louisville Metro Revenue Commission’s Tax Calendar for a list of important due dates. 
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