FAQ

  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 domestic servants and ordained ministers?  [ ANSWER ]
     
  5. Who would be considered a “domestic servant"?  [ ANSWER ]
     
  6. What do I do if I am filing late?  Will I be charged penalty and interest?  [ ANSWER ]
     
  7. What is the penalty for failure to file Form OL-3 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 ]

  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 through our web site's Electronic Services or download and print the Registration Application by clicking on the Need Forms? 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 domestic servants and ordained ministers.  (See Questions 4 and 5 for information regarding  domestic servants and 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 clicking on the "Go" within the "My Louisville" icon on this web site page. 
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  4. What is the occupational tax rate for domestic servants and ordained ministers?
     
    The tax rate is .75% (.0075) for domestic servants and ordained ministers who both work and reside in the Louisville Metro jurisdiction.  Domestic servants and ministers who work in Louisville, but reside outside of Louisville Metro, Kentucky, are not subject to the occupational tax.
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  5. Who would be considered a “domestic servant”?
     
    A domestic servant is defined as an individual employed to drive his employer as a chauffeur, or employed on the grounds or in the home of his employer, to cook, clean, wash, garden, transport, or otherwise care for or wait upon the employer, the employer’s family, and guests; or to care for the person, home, grounds and/or vehicles of the employer, the employer’s family, and guests, including but not limited to maids, butlers, nurses, nursemaids, gardeners, cooks, launders and chauffeurs engaged to serve the employer, the employer’s family, and guests, but not including such individuals who are employed by a cleaning service, personal nursing service, chauffeuring service or other entity which offers the services of its employees to the public.
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  6. 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 may be charged both penalties for the late filing and late payment and interest on any unpaid tax that is not paid by the original due date.
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  7. What is the penalty for failure to file Form OL-3 timely?

    Five percent (5%) per month, or a fraction of a month, of the amount of the unpaid tax which would have been due, up to a maximum of twenty five percent (25%). Interest is computed at 12% per annum from the original due date until the date of payment.  There is a five percent (5%) penalty for failure to pay the tax by the due date.
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  8. Are Section 125 Plans subject to the occupational tax?

    Payments by employers to Section 125 Plans, sometimes referred to as cafeteria plans, flexible benefit plans or mini-flex plans, which provide the opportunity for employees to elect to reduce their taxable compensation to pay for non-taxable benefits such as hospitalization, group term life insurance, group disability insurance, etc., not otherwise paid for by the employer; would not be subject to the occupational tax, provided, however, that to the extent which any such Section 125 flexible benefit plan includes a qualified retirement plan with an Internal Revenue Code Section 401(k) arrangement, any amount deferred into the 401(k) plan pursuant to the employee’s election will be subject to the occupational tax, even though the amount reduced for the Section 125 portion of the plan otherwise would not be subject to the license fee/tax.

    EXAMPLE: An employer establishes a Section 125 plan which allows an employer to reduce compensation to pay the employee’s portion of the company’s health care premium and/or to defer a portion of the employee’s compensation into a 401(k) plan. The amount of the compensation reduction used to pay the employee’s portion of the health care premium would no be subject to the occupational tax. However, the portion of the compensation reduction which went into the 401(k) plan would be subject to the occupational tax.
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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 nonresident) or business entity (partnerships, corporations, 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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