Business Income & Receipts Tax (BIRT) | Services (2024)

Every individual, partnership, association, limited liability company (LLC), and corporation engaged in a business, profession, or other activity for profit within the City of Philadelphia must file a Business Income & Receipts Tax (BIRT) return. This includes:

• Those engaged in commercial or residential real estate rental activity.
• Estates, trusts, or non-profits engaged in any for-profit business or activity within Philadelphia.
• Those who maintain a Commercial Activity License (CAL) but do not actively engage in business.

In all of the situations described above, you must file a BIRT return whether or not you made a profit.

If you have an active CAL but do not actively engage in business, you must file the BIRT return and tell the City that no business occurred. If you don’t file a return, you will receive a non-filer notice and court costs could be imposed.

The BIRT can be filed and paid online. Starting with payments due in April 2018 for Tax Year 2017, taxpayers who owe $5,000 or more for the BIRT are required to pay those taxes electronically.

If you must amend a BIRT return, complete a new tax return with the updated amount(s). Place an “X” in the box that indicates the form is an amended return.

For guidance on how certain federal tax provisions are treated for Philadelphia business and personal tax purposes, please visit our Guidance on federal tax laws webpage.

No Tax Liability

Businesses with $100,000 in Philadelphia taxable gross receipts or less are not required to filethe Business Income & Receipts Tax (BIRT)return. (See BIRT instructions). Instead, we recommend that you file the one-page No Tax Liability (NTL) form using your BIRT account on thePhiladelphia Tax Center. The process is very easy. You should file the NTL for each year that your business has no BIRT liability.

To file an NTL on the Philadelphia Tax Center:

1. Log into your Philadelphia Tax Center profile at tax-services.phila.gov
2. Find your BIRT account, and select “File, view, or amend returns.”
3. Pick “File now” on the “Returns” screen
4. Carefully review your tax information and hit “Next.”
5. On the “Tax liability” screen, enter your liability amount and hit “Next.” If your liability amount is less than $100,000, you will be prompted to file a No Tax Liability instead. Follow the onscreen directions to complete the process.

If you prefer filing a No Tax Liability form, please mail your completed form to:

City of Philadelphia
Department of Revenue
P.O. Box 1660
Philadelphia, PA 19105-1660

Note: If you plan to carry forward net operating losses, we recommend filing a complete BIRT return to help you keep track of your net operating loss carryforwards. Net operating losses incurred in tax years 2022 and thereafter may be carried forward 20 years. Net operating losses incurred in tax years prior to 2022 may only be carried forward three years.

The BIRT must be filed and paid by April 15 of each year, for business activity from the previous calendar year. You may also need to pay estimated tax for the following year, depending on when you started business activity in Philadelphia:

• When you file your first year’s BIRT return after starting business activity in Philadelphia, you don’t need to pay estimated tax for the following year.
• When you file your second year’s BIRT return, you must pay estimated tax for the following year, equal to 100% of your actual tax from the previous year. For this second filing only, you may pay this estimated tax in quarterly installments due April 15, June 15, September 15, and January 15.
• All following years, you must pay the full estimated tax no later than April 15.

Filing extension

Need more time to prepare and file your Philadelphia Business Income and Receipts Tax (BIRT) returns? We will automatically grant you an extension of time to file up to 60 days from the April due date or the original due date of the BIRT return. When this initial 60-day extension period ends, we may grant you an additional extension time if the Internal Revenue Service (IRS) grants you an extension of time for filing the federal return. In effect, we will grant you a matching extension for filing the BIRT return up to the termination date of the federal extension period.

If granted an extension period to file your BIRT return, it cannot exceed the end date of the federal extension period of up to six months from the original IRS filing due date.

There’s no specific filing extension form for Philadelphia’s BIRT. Filing an extension payment voucher either by paper or online serves the dual functions of filing an extended return and making the extension payment.

Please understand that an extension of time to file your returns does not grant you any extension of time to pay your taxes. Payments made after the original due date are subject to interest and penalty charges. See our interest, penalties, and fees page for more information about rates.

If you have an overpayment or tax credit, which you do not wish to be refunded, please contact taxpayer services at (215) 686-6600 to request that it be applied to your desired tax period. You can also apply for credits online through the Philadelphia Tax Center:

1. Log into your Tax Center profile.
2. Find the BIRT panel under the “Summary” tab. Select “Apply for credit programs” on the right side of this same screen.
3. Follow the onscreen prompts to complete the process.

Trade Show Vendors

As of Tax Year 2022, Trade Show Vendors in Philadelphia must use the BIRT-EZ annual form to file their returns on thePhiladelphia Tax Center. As a trade show vendor,the Department of Revenue permits the use of separate accounting to calculate taxable receipts and net income for the specific event within the City of Philadelphia. Tradeshow Vendors can compute a separate Profit & Loss/Income Statement for the specific event that reports the gross receipts generated and a computation of net income after deducting the ordinary, reasonable and necessary expenses related to the event.

The Trade Show Vendor Form is no longer available. File yourreturn onlineby:

• Going tohttps://tax-services.phila.govand selecting “Register a new taxpayer” under the “New taxpayers” panel on the homepage.
• The site asks if you are a tax professional registering on behalf of a client. If you are, select “Yes.” Everybody else should select “No.”
• Follow the on-screen prompts to complete registration. The last step is tocreate a username and password.

How much is it?

The current rates for the Business Income & Receipts Tax (BIRT) are1.415 mills ($1.415 per $1,000) on gross receipts, and 5.99% on taxable net income.

The BIRT is based on both gross receipts and net income. Both parts must be filed.

This is a separate tax from the Net Profits Tax (NPT), so it’s possible to have to pay both the BIRT and the NPT.

What happens if you don't pay on time?

If you don’t pay on time, interest and penalties will be added to the amount you owe.

For more information about rates, see our Interest, penalties, and fees page.

There are no extensions for tax payments, but you can apply for an extension to file your return.

Your Commercial Activity License can be suspended or revoked if you don’t pay your taxes. For-profit businesses are not allowed to operate in Philadelphia if they don’t have an active Commercial Activity License. This means that if you fall behind with your tax payments, we can suspend your business operations until your account is current.

Are you eligible for a discount?

Exemptions

Since tax year 2016, there has been an exemption of the first $100,000 in gross receipts and a proportionate share of net income from the Business Income and Receipts Tax.

Tax credits

Some tax credits reduce the amount of BIRT owed to the City. Regardless of whether your business qualifies for reductions or exemptions, you’re still required to file a BIRT return.

Tax credits that can be applied against the BIRT include:

• Sustainable Jump Start
• Healthy Beverage Tax Credit
• Community Development Credit
• Distressed Business Tax Credit
• Green Roof Tax Credit
• Jobs Creation Tax Credit
• Keystone Opportunity Zone (KOZ)
• Life Partner and Transgender Care Health Benefits Tax Credits
• Philadelphia Re-Entry Employment Program (PREP)
• Sustainable Business Tax Credit
• Veterans’ Employment Tax Credit

Visit the Tax Credits section of this site to find specific eligibility and filing requirements.

Presence in Philadelphia

Economic presence (for tax year 2019 through present day)

Section 103 of the BIRT regulations were amended to reflect the ruling of the U.S. Supreme Court in the case of South Dakota v. Wayfair, Inc.

A business is considered to have nexus in Philadelphia and is subject to BIRT if it has generated at least $100,000 in Philadelphia gross receipts during any twelve (12) month period ending in the current year.

Public Law 86-272 continues to apply for the tax on Net Income.

Active presence (in effect through tax year 2018)

Section 103 of the BIRT regulations includes a definition of “doing business” in Philadelphia. If your business meets certain regulatory criteria, it may qualify for “active presence” treatment (i.e. the tax on gross receipts only).

Can you be excused from paying the tax?

Full exemptions are only available to certain organizations. In general, organizations that are exempt from filing and paying the BIRT are:

• Nonprofits and religious organizations.
• Individuals engaged in a hobby or other not-for profit activity.
• Port related activity.
• Public utilities.

The list above is not exhaustive, and exclusions are based on the facts and circ*mstances of each business. Review the City’s Code and Revenue’s BIRT regulations to make sure you are eligible for an exemption.

Businesses in the first two years of operations may be exempt from paying BIRT through the Jump Start Philly program. Businesses in the first three years of operations may be exempt from paying BIRT through the Sustainable Jump Start program.