Business & self-employment

Use & Occupancy Tax

Due date
25th
of each month, for the same month's activity
Tax rate
1.21%

of the assessed value of the property, with a $2,000 annual tax exemption

Who pays the tax

You have to pay the Business Use and Occupancy Tax if:

  • Your business is physically located in Philadelphia.
  • You operate your business from your Philadelphia residence.
  • You, your tenants, or your sub-tenants use your Philadelphia property for business purposes.

Any owner or landlord whose property is used for business purposes is responsible for filing and paying this tax. The owner or landlord must collect the tax from tenants and pay it to the City, along with any tax for which the owner or landlord is liable.

Anyone responsible for filing a return and paying the tax must do so whether or not they receive a tax return.

Important dates

The Use and Occupancy Tax must be filed and paid monthly on the 25th of each month. If the 25th falls on a weekend or holiday, the return is due on the first business day after the 25th.

For exact due dates, you can refer to the Use and Occupancy Tax schedule of due dates.

 

Tax rates, penalties, & fees

How much is it?

The Use and Occupancy Tax rate is 1.21% of the assessed value of a property, with a $2,000 annual tax exemption.

Beginning July 1, 2015, an exemption of $165,300 applies to the assessed value of each property used for business. This translates into a $2,000 annual tax exemption ($167 per month or $500 per quarter). If there are multiple businesses using or occupying the same property, the $2,000 tax exemption is divided equally between them. Landlords must inform tenants of the number of users or occupiers of the property so they’re aware of how the exemption should be divided.

The Office of Property Assessment determines the value of your property. If you disagree with your property assessment, you can file an appeal with the Board of Revision of Taxes (BRT). Appeal applications are due by the first Monday in October prior to the tax year for which you are requesting a revision. (For example, the due date for 2016 appeals was October 5, 2015.)


What happens if you don't pay on time?

If you don’t pay on time, penalty fees and interest will be added to the amount you owe. Penalties accrue at 1.25% of the unpaid tax for each month or fraction thereof. The amount due will also be subject to monthly interest fee of 0.416%.

For more information about interest and penalty rates, visit the interest, penalties, and fees page.

If you accrue interest up to $15,000 or penalty up to $35,000 and want to dispute it, you’ll need to complete a waiver petition through the City’s Tax Review Board.

Discounts & exemptions

Are you eligible for a discount?

If you are responsible for collecting Use and Occupancy Tax from tenants, you can receive a 1% discount on the total tax if the payment is submitted on or before the 25th of the month the tax is due.

However, if you are the owner of the property and owe a portion of the tax because you operate a business there, the discount cannot be applied to your portion.


Can you be excused from paying the tax?

Portions of your property may be excluded from the assessed value when determining the Use and Occupancy Tax. This results in a lower total tax amount owed. Exemptions include:

  • The portion of real estate used for living space.
  • Real estate subject to the Pennsylvania Sales, Use, and Hotel Occupancy Tax.
  • The portion of real estate used for nonprofit business purposes. To be excused from collecting tax from a nonprofit, a landlord must obtain a copy of the nonprofit’s Federal Exemption Notice. The landlord must submit this document with the first tax return filed after receiving it.
  • The portion of real estate used for port-related activities like piers, wharves, and marine terminal facilities. Exempt property areas must touch or enter either the Delaware or Schuylkill River and fall within City limits.
  • Vacant commercial properties, or portions of commercial properties that are not currently in business use.

Exemptions are not granted automatically. You must report them when you file a Use and Occupancy Tax return.

How to pay

1
File your return online

The Use and Occupancy tax must be filed online through the City’s eFile/ePay site.

To file your taxes online, you’ll need both:

  • Any one of the following types of identification or account numbers:
    • Federal Entity Identification Number (EIN)
    • Social Security Number (SSN)
    • Philadelphia Tax Account number
  • Your Philadelphia Department of Revenue PIN (personal identification number)
2
Pay the tax online

You can pay the Use and Occupancy Tax online through the City’s eFile/ePay website or through the Electronic Funds Transfer program.

If paying by eCheck on the City’s ePay site, you’ll need:

  • Your bank’s nine-digit routing number
  • Your savings or checking account number

Payments made by eCheck are handled free of charge.

A processing fee will apply to credit and debit card payments.

Tax code

84

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