In response to the COVID-19 coronavirus emergency, the City of Philadelphia Department of Revenue has issued the following:
REAL ESTATE TAX:
The deadline to pay 2020 Real Estate Tax has been extended an additional 30 days. The due date for 2020 Real Estate Tax is now April 30, 2020.
Additionally, the Department has extended the deadline to apply for an installment payment plan for 2020 Real Estate Tax. All senior citizens over the age of 65, and eligible low-income homeowners can apply for this installment plan by April 30, 2020. For more information about applying for a Real Estate Tax Installment Plan, please visit: http://www.phila.gov/real-estate-relief.
BUSINESS INCOME & RECEIPTS TAX (BIRT) and NET PROFITS TAX (NPT):
The deadline for filing and paying BIRT and NPT has been extended to July 15, 2020 to coincide with the IRS extensions granted to businesses. This extension policy includes estimated payments and requires no additional action from businesses.
The Wage Tax policy has not changed. Schedules to withhold and remit the tax to the City remain the same. The Department of Revenue published the following guidance to ensure employees that are no forced to work from home understand the Wage Tax standard:
The City of Philadelphia uses a “requirement of employment” standard that applies to all non-residents whose base of operation is the employer’s location within Philadelphia. Under this standard, a non-resident employee is not subject to the Wage Tax when the employer requires him or her to perform a job outside of Philadelphia (i.e. their home). A non-resident who works from home for the sake of convenience is not exempt from the Wage Tax- even with his or her employer’s authorization. On the other hand, if a Philadelphia employer requires a non-resident to perform duties outside the city, he or she is exempt from the Wage Tax for the days spent fulfilling that work. Non-resident employees who mistakenly had Wage Tax withheld during the time they were required to perform their duties from home in 2020, will have the opportunity to file for a refund with a Wage Tax reconciliation form in 2021. The City of Philadelphia requires an employer to withhold and remit Wage Tax for all its Philadelphia residents, regardless of where they perform their duties.
SCHOOL INCOME TAX (SIT):
The payment and filing deadline for the 2019 School Income Tax (SIT) remains April 15, 2020. Taxpayers who cannot meet this deadline should use an extension payment coupon to submit a payment equal to the previous year’s liability by April 15, 2020. Taxpayers have until July 15, 2020 to file a return and pay any difference in tax owed. Taxpayers who overpay in April should indicate on their 2019 SIT return how the Department of Revenue should apply their overpayment. Payments received after July 15, 2010 will accrue interest and penalty from April 15, 2020. A payment coupon was mailed to taxpayers along with their return. Taxpayers who need a payment coupon should visit the Department’s efile/epay website, www.phila.gov/pay.
USE & OCCUPANCY TAX:
Businesses ordered to close beginning March 17, 2020 as a result of safety measures enacted by the Mayor of Philadelphia are not subject to the Use & Occupancy Tax while occupancy of their place of business is prohibited. Businesses that are ordered to close by order of the Mayor beginning March 17, 2020, are not considered to “occupy” the space. The due dates to pay the tax remain the same. Businesses deemed essential, whether they choose to operate or not, are subject to Use & Occupancy Tax. Businesses continuing operations, businesses that have employees on-site, or businesses that maintained employee occupancy to their place of business throughout the Mayor’s order, are also subject to Use & Occupancy Tax. Landlords should file and remit the Use & Occupancy Tax collected from the tenants of the property still using their space for business purposes.
When filing, taxpayers should use “Line 3-Non-taxable Exempt Amount” of the filing form to indicate the portion of their property that was not occupied through the closure order.
Landlords who do not remit the tax, but have collected it through regular rent collection, must refund applicable portions of the tax to tenants.
Once the order to close non-essential businesses is lifted, all property legally available for business purposes, that has not been vacated, is subject to Use & Occupancy Tax.
ABATEMENT OF INTEREST AND PENALTIES:
The City of Philadelphia has enacted an emergency regulation (Special Regulation of the City of Philadelphia Department of Revenue and Law Department for Waiver of Interest and Penalties for Late Filing and Payment Due to COVID-19 emergency) to provide for the abatement of interest and penalties on real estate tax, business income and receipts tax (BIRT), net profits tax (NPT) and school income tax (SIT) paid by the extended deadlines provided by various emergency orders signed by the Mayor. The regulation abates interest and penalties on the following:
- tax year 2020 real estate taxes paid no later than April 30, 2020;
- 2019 BIRT and 2019 NPT taxes, and 2020 estimated BIRT and NPT taxes filed and paid no later than July 15, 2020; and
- 2019 school income taxes where the taxpayer pays amount equal to the amount due for 2018 by April 15, 2020 and files a 2019 return and pays any balance due by July 15, 2020.
For any questions related to the City of Philadelphia Department of Revenue’s tax guidance in response to COVID-19, please contact Paul Morcom, Esquire at 717-237-5364 or Sharon Paxton, Esquire at 717-237-5393.