Occupational License or Net Profit

By PJ Martin

Editor

The Herald-News

 

In 2004, Ordinance 04-0525 was passed creating what most people call the ‘occupational tax’ in Metcalfe County. The occupational tax is 1% on the earnings of all employees in Metcalfe County and 1% on the net profit residents or businesses earn during the year.

If you are self-employed you need to file and pay the occupational taxes each quarter, but if you are a business owner (primary or secondary business) you must file and pay taxes on the net profits each year.

Anyone who works for a larger facility/business in Metcalfe County will notice the local tax deduction on their paycheck stub, but if you are a business owner with or without a store front you are required to fill out a business application form. The form can be found on the county website at https://metcalfecounty.ky.gov or you can see Lorrie Gilpin at the Metcalfe County Government Center. 

However, as the ordinance states, “every person or business entity engaged in any business for profit and any person or business entity that is required to make a filing with the Internal Revenue Service or the Kentucky Revenue Cabinet shall be required to file and pay to the county an occupational license tax for the privilege of engaging in such activities within the county.

What qualifies to withhold the 1 % occupational/net profit tax?

• All wages or compensation earned for work done or services performed or rendered in the county by every resident or nonresident;
• The net profit from any business conducted within the county by a resident or nonresident business entity.

Any person or business that performs business for profit and files a tax return that includes their profit with the IRS or Kentucky Revenue Cabinet is required to file and pay the occupational license tax within Metcalfe County. This includes any business within the county or any person(s) who performs business within the county or if the business owner/operator lives in the county.

There are exceptions to the occupational/net profit tax.

• Any bank, trust company, or combination of, banking and title insurance companies within KY, and any savings and loan association state or federal;
• Compensation received by members of the Kentucky National Guard for active-duty training, unit training, or field training;
• Compensation received by precinct workers for election training or work at election booths in a state, county, or local primary, regular, or special election;
• Public Service Corporations that pay an ad valorem tax on property valued and assessed by the KY Dept. of Revenue pursuant to KRS 136.120. If the business is predominately non-public service and also engages in public service activity, it is required to pay a license fee on the net profit earned from the non-public service activities within the county;
• Persons or businesses that have been issued a license under KRS Chapter 243 to manufacture or sell alcoholic beverages. While required to file a tax return, may exclude the portion of net profits earned from the manufacturing or sale of alcoholic beverages;
• Life insurance companies incorporated under the law of and doing business in the Commonwealth of Kentucky;
• Religious preachers and/or ministers serving and /or employed within the county.

There are specific percentage calculations for businesses that operate in more than one tax district and produce or sell products to or for the US government.

To explain this simply, if you operate a business with or without a store front, have rental properties, have a home business (e.g.: jewelry or kitchen items), perform services such as dozer work, babysitting, painting houses, etc. you must claim the income either quarterly or annually and must fill out a business application form.

As of May 1, 2023, Lorrie Gilpin was assigned the responsibility of updating and collecting Occupational Tax business applications. The forms can be found on the website or you can visit Lorrie Gilpin at the government center at 201 North Main Street, Edmonton, KY.

All of the information discussed and the forms can be found at https://metcalfecounty.ky.gov.