Understanding Business, Professional & Occupational License Tax
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Understanding Business, Professional & Occupational License Tax
When and How to Apply for a Business License
All business owners, including owners of home-based businesses, are subject to the BPOL tax. Business owners are required to register their business with the Department of Tax Administration (DTA) within 75 days of beginning business operations in Fairfax County. If not filed within 75 days, a 10% penalty for late filing will apply.
Business owners must renew their BPOL License each year. Both filing and payment are due by March 1. If the filing deadline falls on a Saturday, Sunday, or county holiday, the deadline is the following business day. A 10% penalty for late filing will be assessed for renewals submitted after March 1.
Businesses registered with DTA in the previous year will receive a renewal notice in the mail in January.
First time filers will need the following information to complete the form:
Most businesses, professions, trades, and occupations are assessed a license tax based on gross receipts for the prior year. For wholesale merchants, the license tax is based on gross purchases rather than gross receipts.
Receipts of venture capital or other investment funds are excluded from taxation, except commissions and fees.
The County's BPOL Ordinance requires an estimate for the first partial and the subsequent first full calendar year of operation. Although the first two years of operation require an estimate of gross receipts (or purchases, for wholesale merchants), in reality, the tax is based on actual gross receipts, since adjustments are made at the end of each tax year during the estimating phase.
Examples:
First Year (partial of operation) - A business makes an initial gross receipt estimate of $160,000. If the actual gross receipts at the end of the year are $135,000, an adjustment of $25,000 is made. This amount would be refunded if the business ended at that time or credited on the next tax year if the business continues. The ultimate tax effectively levied would be on the actual gross receipts of $135,000.
Second Year (first year completed from January 1 through December 31) - The tax basis would be a new gross receipt estimate for the full year. The tax bill would be based on the new gross receipts estimate plus the adjustment (+ or -) of the difference between the initial gross receipts estimate and the actual prior year gross receipts, as described for the first year.
Third Year (second year completed from January 1 through December 31; estimate no longer required) - The tax bill would be based on the actual prior year gross receipts, plus an adjustment (+ or -) of the difference between the prior year new gross receipts estimate and the actual prior year gross receipts.
For all subsequent calendar years, the BPOL tax is based solely on the prior year actual gross receipts.
BPOL Flat Fees and Rates
Businesses with gross receipts/purchases of $100,000 or less pay a flat fee, as follows:
There is no fee for businesses with gross receipts/purchases of $10,000 or less.
For businesses with gross receipts/purchases of $10,001 - $50,000, the fee is $30.
For businesses with gross receipts/purchases of $50,001 - $100,000, the fee is $50.
If gross receipts/purchases are $100,001 or more, then the BPOL tax rate applies . The tax rate varies based on the nature of the business and is specified in the BPOL Ordinance (Fairfax County Code Section 4-7.2).
Other Provisions
First-time applicants may also download the BPOL application and mail it to our office.
If a business which has paid a BPOL tax ceases to operate, a refund may be obtained for the portion of the tax already paid.
Businesses located in the cities of Fairfax, Falls Church, Alexandria, and the towns of Clifton, Herndon, and Vienna are not subject to county BPOL tax, but should contact those jurisdictions for license tax requirements. Businesses located in the towns of Clifton, Herndon, and Vienna are required to file business tangible personal property returns with the county.