I formed a single-member LLC in Philly back in March. Haven't sold a single thing yet , still building the website, no revenue, nothing. Last week I got a letter from the city Revenue Department saying I owe a business income & receipts tax return plus what looks like a small amount of tax for the 2024 tax year. I have no income to report. Is this a mistake, or does the city just send these to every registered entity regardless? I don't want to ignore it and get hit with penalties, but I also don't want to pay a tax I don't owe. Anyone been through this?
Local Taxes
My Philadelphia LLC received a city tax notice before making its first sale
Welcome to Philadelphia, where The mail arrives before the money does.
Not necessarily a mistake. The city mails out BIRT (business income & receipts tax) returns to registered businesses as a matter of course, even if you're not yet active. But there are exclusions — if you're under a certain gross receipts threshold you may not owe, and the net income tax only applies if you're actually profitable. Check the current thresholds on the Revenue Dept site before you do anything.
also the city has a separate thing for new businesses where the first year is handled a little differently depending on when you filed. March is kind of a weird spot in the year for that. I'd call the Revenue Dept. direct line, not the 311 number, they're actually pretty helpful.
delete the website, keep the LLC, live off the land
Seconding what geranium said. A few people in my building's little business group got the samee letter when they weren't active yet. There's usually a box to check for "no activity" and you can file a zero return. Just make sure you actually file it — the penalty for ignoring the notice is worse than the cost of filing a nothing-sandwich
Right, and to be clear — I am not a tax pro, I just have a cousin who went through this and I read the forms out of spite. The city's forms are confusing on purpose. Get a preparer if you can afford one for the first filing.
Honestly the "on purpose" thing is real. I called once and asked which form applied to me and got two different answers on two different calls. So write down who you talked to and when, if you do call.
Slightly off topic, but a single-member LLC in PA also has to think about state filings, not just city. So if the city notice surprised you this much, buckle up for the bigger pile. Not trying to be a downer, just saying the first year is all paperwork and no money.
roofdeck_randy speaks the truth. I assumed "no sales = nothing to do" for like four months and then had a mild panic when I found out otherwise.
Underrated move: request a short extension on the return even if you're filing a zero. Buys you time and the clock on penalties usually pauses. I did it last year. Not a lawyer, not your accountant, just a guy who hates deadlines.
"I am not a tax pro" is the forum signature of our generation
Ha. But seriously I'd rather a bunch of non-pros remind each other to file a zero return than everyone sit on mailed notices and eat late fees. OP, the zero return path is legitimate and probably the fastest fix. Just dont let the letter keep sitting on the counter.