Occupational Tax

What is an Occupational Tax?

Occupational Tax is a fee imposed on individuals for the privilege of working within the City of Leeds. This fee is calculated based on the gross receipts or compensation an individual receives from their employment.

Who Pays the Occupational Tax?

• Employees: Any person employed within the city must pay the Occupational Tax. This includes full-time, part-time, and temporary workers.

• Employers: Employers within the city are responsible for withholding this tax from their employee's wages and remitting it to the city.

• Non-residents: Non-residents who work within the city are also subject to this tax, but only for the portion of their work performed within the city limits.

• Corporate Officers and Government Officials: Officers of corporations and government officials who receive salaries for services rendered within the city are liable for this tax.

Occupational Tax Rate:

The Occupational Tax is set at 1% of gross receipts or compensation. This includes all salaries, wages, commissions, bonuses, severance pay, and other monetary compensation for work done within the city. No deductions are allowed before calculating the tax.

Employer Responsibilities:

Employers are required to:

• Withhold the Occupational Tax from each employee's pay.

• File monthly returns and remit the collected tax to the City of Leeds by the 20th day of the following month.

• File an annual return by January 31 each year, including a summary of all taxes withheld in the previous year and a copy of each employee’s IRS Form W-2 and Form W-3.

• Maintain accurate records of all compensation, deductions, and payments for at least five years.

Penalties and Interest:

Failure to pay the Occupational Tax on time will result in penalties and interest:

• Interest: Unpaid taxes will accrue interest at 12% per annum.

• Penalties: A penalty of 10% of the unpaid tax will be imposed. The minimum penalty is $1.00.

• Additional Penalties: Employers or employees who fail to comply with the tax requirements may face possible civil and criminal penalties for continued non-compliance.

Disclaimer

This page is intended to provide general information about the Occupational Tax. For specific legal advice or more detailed guidance, please consult the City’s Ordinance or a legal professional.