(A) Except as provided in divisions (B) and (E) below, 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 city an occupational license tax for the privilege of engaging in such activities with the city. The occupational license tax shall be measured by 1.95% of:
(1) All wages and compensation paid or payable in the city for work done or services performed or rendered in the city by every resident and nonresident who is an employee; and
(2) The net profit from business conducted in the city by a resident or non-resident business entity.
(B) All partnerships, S corporations and all other entities where income is “passed through” to the owners are subject to this chapter. The occupational license tax imposed in this chapter is assessed against income before it is “passed through” these entities to the owners.
(C) If any business entity dissolves, ceases to operate or withdraws from the city during any taxable year, or if any business entity in any manner surrenders or loses its charter during any taxable year, the dissolution, cessation of business, withdrawal or loss or surrender of charter shall not defeat the filing of returns and the assessment and collection of any occupational license tax for the period of that taxable year during which the business entity had business activity in the city.
(D) If a business entity makes, or required to make, a federal income tax return, the occupational license tax shall be computed for the purposes of this chapter on the bases of the same calendar or fiscal year required by the federal government, and shall employ the same methods of accounting required for federal income tax purposes.
(E) The occupational license tax imposed in this section shall not apply to the following persons or business entities:
(1) Any bank, trust company, combined bank and trust company, combined trust, banking and title business organized and doing business in this state, any savings and loan association whether state or federally chartered pursuant to the provisions of KRS 92.300;
(2) Any compensation received by members of the Kentucky National Guard for active duty training, unit training assemblies and annual field training pursuant to the provisions of KRS 92.300;
(3) Any compensation received by precinct workers for election training or work at election booths in state, city or local primary, regular or special elections pursuant to the provisions of KRS 92.300;
(4) Public service corporations that pay an ad valorem tax on property valued and assessed by the commonwealth’s Department of Revenue pursuant to the provisions of KRS 136.120. Licensees whose businesses are predominately non-public service who are also engaged in public service activity are required to pay a license fee on their net profit derived from the non-public service activities apportioned to the city;
(5) Persons or business entities that have been issued a license under KRS Ch. 243 to engage in manufacturing or trafficking in alcoholic beverages. Persons engaged in the business of manufacturing or trafficking in alcoholic beverages are required to file a return, but may exclude the portion of their net profits derived from the manufacturing or trafficking in alcoholic beverages;
(6) Insurance companies incorporated under the laws of and doing business in the Commonwealth of Kentucky except as provided in KRS 91A.080;
(7) Any profits, earnings, distributions of an investment fund which would qualify under KRS 154.20-250 to 154.20-284 to the extent any profit, earnings or distributions would not be taxable to an individual investor;
(8) All rental income of any type or source is fully taxable for all forms of ownership, except for an individual or single-member LLC who owns four or less residential rental housing units; they are exempt from the requirements of this chapter. A housing unit is defined as a single living quarters (duplex = two, apartment unit = one). With ownership of five or more residential rental units inside the city limits, an individual or single-member LLC is presumed to be operating a business and is subject to this chapter and all net profits are fully taxable.
(9) The sale of agricultural products by the owner of locally homegrown agriculture products. This does not include the resale of produce from a distributor;
(10) Private domestic labor is excepted, net included are commercially marketed services provided for the home;
(11) Vendors who only participate in festivals or fairs sponsored by non-profit organizations where said events do not exceed three days may be exempt; and
(12) Any mobile food vendor that only participates in city sponsored events or festivals shall be exempted from obtaining a city occupational license, however, they shall be required to pay the applicable vendor set-up fee associated with each city event or festival.
(Prior Code, § 110.03) (Ord. 09-2006, passed 5-8-2006; Ord. 10-2012, passed 8-20-2012; Ord. 25- 2019, passed 11-4-2019; Ord. 13-2023, passed 6-26-2023)