Carryforward for BIRT increased to 20 Years

Every individual, partnership, association, limited liability company (LLC), and corporation engaged in a business, profession, or other activity for profit within the City of Philadelphia must file a Business Income & Receipts Tax (BIRT) return unless Philadelphia taxable gross receipts are less than $100,000.

In November 2022, the carryforward period for Business Income and Receipts Tax (BIRT) net operating loss carryforwards was increased to 20 years. The BIRT net operating loss carryforward has long been capped at three years. In 2018, the city council passed an ordinance extending the carryforward period to twenty years and the Pennsylvania General Assembly finally enacted legislation (HB 324) allowing taxpayers to immediately take advantage of the change with respect to losses incurred in 2022 and later years. Losses incurred before 2022 remain subject to a three-year carryforward. 

In addition, on Nov. 9. 2022, the mayor of Philadelphia signed an ordinance reducing the BIRT tax rate applicable to the tax year 2022 to 5.99% from 6.2%. The amendment serves to correct an error in the original rate reduction legislation enacted in June of 2022. The tax rate applicable to tax years 2023 and beyond remains at 5.99%. 

Questions? Reach out to your accounting professional.