- Agency
- The Lexington-Fayette Urban County Government Division of Revenue
- Form or filing
- The net profits license fee return, which has a final return box for a sale, dissolution or merger
- Timing
- Due by the fifteenth day of the fourth month after the tax year closes, so April 15 for calendar year filers, unless an extension applies
Common snag: Assuming the sale ended the duty to file. Profit earned in the year of sale still has to be reported on a final return.
This guide is general information and is not tax or legal advice. Rates, forms and dates change, so confirm everything with your CPA and the Division of Revenue.
A Local Tax on Top of State Tax
Every business operating in Fayette County needs an occupational license from the city and county government, and pays an annual fee after that.
For most businesses the yearly fee is based on net profit, so a sale does not erase the filing for the year you sold.
The Final Return Box
The net profits license fee return carries a box marked as a final return. The instructions list a sale, a dissolution and a merger among the reasons to use it. Check the box, answer the related question, then sign and date the return.
Ask your CPA to read the current form, because versions change over the years.
When It Is Due
The code sets the due date at the fifteenth day of the fourth month after the close of the year. For a calendar year business that means April 15 of the following year. The government can grant an extension of up to six months in some cases.
Because you sold mid year, your final period may be short. Your CPA decides how the profit before closing is reported.
The Initial License Fee Credit
New businesses pay a small initial license fee that can be credited against the first net profits return for that year. It does not create a refund. This matters to your buyer, who will usually apply for a new license rather than take over yours.
Payroll Fees and Other Local Accounts
If you have employees, the local government may also collect a fee on wages. Ask your CPA whether a final withholding return is needed and whether any other city or county account should be closed.
Steps for Sellers
- Ask your CPA which period your final return covers.
- Pull the last return filed so the numbers match.
- File the return with the final box checked, and keep a copy for your records.
- Confirm with the Division of Revenue that your account is closed.
Where This Fits
This is separate from the state side. Read buyer withholding and tax clearance and the guide on tangible property returns.
Your final year profit also affects how a buyer reads your books. See SDE versus EBITDA, then find your sale price.