[Archived] Alexandria City Council Adopts Major Innovative Business License Tax Relief, Reform, and Simplification

City Press Release


	For Immediate Release	For More Information, Contact
	June 22, 2005 PIO# 208-05/rdo	Barbara J. Gordon, Public Information Officer, or Raynard Owens, Communications Officer, at 703.838.4300 Raynard Owens, Communications Officer, at 703.838.4300

Alexandria City Council Adopts Major Innovative
Business License Tax Relief, Reform, and Simplification

The Alexandria City Council adopted an ordinance during its June 21 meeting that provides business license tax relief, reform, and simplification for small and medium sized businesses during their major first two years of operation in the City.

The newly reformed system, which is relatively unique in Virginia, will reduce the tax burden for businesses whose estimated gross receipts are between $100,000 and $2 million to only $50 in the first year, and then, on average, cuts the tax burden in about half for the second year. Subsequent-year complicated true-ups are also eliminated for these businesses.

Businesses that have estimated gross receipts of $2 million or less in the first year of operation will pay a one-time $50 fee to obtain a business license. In the second year of operation, the businesses will pay the business license tax based on the first year’s actual gross receipts and not the second year estimated gross receipts, which had been the standard practice. The businesses will pay the business license tax in the third year based upon the second year’s actuals.

By implementing these reforms, the City will be leaving needed funds in start-up businesses’ coffers at a time when those businesses most need those funds. In addition, the tax reform will serve as an incentive for businesses to locate in Alexandria.

Based on the number and tax returns of new businesses received in prior years, the ordinance is expected to benefit approximately 100 new businesses in FY 2006 at a cost of $200,000. In FY 2007 and beyond, the estimated cost is $400,000 and would benefit approximately 200 new businesses per year.

For details on the City’s new business license tax reform, call Mark Jinks, Assistant City Manager, at 703.838.4300.

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