OPT Frequently Asked Questions

OPT Frequently Asked Questions

  1. What is the Occupational Privilege Tax (OPT)? 
  2. What is the Business OPT?
  3. What is the "$500-a-month earnings test"?
  4. What are the tax rates for Denver OPT?
  5. When is the OPT return due?
  6. What factors determine the frequency of filing Denver OPT returns?
  7. Can I file an annual OPT return?
  8. If I file the Denver OPT return late, is there any penalty or interest due?
  9. How do I calculate the penalty and interest due on an OPT return filed late?
  10. I have several businesses in Denver; how much Denver OPT is due?
  11. I work for more than one employer in Denver; do I have to pay the Denver OPT for each job?
  12. Where can I download Form TD269?
  13. We are not located in Denver; do we have to pay Denver OPT?
  14. Our business is not located in the City of Denver. Why did Denver set up an OPT account for our business?
  15. I don’t have any employees, why do I owe a Denver OPT?
  16. How can I obtain additional information on OPT?

What is the Occupational Privilege Tax (OPT)
It is commonly called a head tax.  It is a tax imposed on businesses operating in Denver (Business OPT) and on individuals who earn at least $500 in a month performing services in Denver (Employee OPT).

 

What is the Business OPT?
The Business OPT is the tax imposed on businesses that have employees who meet the $500-a-month earnings test, and on the owners, partners or managers of businesses that perform any business, trade, occupation or profession in Denver. The rate is $4.00 per person per month.

What is the "$500-a-month earnings test"?
The $500-a-month earnings test means that the employee performs sufficient services in Denver to earn at least $500 from all sources (wages, tips, commissions, bonuses, etc.). This is not comparable to taxable income for income tax purposes.
Example: if an employee makes $600 a month working in Denver, and has a 401K plan deduction for $200, the employee’s taxable wages for income tax purposes is $400. However, the employee’s earnings for OPT purposes would remain at $600, and the OPT would be due.

 

What are the tax rates for Denver OPT?
An employee who earns at least $500 in a month from performing services in Denver is liable for the Employee OPT, which is to be withheld from their wages at the rate of $5.75 a month and remitted to Denver by the employer.
An employer is liable for paying Business OPT at the rate of $4.00 a month per each employee who is liable for Employee OPT. In addition, an employer is liable for paying the Business OPT at the rate of $4.00 per month on each owner, partner, or manager performing services in Denver, for any month in which the business operates in Denver.

When is the OPT return due?
The OPT return is due on the last day of the month following the period in which the liability was incurred. The period is determined by the filing frequency, either monthly, quarterly, or annually.
Example: If a quarterly filer is paying the first quarter (January through March), the payment would be due on April 30

 

What factors determine the frequency of filing Denver OPT returns?

  • Businesses that have 10 or more employees must file a return monthly.
  • Businesses that have fewer than 10 employees, may file a return quarterly.
  • If you are an individual, sole proprietor, or a partnership, without employees who are subject to the OPT, you are allowed to pay in advance for the entire calendar year.
  • All Payroll Services are required to file monthly - regardless of the number of employees for which they are filing.

Can I file an annual OPT return?
If you are an individual, sole proprietor, or a partnership without employees who are subject to the tax, you may pay in advance for the entire calendar year. This advance annual payment is due on April 30th of each year.

 

If I file the Denver OPT return late, is there any penalty or interest due?
There is a 15% penalty on the total amount of tax that was paid late, with a minimum penalty of $25.00.
The interest rate for late filers is 1% each month or fraction of a month on the total amount of tax paid late, calculated from the time the return was due to the date the tax is paid.

 

How do I calculate the penalty and interest due on an OPT return filed late?
Penalty: Multiply the total tax due by 0.15. If the answer is less than $25.00, pay the minimum penalty of $25.00.
Interest: Multiply the total tax due by 0.01. Multiply that answer by the number of months (or fraction of a month) between the date the return was due and the date payment will be made. Payment date is determined by the postmark date, if mailed.
Example: If a return was due on April 30, but payment was not made until June 3, 2% interest would be due (one whole month, and one fraction of a month).

 

I have several businesses in Denver; how much Denver OPT is due?
Remit $5.75 Employee OPT for each employee who earns at least $500 in a calendar month from performing services in Denver .  This tax amount should be withheld from the employee’s wages.  Officers of corporations are considered employees, so the $5.75 would need to be withheld from their wages whenever they meet the $500 earnings test.

Also remit $4.00 Business OPT for each taxable employee.  This tax amount is due from the employer.

If the business is a sole proprietor or a partnership, remit only the Business OPT portion at the rate of $4.00 a month for each owner or partner.  Owners and partners are not considered employees and the $500 earning test does not apply.  The business would still be liable for Business OPT on other taxable employees.

Individuals who work for more than one Denver employer are required to pay the Employee OPT only once.  The employee should submit Form TD269 to the secondary employer, requesting that the Employee OPT not be withheld from their wages. However, the Business OPT of $4.00 would still be due from the secondary employer.      

I work for more than one employer in Denver; do I have to pay the Denver OPT for each job?
Individuals who work in Denver for more than one employer are required to pay the Employee OPT only once.  The employee should submit Form TD269 to the secondary employer, requesting that the Employee OPT not be withheld from their wages.  Alternatively, if more than one employer withheld the taxes, a Claim for Refund form may be submitted.

Where can I download Form TD269?
Click here to get a form.

 

We are not located in Denver; do we have to pay Denver OPT?
Your business is liable for paying a minimum of $4.00 Business OPT tax for each month in which it performs any business, trade, occupation or profession in Denver. If your employees earn at least $500 in a month from performing services in Denver, both Employee OPT and Business OPT are due for those months.

 

Our business is not located in the City of Denver. Why did Denver set up an OPT account for our business?

Two possible reasons are:

  • Your business has employees who earn at least $500 in a month from performing services in Denver .  Examples:
    • Drivers who make deliveries in Denver
    • People who make repairs or service equipment in Denver
    • Salespeople who call on customers in Denver
    • Lobbyists or attorneys who earn income who come into Denver to work
    • Real estate agents or brokers who earn commissions from the sale of property in Denver .
  • Your business is liable for paying Business OPT for any month in which it performs a business, trade, occupation or profession in Denver .

 

I don’t have any employees, why do I owe a Denver OPT?
Your business is liable for paying a minimum of $4.00 Business OPT tax for each month in which it performs any business, trade, occupation or profession in Denver. The $500 earnings test does not apply to sole proprietors and partners.

 

How can I obtain additional information on OPT?
Denver has an excellent Tax Guide topic on OPT.  You can also call our office at 720-913-9400, or e-mail us at 311@denvergov.org

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