Do I Need to Pay the Occupational Privilege Tax in Denver?
Understand who is responsible for Denver’s Occupational Privilege Tax, how it’s paid, and what happens if you don’t comply.
Denver imposes an Occupational Privilege Tax (OPT) on individuals who work within the city and their employers. This tax funds municipal services, but not everyone is required to pay it.
Understanding tax liability depends on employment status and earnings.
Tax Liability Criteria
Denver’s OPT applies to individuals earning wages within city limits, with liability based on income thresholds. Employees must pay the tax if they earn at least $500 in a calendar month from work performed in Denver, regardless of employment type. Independent contractors are not subject to the employee portion, as they are classified differently for tax purposes.
The tax is a flat amount rather than a percentage of earnings. Employees meeting the income requirement pay $5.75 per month, while employers contribute $4.00 per employee, totaling $9.75 per worker. This remains constant regardless of how much an employee earns beyond $500.
Exemptions exist for federal, state, and local government employees and certain nonprofit organizations. However, nonprofit status alone does not guarantee exemption. The organization must meet Denver’s specific criteria. Employees working remotely outside Denver, even for a city-based employer, are generally not liable unless they physically work within city limits.
Employee and Employer Responsibilities
Employers must withhold and remit the required OPT amounts for employees working in Denver, regardless of company headquarters. If an employer fails to deduct the tax, they remain responsible for both their portion and any uncollected employee contributions.
Businesses should integrate OPT deductions into payroll systems to ensure compliance. Payroll software can automate these deductions, reducing errors. Employers should also inform employees about the tax, particularly new hires or remote workers who occasionally work in Denver.
Employees should verify that the tax is correctly deducted from their paychecks. If an employer fails to withhold it, the employee may still be liable. Workers should report discrepancies to their payroll department to correct errors before they lead to compliance issues.
Filing Procedures
Businesses subject to OPT must file returns with the City and County of Denver’s Treasury Division. Registration with the city’s tax system is required before filing, which can be completed through the Denver eBiz Tax Center. Once registered, employers receive a tax account number for all filings.
Filing frequency depends on tax liability. Businesses owing more than $50 per month must file monthly, while those with lower liabilities may qualify for quarterly or annual filing. The city assigns filing frequencies upon registration and adjusts them if a business’s tax burden changes.
Even if no tax is due for a period, businesses must file a zero-dollar return to avoid penalties. The city offers online filing through the eBiz Tax Center, allowing electronic submissions. Paper filing is permitted but takes longer to process and increases the risk of errors.
Payment Timelines
OPT payments must follow assigned filing frequencies, with deadlines on the last day of the month following the reporting period. For example, taxes withheld in January must be remitted by the end of February. Late payments accrue daily interest, increasing the total amount due.
Payments can be made electronically through the Denver eBiz Tax Center, which provides confirmation receipts. Businesses may also pay by check or money order, though mail processing takes longer, increasing the risk of late payment.
Effects of Nonpayment
Failure to pay OPT can result in financial penalties and enforcement actions. Interest accrues immediately on unpaid balances, and late fees are applied as a percentage of the outstanding tax.
The city enforces compliance through audits and assessments. Businesses that fail to remit OPT may face collection actions, including tax liens or garnishments, which can affect credit standing. Repeated noncompliance may lead to audits requiring payroll records to verify tax payments. If discrepancies are found, additional assessments may be issued, increasing the amount owed. Employers with a history of nonpayment risk losing good standing with the city, which can affect their ability to obtain business licenses or permits.