
The pandemic has seen a rise in freelance and contract work from those looking for job flexibility.
What new freelancers may not know is that Arlington tax code says they need a permit to work from home and need to pay local business taxes, just like any other business or contractor.
COVID-19 has seen tremendous changes in how Americans work, where and for whom. People are taking their computers to exotic locales or states with lower living costs, while companies are rethinking their office leases or trying to make their offices more attractive. Meanwhile, many are leaving their jobs to strike out on their own as freelancers.
But one area is experiencing delayed shockwaves from these seismic shifts: taxes. Last year folks saw taxes rise or fall depending on where they worked from home or if they could write off their home office. With the second pandemic-era tax season dawning, here’s what independent workers of Arlington need to know.
- The county keeps track of independent workers, requiring them to get a permit certifying their “definite place of business” is in Arlington.
- Every business with a definite place of work in Arlington is considered taxable.
- Business license taxes are calculated before expenses in Arlington.
- License tax rates are fixed until gross receipts exceed $100,000, at which point they’re calculated on a variable rate.
Independent workers can deduct their expenses from their state and federal taxes, but locally, Arlington’s Business, Professional and Occupational License (BPOL) tax collects on pre-expense revenue, or gross receipts.
Businesses with receipts less than $10,000 owe nothing, while those grossing up to $50,000 pay $30 and those grossing up to $100,000 pay $50. After $100,000 over, the annual tax is $0.36 for each $100 of revenue.
“Customers can get confused and think that they should pay a flat fee for gross receipts up to $100,000, plus the tax rate on the remaining receipts, however, the correct amount to file and pay is based on multiplying the total gross receipts by the tax rate,” said Susan Anderson, the communications director for Arlington’s Office of the Commissioner of Revenue.
She says every person engaged in business in Arlington — whether a home or a co-working space — is subject to the BPOL.
“Anyone who is not an employee and who works as an independent contractor has a taxable business,” Anderson said. “It is not necessary to incorporate as an LLC or corporation in order to conduct licensable business activities.”
This is not a new tax being enforced, but she encouraged independent contractors with questions to contact the office’s Business Division Tax Specialists at (703) 228-3060 or email [email protected].
“Our staff is very happy to assist,” she said. “Also, as a reminder, the Business License Tax filing and payment are due annually on March 1.”
The BPOL tax is Arlington’s third-largest source of revenue behind real estate and personal property taxes, including car taxes. For the 2019-20 fiscal year, the BPOL tax netted $72 million, according to the 2022 adopted budget. It’s estimated to net $63 million for the 2020-21 fiscal year and could bounce back to $72.5 million in the 2021-22 fiscal year.
Criticisms of the BPOL
The tax has long had critics who have called for its elimination — to the worry of Arlington County tax officials.
On the right and the left, in Arlington and at the state level, critics have argued for years the BPOL hurts small businesses, particularly those with razor-thin profit margins, as well as startups and entrepreneurs, while large companies — such as Arlington-headquartered Lidl and Nestle — have avoided it in Arlington because their sales happen elsewhere. The same could happen for Amazon.
Some Virginia writers who argue they’re hurt by BPOL took their battle to the courts and one court ruled in their favor.







