(a) Subject to the provisions of Section 181.15 et seq., an annual tax for the purposes specified in Section 181.01 shall be imposed on and after January 1, 1982 at the rate of one and three quarters percent (1.75%) per Ordinance 79-81, passed November 3, 1981; and at a rate of two percent (2.0%) effective July 1, 2007, and continuing thereafter until repealed, pursuant to Ordinance 04-07, passed May 21, 2007, upon the following taxable income:
(1) On all salaries, wages, commissions, tips, gratuities, sub pay, and other compensation, such as early retirement incentive plans, earned during the effective period of the ordinance by residents for work done or services performed or rendered. The tax shall not be levied upon expenses reported on Federal Form 2106, subject to audit and approval by the Department of Taxation.
(2) On all salaries, wages, commissions, tips, gratuities, sub pay, and other compensation, such as early retirement incentive plans, earned during the effective period of the ordinance by non-residents for work done or services performed or rendered in the City of Alliance. The tax shall not be levied upon expenses reported on Federal Form 2106, subject to audit and approval by the Department of Taxation.
(3) On any programs to include, but not limited to, deferred compensation plans, cafeteria plans and similar plans offered that would reflect a reduction from salaries, wages, commissions and other compensation as reported on W-2 and/or similar wage reporting form.
(4) On any programs to include, but not limited to IRA's, KEOUGH's and similar plans offered that qualify for reductions in salaries, wages, commissions and other compensation under federal and state tax regulations unless specifically exempted in this ordinance and/or under state statutes.
(5) A. On the portion attributable to the City of the net profits earned and accrued or received of all resident associations, unincorporated businesses, professions or other entities, derived from sales made, work done, services performed or rendered and business or other activities conducted in the City.
B. On the portion of the distributive share of the net profits earned and accrued or received of a resident partner or owner of a resident unincorporated business entity or association not attributable to the City and not levied against such unincorporated business entity.
(6) A. On the portion attributable to the City of the net profits earned and accrued or received of all non-resident associations, unincorporated businesses, professions or other entities, derived from sales made, work done or services performed or rendered and business or other activities conducted in the City, whether or not such association or other unincorporated business, profession or association has an office or place of business in the City.
B. On the portion of the distributive share of the net profits earned and accrued or received of a resident partner, or owner of a non-resident association or other unincorporated business entity not attributable to the City and not levied against such unincorporated business entity.
(7) On the portion attributable to the City of the net profits earned and accrued or received of all corporations derived from sales made, work done, services performed or rendered and business or other activities conducted in the City, whether or not such corporations have an office or place of business in the City.
(8) On all income derived from gambling, wagering, lotteries, including the Ohio State Lottery and Multi-state lotteries and games or schemes of chance earned or received by the residents of the City.
(b) Determination of Income Subject to Tax. The portion of the entire net profits of a taxpayer to be allocated as having been derived from within the City, in the absence of actual records thereof, shall be determined as follows:
(1) Multiply the entire net profits by business allocation percentage to be the average ratio of:
A. The average net book value of the real and tangible personal property owned or used by the taxpayer in the business or profession in the City during the taxable period to the average net book value of all the real and tangible personal property owned or used by the taxpayer in the business or profession during the same period, wherever situated. As used herein, real property shall include property rented or leased by the taxpayer and the value of such property shall be determined by multiplying the annual rental thereupon by 8.
B. Wages, salaries, and other compensation paid or accrued during the taxable period to persons employed in the business or profession for services performed in the City to wages, salaries, and other compensation or accrued during the same period to persons employed in the business or profession, wherever their services are performed.
C. Gross receipts of the business or profession from sales made and services performed during the taxable period in the City to gross receipts of the business or profession during the same period from sales and services, wherever made or performed. In the event the foregoing allocation formula does not produce an equitable result, another basis may, under uniform regulation, be substituted so as to produce such results.
(2) As used in this section, “sales made in the City” means:
A. All sales of tangible personal property which is delivered within the City regardless of where title passes if tangible personal property is shipped or delivered from a stock of goods within the City.
B. All sales of tangible personal property which is delivered within the City regardless of where title passes even though transported from a point outside the City if the taxpayer is regularly engaged through its own employees in the solicitation or promotion of sales within the City and the sales result from such solicitation or promotion.
C. All sales of tangible personal properly which is shipped from a place within the City to purchasers outside the City regardless of where title passes if the taxpayer is not, through its own employees, regularly engaged in the solicitation or promotion of sales at the place where delivery is made.
For the purpose of this section, the taxable base shall be determined in accordance with federal tax interpretations, when applicable, and with the accounting method used by the taxpayer for federal income taxes adjusted to the requirements of this section. (See addenda for text of Section 718.02)
(c) Consolidated Return.
(1) Filing of consolidated returns may be permitted or required in accordance with Rules and Regulations prescribed by the Administrator pursuant to the authority contained in Section 181.08.
(2) A corporation which owns or controls at least eighty percent (80%) of the common stock of another corporation or corporations may at its option make a consolidated return, provided that affiliated corporations which do no business within the United States shall not be included in such consolidated return.
(3) In the case of a corporation that carried on transactions with its stockholders or with other corporations related by stock ownership, interlocking directorates, or some other method, or in case any person operates a division, branch, factory, office, laboratory or activity within the City of Alliance, constituting a portion only of its total business, the Administrator shall require such additional information as he may deem necessary to ascertain whether net profits are properly allocated to the City of Alliance. If the Administrator finds net profits are not properly allocated to the City of Alliance by reason of transactions with stockholders or with corporations related by stock ownership, interlocking directorates, or transactions with such division, branch, factory, office, laboratory, or activity or by some other method, he shall make such allocation as he deems appropriate to produce a fair and proper allocation of net profits to the City of Alliance.
(d) Exemptions. The tax provided for herein shall not be levied on the following:
(1) Funds received from local, state, or federal governments because of service in the Armed Forces of the United States by the person rendering such service, or as a result of another person rendering such service.
(2) Poor relief, pensions, unemployment insurance benefits, social security benefits and/or similar payments, including disability benefits received from private industry or local, state, or federal government, or from charitable, religious, or educational organizations.
(3) Alimony received.
(4) Income, dues, contributions, receipts from casual entertainment, amusements, sport events and health and welfare activities received by religious, fraternal, charitable, scientific, literary, educational institutions or organizations, labor unions, lodges and similar organizations.
(5) Any association, organization, corporation, club or trust, which is exempt from federal tax on income by reason of its charitable, religious, educational, literary, scientific, etc. purposes.
(6) Gains from involuntary conversion, cancellation of indebtedness, interest on federal obligations, items of income already taxed by the State from which the City is specifically prohibited front taxing and income of a decedent's estate during the period of administration, except such income from the operation of a business.
(7) Earnings and income of all persons under sixteen (16) years of age whether residents or non-residents.
(8) Dividends.
(9) Interest.
(10) Relocation costs of any employee that are reimbursed by the employer.
(11) The tax provided for herein shall not be levied upon any compensation, net profits or other income that the Municipality is precluded from taxing under Ohio R.C. Chapter 718.
(e) Taxable Income Amplified.
(1) Gross wages, salaries, commissions and other compensation to include:
A. Sick and vacation pay.
B. Income from wage continuation plans (includes retirement incentive plans).
C. Stock options - taxed when exercised on amount indicated on W-2 forms.
D. Cost of group term life insurance over $50,000.00, tax on entire amount.
E. Severance pay or separation payments.
F. Compensation paid in property or the use thereof at fair market value to the same extent as taxable under Federal Internal Revenue Act and so indicated on the W-2 form.
G. Tips.
H. Contributions made by or on behalf of employees to tax deferred annuity plan (401-K plans and the like), proportionate to the amounts earned in Alliance.
I. Stipends - if work required (vow of poverty not recognized).
J. Income from guaranteed annual wage contracts.
K. Third party disability pay - employer paid premiums.
L. Bonuses.
M. Health insurance premiums withheld each payday by employer from employee wages for future monthly premium payments (nondeferrable).
(2) Net profits from:
A. Corporations.
B. Unincorporated businesses.
1. Sole proprietorship - Schedule C.
2. Rental properties - Schedule E.
3. Partnerships - Schedule E - Tax is imposed on individual partner.
4. Farm net income - Schedule F.
C. Trusts and estates (file and pay as entity).
(3) Directors’ fees,
(4) Income from jury duty.
(5) Supplemental unemployment pay - paid by employer.
(6) Union steward fees.
(7) Strike benefits paid by company.
(8) Profit sharing - if from non-qualified plan.
(9) Moving expense reimbursement in excess of Federal Form 3903 allowance.
(Ord. 04-07. Passed 5-21-07.)