(A) The one percent tax.
(1) Basis.
(a) Resident employee.
1. In the case of residents of the Village of Anna, an annual tax of 1% is imposed on all salaries, qualifying wages, commissions, and other compensation earned during the effective period of these regulations. For the purpose of determining the tax on the earnings of resident taxpayers taxed under § 35.03, the source of the earnings and the place or places in or at which the services were rendered, are immaterial. All the earnings wherever earned or paid are taxable.
2. The following are items which are subject to the tax imposed by § 35.01(A)(1)(a) of these regulations.
a. On all qualifying wages as defined in IRC § 3121(a).
b. On the gross wages of those employees exempt from the Medicare tax withholding, less any qualifying deductions.
c. Payments made to employees by an employer as vacation wages are taxable.
d. Payments made to an employee by an employer, or a third party provider on behalf of the employer, under a wage continuation plan during periods of disability or sickness, are taxable.
e. Where compensation is paid or received in property, its fair market value, at the time of receipt, shall be subject to the tax and to withholding. Board, lodging, and similar items received by an employee in lieu of additional cash compensation shall be included in earnings at their fair market value. In the case of domestics and other employees whose duties require them to live at their place of employment or assignment, board and lodging shall not be considered as wages or compensation earned.
(b) Non-resident employee.
1. In the case of individuals who are not residents of the Village of Anna, there is imposed under this division of these regulations, a tax of 1% on all salaries, qualifying wages, and commissions, and other compensation earned during the effective period of these regulations for work done or services performed or rendered within the Village of Anna, whether the compensation or remuneration is received or earned directly or through an agent, and whether paid in cash or in property. The location of the place from which payment is made is immaterial. A non-resident employee who performs services inside the village on 13 or more days or occasions, whichever represents the shorter time period, is taxable under these regulations.
2. The items subject to tax under this division of these regulations are the same as those listed and defined in § 35.03(A)(1)(a). For the methods of computing the extent of the work or services performed within the Village of Anna, in cases involving compensation for personal services partly within and partly without the Village of Anna, see § 35.06(A)(6).
(c) 1. Imposition of tax on net profits of resident businesses.
a. In the case of resident businesses, professions, enterprises, undertakings, or other entities conducted, operated, engaged in, prosecuted or carried on, irrespective of whether the taxpayer has an office or place of business in the Village of Anna, there is imposed an annual tax of 1% on the adjusted federal taxable income earned, accrued, or received during the effective period of these regulations attributable to the Village of Anna, under the formula or separate accounting method provided for in § 35.03 of these regulations, derived from sales made, work done, or services performed or rendered, and business or other activities conducted in the Village of Anna.
b. An unincorporated association, partnership, limited partnership or limited liability company, (also known as a pass-through entity), which is domiciled in the village may make an election as to whether the income of the entity shall be taxed at the entity level (i.e. in the hands of the entity) or in the hands of the owner or owners of the entity. For entities in existence on January 1, 2003 the manner in which their past returns have been filed shall constitute the making of the election for the purposes of this rule. The tax imposed on an unincorporated resident entity owned by one person is upon the individual owner.
c. The tax imposed by § 35.03(A)(3)(a) of these regulations is imposed on all resident entities having adjusted federal taxable income attributable to the Village of Anna under the method of allocation provided for in the regulations, regardless of where the owner or owners of the resident business entity reside.
d. Resident unincorporated entities owned by two or more persons, all of whom are residents of the Village of Anna, shall disregard the method of allocation provided for in these regulations and pay the tax on their entire federal adjusted taxable income thereof. In this case, the tax paid by the entity shall constitute all tax due from the owners or members of the entity for their distributive share of the net profits; however, an additional return shall be required from any owner or member having taxable income other than the distributive share of the net profits from the entity.
2. Imposition of tax on resident’s distributive share of profits of a resident business entity, not attributable to the Village of Anna.
a. A resident individual who is sole owner of a resident entity shall disregard the business allocation formula and pay the tax on the entire net profits of his or her resident business entity.
b. In the case of a resident individual partner or part owner of a resident entity, there is imposed an annual tax of 1% on the individual’s distributive share of net profits earned, accrued, or received during the effective period of the regulations not attributable to the Village of Anna, under the method of allocation provided for in § 35.01 of these regulations, and not taxed against the entity. (See § 35.15).
a. In the case of non-resident businesses, professions, enterprises, undertakings, or other activities conducted, operated, engaged in, prosecuted, or carried on, there is imposed an annual tax of 1% on the net profits earned, accrued, or received during the effective period of these regulations attributable to the Village of Anna, under the formula or separate accounting method provided for in this regulation.
b. The tax imposed on non-resident entities owned by two or more persons is upon the entities rather than the individual members or owners thereof. (For tax on that part of a resident owner’s distributive share of net profits not taxed against the entity, see § 35.03(A)(4)(b)).
c. Non-resident entities owned by two or more persons, all of whom are residents of the Village of Anna, may elect to disregard the method of allocation provided for in these regulations and pay the tax on the entire net profits. In this case, the tax paid by the entity shall constitute all tax due from the owners or members of the entity for their distributive share of the net profits; however, a return shall be required from the owner or member having taxable income other than the distributive share of the net profit from the entity.
d. Distributions of proportionate shares received by an owner domiciled in the village from any pass-through entity from a non-resident pass-through entity such as a partnership, limited partnership, limited liability company or Subchapter S corporation shall be considered as income from an association as defined in these regulations. This rule codifies the interpretation of the regulations as of January 1, 2003. Ref: R.C. § 718.14(B).
2. Imposition of tax on resident’s share of profits of a non-resident business entity not attributable to the Village of Anna. See § 35.15 for credits.
a. A resident individual who is sole owner of a non-resident business entity shall disregard the business allocation formula and pay the tax on the entire net profits of his or her entity.
b. In the case of a resident individual partner or part owner of a nonresident entity, there is imposed an annual tax of 1% on the individual’s distributive share of net profits earned, accrued, or received during the effective period of these regulations not attributable to the village under the method of allocation provided for in § 35.03 of these regulations and not taxed against the entity.
(e) Imposition of tax on the adjusted federal taxable income of corporations.
1. In the case of corporations, whether domestic or foreign and whether or not the corporations have an office or place of business in the Village of Anna, there is imposed an annual tax of 1% on the net profits earned, received, or accrued during the effective period of these regulations attributable to the Village of Anna under the formula provided for in these regulations.
2. In determining whether a corporation is conducting a business or other activity in the Village of Anna, the provisions of § 35.03(A)(1)(b) of these regulations shall be applicable.
(f) Amplification.
1. Amplification. In amplification of the definition contained in § 35.02 of these regulations, but not in limitation thereof, the following additional information respecting net business profits is furnished.
2. Adjusted federal taxable income.
a. Net profits as used in these regulations means the adjusted federal taxable income derived from any business, profession, or other activity or undertaking carried on for profit or normally carried on for profit.
b. Net profits, as disclosed on any return filed pursuant to the provisions of these regulations, shall be computed by the same accounting method used in reporting net income to the Federal Internal Revenue Service (providing the method does not conflict with any provisions of these regulations). Net profits, shown on returns filed pursuant to these regulations, must be reconciled with the income reported to the Federal Internal Revenue Service.
(g) Rental from real property.
1. Rentals received by the taxpayer are to be included only if and to the extent that the rental, ownership, management, or operation of the real estate from which the rentals are derived (whether so rented, managed, or operated by the taxpayer individually or through agents or other representatives) constitutes a business activity of the taxpayer, in whole or in part.
2. In determining the amount of gross monthly rental of any real property, periods during which (by reason of vacancy or any other cause) rentals are not received shall not be taken into consideration by the taxpayer.
3. Rentals received by a taxpayer engaged in the business of buying and selling real estate shall be considered as part of business income.
4. Real property, as the term is used in these regulations, shall include commercial property, residential property, farm property, and any and all other types of real estate.
5. In determining the taxable income from rentals, the deductible expenses shall be of the same nature, extent, and amount as are allowed by the Internal Revenue Service for federal income tax purposes.
6. Residents of the Village of Anna are subject to taxation upon the net income from rental (to the extent above specified), regardless of the location of the real property owned.
7. Non-residents of the Village of Anna are subject to taxation only if the real property is situated within the Village of Anna.
8. Corporations owning or managing real estate are taxable only on that portion of income derived from property located in the Village of Anna.
9. Losses from rentals located and/or operating outside of the village and owned by a resident will be allowed to offset other taxable income in the following manner:
a. The loss will be adjusted to reflect an identical negative effect as if the rental had netted a gain to include all applicable credits for taxes paid to other cities.
b. Losses that occur in another taxing jurisdiction with a rate of 1% or more are not allowed to offset W-2 income taxable to the Village of Anna. The loss can not be carried forward to off-set any income other than the venture which produced the loss.
(2) Allocation of business profits. A request to change the method of allocation must be made in writing before the end of the taxable year.
(a) Business allocation percentage method.
1. Step l.
a. Ascertain the percentage which the actual cost of real and tangible personal property, including lease-hold improvements, owned or used in the business and situated within the Village of Anna, is of the average net book value of all real and tangible personal property, including leasehold improvements, owned or used in the business wherever situated, during the period covered by the return.
b. The percentage of taxpayer’s real and tangible personal property within the Village of Anna is determined by dividing the average net book value of the property within the Village of Anna (without deduction of any encumbrances) by the average net book value of all property within and without the Village of Anna. In determining the percentage, property rented to the taxpayer, as well as real and tangible personal property owned by taxpayer, must be considered.
i. The actual cost of real and tangible personal property rented by taxpayer shall be determined by multiplying gross annual rents payable by eight.
ii. Gross rents means the actual sum of money or other consideration payable, directly or indirectly, by the taxpayer for the use or possession of property and includes:
A. Any amount payable for the use or possession of real and tangible personal property or any part thereof, whether designated as a fixed sum of money or as a percentage of sales profits or otherwise; and
B. Any amount payable as additional rent or in lieu of rent such as interest, taxes, insurance, repairs, or other amounts required to be paid by the terms of a lease or other arrangements.
2. Step 2. Ascertain the percentage which the gross receipts of the taxpayer derived from sales made and service rendered in the Village of Anna is of the total gross receipts, wherever derived, during the period covered by the return.
a. The following sales shall be considered the Village of Anna sales:
i. All sales made through retail stores located within the Village of Anna to purchasers within or without the Village of Anna, except the sales to purchasers outside the Village of Anna that are directly attributable to regular solicitations made outside the Village of Anna personally by taxpayer’s employees.
ii. All sales of tangible personal property delivered to purchasers within the Village of Anna if shipped or delivered from an office, store, warehouse, factory, or place of storage located within the Village of Anna.
iii. All sales of tangible personal property delivered to purchasers within the Village of Anna even though transported from a point outside the Village of Anna if the taxpayer is regularly engaged through its own employees in the solicitation or promotion of sales within the Village of Anna and the sale is directly or indirectly the result of the solicitation.
iv. All sales of tangible personal property shipped from an office, store, warehouse, factory, or place of storage within the Village of Anna to purchasers outside the Village of Anna if the taxpayer is not, through its own employees, regularly engaged in the solicitation or promotion of sales at the place of delivery.
v. Charges for work done or services performed incident to a sale, whether or not included in the price of the property, shall be considered gross receipts from the sale.
b. In the application of the foregoing divisions, a carrier shall be considered the agent of the seller regardless of the FOB point or other conditions of the sale; and the place at which orders are accepted or contracts legally consummated shall be immaterial. Solicitation of customers outside the Village of Anna by mail or phone from an office, or place of business within the Village of Anna shall not be considered a solicitation of sales outside the Village of Anna.
3. Step 3. Ascertain the percentage which the total wages, salaries, commissions, and other compensation of employees within the Village of Anna is of the total qualifying wages, salaries, commissions, and other compensation of all the taxpayer’s employees within and without the Village of Anna during the period covered by the return.
a. Salaries and reasonable compensation paid owners, or credited to the account of owners or partners during the period covered by the return, are considered wages for the purpose of this computation.
b. Wages, salaries, and other compensation shall be computed on the cash or accrual basis in accordance with the method of accounting used in the computation of the entire net income of the taxpayer.
c. In the case of an employee who performs services both within and without the Village of Anna, the amount treated as compensation for services performed within the village shall be deemed to be:
i. In the case of an employee whose compensation depends directly on the volume of business secured by him or her, such as a salesman on a commission basis, the amount received by him or her for the business attributable to his or her efforts within the Village of Anna.
ii. In the case of an employee whose compensation depends on other results achieved, the proportion of the total compensation received which the value of his or her services within the Village of Anna bears to the values of all his or her services; and
iii. In the case of an employee compensated on a time basis, the proportion of the total amount received by him or her, which his or her working time within the Village of Anna is of his or her total working time.
4. Step 4. Add the percentages determined in accordance with Steps 1, 2, and 3, or the aforesaid percentages as may be applicable to the particular taxpayer’s business, and divide the total so obtained by the number of percentages used in ascertaining the total. The result so obtained is the business allocation percentage. In determining the average percentage, a factor shall not be excluded from the computation merely because the factor is found to be allocable entirely outside the Village of Anna. A factor is excluded only when it does not exist anywhere.
5. Step 5. The business allocation percentage determined in Step 4 above shall be applied to the entire taxable net profits of the taxpayer wherever derived to determine the net profits allocable to the Village of Anna.
(b) Substitute method.
1. In the event a just and equitable result cannot be obtained under the formula, the Board, upon application of the taxpayer or the Commissioner, may substitute other factors in the formula or prescribe other methods of allocating net income calculated to effect a fair and proper allocation.
2. Application to the Board to substitute other factors in the formula or to use a different method to allocate net profits must be made in writing before the end of the taxable year and shall state the specific grounds on which the substitution of factors or use of a different method is requested and the relief sought to be obtained. A copy thereof shall be served at the time of filing upon the taxpayer or Commissioner as the case may be. No specific form need be followed in making the application. Once a taxpayer has filed under a substitute method, he or she must continue to so file until given permission to change by the Board of Review.
(3) Operating loss carry forward.
(a) The portion of a net operating loss, based on income taxable under these regulations sustained in any taxable year subsequent to January 1, 1978, allocable to the Village of Anna, may be applied against the portion of the profits of succeeding years allocable to the Village of Anna until exhausted, but in no event of more than five taxable years. No portion of a net operating loss shall be carried back against net profits of any prior year.
(b) In the event net profits are allocated both within and without the Village of Anna, the portion of a net operating loss sustained shall be allocated to the Village of Anna in the same manner as provided herein for allocating net profits to the Village of Anna. The portion of a net operating loss to be carried forward shall be determined in the year the net operating loss is sustained, on the basis of the allocation factors applicable to that year. The same method of accounting and allocation must be used in the year to which an operating loss is carried as was used in the year in which the operating loss was sustained.
(c) In the case of fiscal years beginning prior to the effective date of these regulations, the net operating loss deduction will be that portion of the operating loss that the number of months of the fiscal year after the effective date of these regulations bears to the total number of months in the fiscal year.
(d) A short fiscal year (a fiscal year of less than 12 months) in cases where there has been a change in accounting period, where a new taxpayer selects a short fiscal year, or where a new taxpayer operates in the Village of Anna for less than his or her full accounting period, shall be considered as a full taxable fiscal year.
(e) In any return in which a net operating loss deduction is claimed, a schedule should be attached showing:
1. Year in which net operating loss was sustained;
2. Method of accounting and allocation, used to determine portion of net operating loss allocable to the Village of Anna;
3. Amount of net operating loss used as a deduction in prior years; and
4. Amount of net operating loss claimed as a deduction in current year.
(f) The net operating loss of a business which loses its identity through merger, consolidation, and the like, shall not be allowed as a carry-forward loss deduction to the surviving business entity.
(g) Losses occurring in a taxing jurisdiction outside of the Village of Anna, which imposes a tax of 1% or more can not be carried forward to off-set income other than the venture that produced the loss by a resident of the Village of Anna.
(4) Consolidated returns. Consolidated returns may be filed by any affiliated group of corporations if that affiliated group filed for the same tax reporting period a consolidated return for federal income tax purposes pursuant to § 1501 of the Internal Revenue Code.
(5) Exceptions. The following shall not be considered taxable.
(a) Poor relief, unemployment insurance benefits, supplemental unemployment benefits, old age pensions, or similar payments received from local, state, or federal governments or charitable or religious organizations.
(b) Proceeds of insurance, annuities, workman’s compensation insurance, social security benefits, pensions, compensation for damages for personal injuries and like reimbursement, not including damages for loss of profits.
(c) Compensation for damage to property by way of insurance or otherwise.
(d) Interest and dividends from intangible property.
(e) Military pay and allowances received as a member of the armed forces of the United States; to include nonactive duty pay, reserve pay, and National Guard pay.
(f) Any charitable, educational, fraternal, or other type of non-profit association or organization enumerated in R.C. § 718.01 which is exempt from payment of real estate taxes is exempt from payment of the tax imposed by these regulations.
(g) Any association or organization falling in the category listed in the division (f) above not exempt from the payment of real estate taxes is required to file declarations and final returns and remit the taxes levied under these regulations on all business activities of a type ordinarily conducted for profit by taxpayers operating for profit.
(h) Where a non-profit association or organization conducts income-producing business both within and without the corporate limits, it shall calculate its profits allocable to the Village of Anna under the method or methods provided above.
(i) Ministers’ housing allowance.
(j) Pay received for work performed at an election precinct for amounts less than $1,000 during a calendar year.
(k) Nonresident employees who perform services inside the village for 12 or fewer days, or any part of any day, during any calendar year.
(B) The three quarter percent tax.
(1) Purpose. The purpose of this division is to authorize, provide for, and levy an additional tax on income at the rate of 3/4% (additional tax) over and above the 1% tax on income currently being levied and collected (income tax), in order to provide funds for the payment of Fire Department improvements and expenses.
(2) Imposition of additional tax. The additional tax for the purpose specified in division (B)(1) above shall be imposed at the rate of 3/4% per annum over and above the 1 % tax currently being levied and collected, the question of levying the additional tax having been approved by the requisite majority of voters voting thereon in the general election held on November 3, 1998.
(3) Levy, collection and payment of additional tax.
(a) The additional tax shall be levied, collected and paid with respect to salaries, wages, commissions, rentals and other compensation on and after January 1, 1999, and with respect to the net profits of businesses, professions or other activities earned on or after January 1, 1999. Provided, however, that where the fiscal year of the business, profession or other activity differs from the calendar year, the additional tax shall be applied to that part of the net profits for the fiscal year as shall be earned on or after January 1, 1999, to the close of the taxpayer’s fiscal year. Thereafter, the taxpayer shall report on its fiscal year basis.
(b) The funds collected as a direct result and consequence of the additional tax levied and imposed under the provisions of this division shall be allocated for the following purposes.
1. The funds collected under this division shall be placed into the Village Income Tax Fund as the funds are collected, and then shall be transferred to the Village Fire Department Fund in accordance with reports from the Tax Commissioner which specify the amount of funds which have been collected as a direct result and consequence of the additional tax levied and imposed under this division.
2. The funds collected under this division shall be allocated first to defray all costs and expenses of collecting the additional tax levied and imposed by this division and second for the purpose of payment of Fire Department improvements and expenses.
(4) Income tax credit. Resident individuals of the Village of Anna who are required to pay and do pay tax to a municipality other than the village on salaries, wages, commissions, and other compensation for work done or services performed outside the village or new profits from business, professions or other activities conducted outside the village may claim a credit of the amount of the tax paid by them on their behalf to another municipality to the extent of the additional tax imposed by this division on the income, the credit being limited to 3/4% of the amount of income tax by both the village and another municipality. A return must be filed for the purpose of claiming the credit or allowance, together with the evidence of the payment of similar tax to the municipality in which the resident has a source of income as the Tax Commissioner may require.
(5) Levy and collection. The 3/4 % annual tax for the purposes specified in this division, shall be levied and collected in the manner as set forth in this section, and not levied on the items set forth in § 35.03(A)(5) of the regulations.
(Ord. 670-77, passed 11-9-1977; Am. Ord. 1232-98, passed 11-24-1998; Am. Ord. 1338-01, passed 6-26-2001; Am. Ord. 1339-01, passed 6-26-2001; Am. Ord. 1428-04, passed 6-22-2004; Am. Ord. 1464-05, passed 12-13-2005; Am. Ord. 1482-01, passed 8-8-2006; Am. Ord. 1690-15, passed 12-22-2015)