§ 115.03  EMPLOYEES.
   (A)   Employees in general. The license fee is imposed on both residents and nonresidents of the city at the rate of 2% of all subject salaries, wages, commissions and other compensation earned for work done or services performed or rendered in the city. The following are subject to the license fee:
      (1)   Salaries, wages, commissions, bonuses, incentive payments, and other compensation received by an individual, whether directly or indirectly through an agent and whether in cash or in property, for services rendered:
         (a)   As an officer, director, agent or employee, or both, of a corporation (including a corporation of the first or nonprofit class), joint stock association or joint stock company;
         (b)   As an officer, agent or employee (as distinguished from a partner or member) of a partnership, limited partnership or any other form of unincorporated enterprise owned by one or more persons;
         (c)   As an agent employee (as distinguished from the proprietor) of a business, trade or profession, conducted by an individual owner;
         (d)   As an officer, agent or employee (whether elected or appointed, enlisted or commissioned) of a governmental administration, agency, arm, authority, board, body, branch, bureau, department, division, section or unit thereof.
         (e)   As an officer, agent or employee of any other entity.
      (2)   Salaries, wages, bonuses, incentive payments, and other compensation received by an individual, whether directly or through an agent and whether in cash or in property, for services rendered:
         (a)   Whether based upon hourly, daily, weekly, semimonthly, monthly, annual, unit of production of piece-work rates; and
         (b)   Whether paid by an individual, partnership, association, corporation (including a corporation of the first or nonprofit class), governmental administration, agency, arm, authority, board, body, branch, bureau, department, division, section or unit, or any other entity.
      (3)   Commissions received by an employee, whether directly or through an agent, and whether in cash or in property, for services rendered, regardless of how computed or by whom paid. If such commissions are included in the net earnings of a trade, business or profession regularly carried on by such individual and, therefore, subject to license fees under § 115.04, they shall not again be separately taxed.
      (4)   Fees and other earned income, unless such fees are properly included as part of the nets profits of a trade, business, profession or enterprise regularly carried on by the individual and such net profits are subject to tax under § 115.04. Compensation paid to a director or officer of a corporation are subject to withholding under this chapter as in the case of any other employee.
      (5)   Other compensation will be treated as follows:
         (a)   Subject to the license fee.
            1.   Tips received by waiters and others. Tips received are subject to the license fee and will be reported in the same manner as regular earnings.
            2.   Vacation, holiday and/or sick benefits. Payments made to employees by an employer as vacation, holiday and/or sick payments are subject.
            3.   Separation payments. Payments made to employees by an employer at the time of a voluntary or involuntary separation (dismissal) of the employee from the service of the employer, are to be regarded as subject to the license fee.
            4.   Employee contributions to any retirement, profit sharing or deferred compensation plan, which are deferred for federal income tax purposes under a salary reduction agreement or similar arrangement, including but not limited to salary reduction arrangements under Section 401(a), 401(k), 402(e), 403(a), 403(b), 408, 414(h) or 457 of the Internal Revenue Code.
            5.   Employee contributions to any welfare benefit, fringe benefit or other benefit plan made by salary reduction or other payment method which permits employees to elect to reduce federal taxable compensation under the Internal Revenue Code, including but not limited to Sections 125 and 132 of the Internal Revenue Code.
            6.   Property and services received as compensation. The fair market value of property or services received as compensation by an employee and paid by the employer including board and lodging and similar items where such board and lodging is considered part of the compensation paid and is not afforded for the convenience of the employer.
            7.   Other income. All other income paid by an employer and received by an employee for the performance of any activity subject to the license fee, not expressly exempt (see below) unless such income is to be reported and a net profit license fee paid thereon under the provisions of these regulations.
         (b)   Not subject to the license fee.
            1.   Retirement payments. Periodical payments commonly recognized as old-age or retirement pensions, made to persons retired from service after reaching a specified age or after a stated period of employment, are not subject to the license fee.
            2.   Disability and unemployment compensation. Payments made to employees by an employer under a disability, or accident plan are not subject to the license fee. Unemployment compensation payments by the state or any other agency are not subject.
            3.   Death benefits. Death benefits payable by an employer to the beneficiary of an employee or to the employee's estate, whether payable in a single sum or otherwise, are not subject to the license fee.
            4.   Benefits arising under the workers' compensation act. Amounts received by employees under the workers' compensation act as compensation for a disability sustained during the course of employment, together with any amount of damages received by suit or agreement on account of such disability, are not subject to the license fee.
            5.   Allowances and reimbursement for expenses. Reasonable sums allowed and paid by employers to employees for expenses necessarily and actually incurred by the employee in the direct performance of his services.
            6.   Strike benefits. Strike pay benefits paid from a fund which is established and/or replenished, in whole or in part, from the employee's wages.
            7.   Kentucky National Guard. Compensation paid members of the Kentucky National Guard for active duty training, unit training assemblies and annual field training.
            8.   Employer contributions to qualified plans not arising from employee election.
            9.   Employer payments for employee benefits. Employer's payments for employee's life insurance premiums not treated as wages for Federal Income Tax purposes, employer's payments for employee's health insurance benefits.
            10.   Student grants. Stipends, honorariums, grants and other payments made to students to the extent that such payments are conditioned only upon the recipient's pursuit of studies and/or participation in athletic or other intercollegiate competition, and scholarships and other noncash fringe benefits received by duly registered students from the school, college or university in which they are enrolled.
            11.   Payments to nonresident military personnel. Payments to nonresident military
personnel exempt from state and location taxation under the Soldiers and Sailors Federal Relief Act (50 USCA 574).
            12.    Compensation to individual domestic workers or care providers.
            13.    Compensation to individuals with single newspaper routes.
         (c)   Applicability  of  the  foregoing to  employees whose compensation is not wholly subject. In the case of individuals whose compensation is earned for services performed both within and without the city and who receive subject payments as set forth in the foregoing rules and regulations, they are subject to the license fee in the same proportion that services performed within the city bear to their total employment time.
   (B)   Withholding of license fee.
      (1)   (a)   It is the duty of each employer who employs one or more persons on a salary, wage, commission or other compensation basis, to deduct, at the time of the payment of such compensation, the license fee on such salary, wage, bonus, incentive payment, commission or other compensation due by the employer to the employee. The license fee shall be deducted by the employer from all compensation paid to employees for activities in the city.
         (b)   However, the mere fact that the license fee is not withheld will not relieve the employee of the responsibility of filing a return and paying the fee on the compensation received. A nonresident employer, either maintaining in the city an office, business address, or doing business therein, or who is otherwise subject to service of legal process, is subject to the withholding provisions of this chapter.
      (2)   Where an individual receives compensation for personal services rendered or performed partly within and partly outside the city, the withholding agent shall deduct and withhold that portion of the compensation which is earned within the city in accordance with the following rules of apportionment:
         (a)   If the individual is a traveling salesperson, agent or other employee, whose compensation on the basis of commissions depends directly on the volume of business transacted by the individual, the deducting and withholding shall attach to the portion of the entire compensation which the volume of business transacted by the employee within the city bears to the volume of business transacted by the employee both within and outside of the city. There shall be no proration of compensation for employees headquartered within the city where travel is only incidentally connected with the occupation.
         (b)   The deducting and withholding of personal service compensation of all other employees, including officers of corporations, shall attach to the portion of the personal service compensation of such employee which the total number of hours employed within the city bears to the total number of hours employed both within and outside the city.
         (c)   If it is impossible to apportion the earnings as provided above because of the peculiar nature of the services of the employee, or of the usual basis of compensation, apportionment shall be made in accordance with the facts, and the fee deducted and withheld accordingly. With respect to each such employee or group of employees similarly or identically circumstanced, the employer shall furnish the Finance Director a detailed statement of facts.
         (d)   The occasional entry into the city of an employee, who performs the duties for which the employee is employed entirely outside the city, but enters the city for the purposes of reporting, receiving instructions, accounting, etc., incidental to the employee's duties outside the city shall not be deemed to take such employee out of the class of those rendering their services entirely outside the city.
   (C)   Returns of license fee and payment.
      (1)   The return and payment required to be made on account of deductions by employers from salaries, wages and other compensation of employees shall be made on the last day of the month following the end of the calendar quarter.
      (2)   (a)   If the last day of the month following the end of the calendar quarter falls on a Saturday, Sunday or legal holiday, the return and payment shall be made on the next regularly scheduled working day. If the envelope bearing the return(s) is postmarked on or before the due date, late filing penalties will not apply. The employer shall report for the quarterly periods ending March 31, June 30, September 30, and December 31 of each year the wages from which license fees have been so withheld, and shall make the payment required to be made on account of the employee withholding of occupational license fees on or before the time required for the filing of the quarterly returns.
         (b)   Notwithstanding the provisions of division (A) of this section, each employer who employs persons within the city for which the aggregate city, occupational license fees required to be withheld from all employee wages for any one of the preceding four quarters shall have exceeded the sum of $3,000 shall remit the occupational license fees required to be withheld from employees monthly on or before the last day of the month following the month in which the wages shall have been paid by the employer, or (in the case of deferred compensation subject to the license fees imposed hereunder) on the last day of the month following the month in which the compensation is deemed to have been earned by the employee.
      (3)   The returns required to be filed under this ordinance shall be made on forms prescribed by and obtainable from the Occupational License/Net Profit Division and/or the Finance Director.
      (4)   On or before February 28 of each year, each employer shall file with the Finance Director on the form prescribed by and obtainable from the Occupational License/Net Profit Division and/or the Finance Director an annual information return listing each employee from whom the license fee has been withheld, showing the employees name, Federal ID number (Social Security Number), total annual compensation, total annual compensation subject to the license fee and the amount of license fee withheld from each employee during the preceding calendar year.
      (5)   The annual information return shall include a copy of form W-2 for each employee.
      (6)   The gross compensation to be reported for each employee should be for the full 12 calendar months of the year, or such portion thereof as the employee reported on was employed.
      (7)   The failure of any employer, either residing within or outside of the city, to collect the license fee and to make such return shall not relieve the employee from the payment of such fee in compliance with these regulations respecting the making of returns and the payment of license fees.
      (8)   Every employer is deemed to be a trustee of the city in collecting and holding the license fee required under this chapter to be withheld, and the funds so collected by such withholding are deemed to be trust funds. Every such employer required to deduct and withhold the license fee at the source is liable directly to the city for the payment of such fee whether actually collected by such employer or not.
      (9)   Every employer is required to submit a copy of Forms 1096 and the respective Form 1099s to reflect monies paid to contract labor, subcontractors, etc.
      (10)   An individual employee subject to the fee shall file his or her return on or before the federal income tax filing due date of each year for the previous year's wages/compensation on the forms prescribed by the city and obtainable from the Occupational License/Net Profit Division and/or the Finance Director.
(Ord. 51, 2021, passed 4-23-21)