CHAPTER 187
Earned Income Tax
Earned Income Tax
187.01 Purpose.
187.02 Definitions.
187.03 Imposition of tax.
187.04 Determination of allocation of tax.
187.05 Sales made in the City.
187.06 Business allocation percentage.
187.07 Rental income.
187.0701 Residential landlords.
187.071 Royalty income from oil and/or gas wells.
187.08 Operating loss carry-forward.
187.09 Sources of income not taxed.
187.10 Filing returns.
187.11 Form and content of return.
187.12 Extension of time for filing returns.
187.13 Consolidated returns.
187.14 Amended returns.
187.15 Payment of tax on filing of return.
187.16 Collection at source.
187.17 Declarations of income not collected at source.
187.18 Filing of declaration.
187.19 Form of declaration.
187.20 Payment to accompany declaration.
187.21 Annual return.
187.22 Interest on unpaid tax.
187.23 Penalties on unpaid tax.
187.24 Exceptions.
187.25 Abatement of interest and penalty.
187.26 Violations.
187.27 Limitation of prosecution.
187.28 Failure to procure forms no excuse.
187.29 Collection of unpaid taxes and refunds of overpayments.
187.30 Taxpayer relief and reciprocity provisions; nonresident taxpayers. (Repealed)
187.31 Residents subject to income tax in other municipalities.
187.32 Claim for credit. (Repealed)
187.33 Disbursement of funds collected.
187.34 Duty of Administrator to receive tax imposed.
187.35 Duty to enforce collection.
187.36 Authority to make and enforce regulations.
187.37 Authority to arrange installment payments.
187.38 Authority to determine amount of tax due.
187.39 Authority to make investigations.
187.40 Authority to complete production of records.
187.41 Refusal to produce records.
187.42 Confidential nature of information.
187.43 Taxpayer required to retain records.
187.44 Authority to contract for central collection services.
187.45 Board of Review established.
187.46 Duty to approve regulations and hear appeals.
187.47 Right of appeal.
187.48 Severability.
187.49 Collection of tax after termination of chapter.
187.50 Managers' obligation.
187.99 Penalty.
CROSS REFERENCES
Power to levy income tax - see Ohio Const., Art. XVIII, §3
Limitation on rate of taxation - see CHTR. §6.03
Payroll deductions - see Ohio R. C. 9.42
Municipal income taxes - see Ohio R. C. Ch. 718
187.01 PURPOSE.
To provide funds for the purposes of general Municipal functions and capital improvements of the City, there shall be and is hereby levied a tax on all salaries, wages, commissions and other compensations, and on net profits as hereinafter provided.
(Ord. 1981-47. Passed 4-27-81.)
187.02 DEFINITIONS.
For the purposes of this chapter, the terms, phrases, words and their derivatives shall have the meanings given in this section. The singular shall include the plural and the masculine shall include the feminine and the neuter.
(a) "Administrator" means the Director of Finance, who shall administer and enforce the provisions of this chapter.
(b) "Association" means any partnership, limited partnership or any other form of unincorporated enterprise, owned by two or more persons.
(d) "Business" means any enterprise, activity, profession or undertaking of any nature conducted for profit or ordinarily conducted for profit, whether by an individual, partnership, association, corporation or any other entity, excluding, however, all nonprofit corporations which are exempt from the payment of Federal income tax.
(e) "Corporation" means a corporation or joint stock association organized under the laws of the United States, the State of Ohio or any other state, territory or foreign country or dependency.
(f) "Employee" means one who works for wages, salary, commission or other type of compensation in the service of an employer.
(g) "Employer" means an individual, partnership, association, corporation, government body, unit or agency, or any other entity, whether or not organized for profit, who or that employs one or more persons on a salary, wage, commission or other basis of compensation.
(h) "Fiscal year" means an accounting period of twelve months or less ending on any day other than December 31.
(i) "Gross receipts" means the total income from any source whatever.
(j) "Net profits" for taxable years prior to 2004 means a net gain from the operation of a business, profession, enterprise or other activity after provision for all ordinary and necessary expenses either paid or accrued in accordance with the accounting system used by the taxpayer for Federal income tax purposes without deduction of taxes imposed by this chapter, Federal, State and other taxes based on income and, in the case of an association, without deduction of salaries paid to partners and other owners. (For taxable years 2004 and later, see “Adjusted federal taxable income”)
(k) "Nonresident" means an individual domiciled outside the City.
(l) "Nonresident unincorporated business entity" means an unincorporated business entity not having an office or place of business within the City.
(m) "Person" means every natural person, partnership, fiduciary, association or corporation. Whenever used in any clause prescribing and imposing a penalty, the term "person", as applied to any unincorporated entity, means the partners or members thereof, and as applied to corporations, the officers thereof.
(n) "Place of business" means any bona fide office, other than a mere statutory office, factory, warehouse or other space which is occupied and used by the taxpayer in carrying on any business activity individually or through one or more of his regular employees regularly in attendance.
(o) "Resident" means an individual domiciled in the City.
(p) "Resident unincorporated business entity" means an unincorporated business entity having an office or place of business within the City.
(q) “Royalty interest in the production of an oil and/or gas well” means a fee holder's interest in the production from an oil and/or gas well, usually one-eighth of the gross production, together with associated incidental compensation received by the fee holder, usually set forth in a lease, such as compensation for the use of land for ingress and egress, compensation for erection of storage tanks and compensation for incidental damages to the fee holder's property.
(r) "Taxable income" means wages, salary and other compensation paid by an employer or employers before any deduction and/or the net profits from the operation of a business, profession or other enterprise or activity adjusted in accordance with the provisions of this chapter.
(s) "Taxable year" means the calendar year, or fiscal year, upon the basis of which the net profits are to be computed and, in the case of a return for a fractional part of a year, the period for which such return is required to be made.
(t) "Taxpayer" means a person, whether an individual, partnership, association, corporation or other entity, required hereunder to file a return or pay a tax.
(u) “Adjusted federal taxable income” - A “C” corporation’s federal taxable income before net operating losses and special deductions as determined under the Internal Revenue Code, but including subsequent adjustments from required additions and deductions. Pass-through entities must compute “Adjusted Federal Taxable Income” as if the pass-through entity was a “C” corporation. This definition does not apply to any taxpayer required to file a return under Ohio Revised Code (ORC) section 5745.03 or to the net profit from a sole proprietorship. This definition is effective for tax years beginning on or after January 1, 2004.
(v) “Qualifying wage” - These are wages as defined in Section 3121(a) of the Internal Revenue Code, without regard to any wage limitations, but including subsequent adjustments from required additions and deductions. “Qualifying wage” represents employees’ income, including non-qualified deferred compensation and stock options, from which municipal tax shall be deducted by the employer, and any wages not considered a part of “qualifying wage” shall not be taxed by the City. This definition is effective January 1, 2004, for taxable years 2004 and later.
(w) “Generic Form” - An electronic or paper form designed for reporting estimated municipal income taxes, and/or annual municipal income tax liability, and/or requests for refunds, which contain all the information required on City regular tax return, estimated payment forms, and request for refund forms, and are in a similar format that will allow processing of the generic forms without altering the City procedures for processing forms.
(Ord. 2005-049. Passed 3-28-05.)
(x) "Pension" For the purposes of this chapter, a pension is any amount paid to an employee or former employee that is reported to the recipient on an IRS form 1099-R, or successor form. Pension does not include deferred compensation, or amounts attributable to nonqualified deferred compensation plans, reported as FICA/Medicare wages on an IRS Form W-2, Wage and Tax Statement, or successor form. (Ord. 2014-139. Passed 11-17-14.)
187.03 IMPOSITION OF TAX.
An annual tax for the purposes specified herein shall be imposed on and after April 1, 2003, at the rate of two percent per year upon the following:
(a) On all salaries, wages, commissions and other compensation earned on and after April 1, 2003, by residents of the City.
(b) (1) On all salaries, wages, commissions and other compensation earned on and after April 1, 2003, by nonresidents of the City for work done or services performed or rendered within the City.
(2) A non-resident individual who works in the City 12 or fewer days per year shall be considered an occasional entrant, and shall not be subject to the City municipal income tax for those 12 days. For purposes of the 12 day calculation, any portion of a day worked in the City shall be counted as one day worked in the City.
(3) Beginning with the 13th day, the employer of said individual shall begin withholding the City income tax from remuneration paid by the employer to the individual, and shall remit the withheld income tax to the City in accordance with the requirements of this chapter/ordinance. Since the individual can no longer be considered to have been an occasional entrant, the employer is further required to remit taxes on income earned in the City by the individual for the first 12 days.
(4) If the individual is self-employed, it shall be the responsibility of the individual to remit the appropriate income tax to City.
(5) The 12 day occasional entry rule does not apply to entertainers or professional athletes, their employees or individuals who perform services on their behalf, or to promoters and booking agents of such entertainment events and sporting events.
(c) (1) On the portion attributable to the City on the net profits earned on and after April 1, 2003, of all resident unincorporated business entities or professions or other activities, derived from sales made, work done, services performed or rendered and business or other activities conducted in the City.
(2) On the portion of the distributive share of the net profits earned on and after April 1, 2003, of a resident partner or owner of a resident unincorporated business entity not attributable to the City and not levied against such unincorporated business entity by the City.
(d) (1) On the portion attributable to the City of the net profits earned on or after April 1, 2003, of all nonresident unincorporated business entities, professions or other activities, derived from sales made, work done, services performed or rendered and business and other activities conducted in the City, whether or not such unincorporated business entity has an office or place of business in the City.
(2) On the portion of the distributive share of the net profits earned on and after April 1, 2003, of a resident partner or owner of a nonresident unincorporated business entity not attributable to the City and not levied against such unincorporated business entity by the City.
(e) On the portion attributable to the City of the net profits earned on and after April 1, 2003, 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.
Such tax shall be levied, collected and paid with respect to salaries, wages, commissions and other compensation and with respect to the net profits of businesses, professions or other activities earned on and after April 1, 2003.
(Ord. 2005-049. Passed 3-28-05.)
187.04 DETERMINATION OF ALLOCATION OF TAX.
In the taxation of income which is subject to the City income tax, if the books and records of a taxpayer conducting a business or profession both within and without the boundaries of the City disclose with reasonable accuracy what portion of its net profit is attributable to that part of the business or profession conducted within the boundaries of the City, then only such portion shall be considered as having a taxable situs in the City for the purposes of Municipal income taxation. 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:
Multiply the entire net profits by a business allocation percentage to be determined by a three-factor formula of property, payroll and sales, each of which shall be given equal weight, as follows:
(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 in the preceding paragraph, 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 thereon by eight.
(b) Wages, salaries and other compensation paid during the taxable period to persons employed in the business or profession for services performed in the City to wages, salaries and other compensation paid 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 that the foregoing allocation formula does not produce an equitable result, another basis may under uniform regulations, be substituted so as to produce such result.
(d) The net profits allocable to the City from business, professional or other activities conducted in the City by corporations or unincorporated entities (whether resident or non-resident) may be determined from the records of the taxpayer only if the taxpayer has bona fide records which disclose with reasonable accuracy what portion of his net profits is attributable to that part of his activities conducted within the City.
(e) If the books and records of the taxpayer are used as the basis for apportioning net profits, a statement must accompany the return explaining the manner in which such apportionment is made in sufficient detail to enable the Administrator to determine whether the net profits attributable to the City are apportioned with reasonable accuracy.
(f) In determining the income allocable to the City from the books and records of a taxpayer, an adjustment may be made for the contribution made to the production of such income by headquarters activities of the taxpayer, whether such headquarters is within or without the City.
(Ord. 2005-049. Passed 3-28-05.)
187.05 SALES MADE IN THE CITY.
As used in this chapter, "sales made in the City" means:
(a) All sales of tangible personal property delivered within the City, regardless of where title passes, if shipped or delivered from a stock of goods within the City.
(b) All sales of tangible personal property 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 his own employees in the solicitation or promotion of sales within the City and the sales results from such solicitation or promotion.
(c) All sales of tangible personal property which is shipped from a place within the City to purchasers outside of the City, regardless of where title passes, if the taxpayer is not, through his own employees, regularly engaged in the solicitation or promotion of sales at the place where delivery is made.
(Ord. 1981-47. Passed 4-27-81.)
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