(A) Mandatory registration.
(1) Each new resident of the village shall register with the Department of Taxation of the village to become subject to the village income tax within 30 days of residence in the village.
(2) All employers, contractors or subcontractors who do work in the village shall register with the Fiscal Officer when work begins and shall present him or her with a list of all employees, subcontractors or others who may do work for them that are not already registered with the village or whose profits, wages or earnings are not presently subject to withholding of the village income tax.
(3) On January 1, 2002 and on every year thereafter, all landlords who rent property or dwellings in the village must submit an up-to-date list of their tenants to the Fiscal Officer. This list is not required if the tenants are responsible for their own water utility payments.
(4) Any person who violates this division shall be subject to the provision of §§ 35.134 and 35.999 below.
(B) Authorization of income tax levy. To provide funds for the purpose of general municipal operations, a municipal income tax at the rate of 1% is hereby levied upon the following:
(1) Resident and non-resident employees.
(a) On the taxable income earned by resident individuals.
(b) On the net taxable income earned by nonresident individuals for work done or services performed or rendered in the village.
(2) Resident business entities.
(a) 1. On the portion attributable to operations inside the village of the net business profits of all resident associations, unincorporated businesses, professions or other entities, conducted by resident individuals in the village.
2. The tax imposed on resident associations or other unincorporated entities owned by two or more individuals is upon the entities rather than the individual owners or members thereof. Losses from the operation of such activities required filing, as a separate entity may not be used to offset wages, salaries, or other types of employee's earnings or other compensation.
(b) On a resident partner or owner share of the taxable income earned during the effective period of this subchapter, of a resident association or other unincorporated entity not attributable to operations within the village and not levied against such associations or other unincorporated entity.
(3) Non-resident business entities.
(a) 1. On the portion attributable to operations inside the village of the net business profits earned by all non-resident associations, unincorporated businesses, professions or other entities, conducted by non-resident individuals, whether or not the association or other unincorporated entity has a place of business in the village.
2. The tax imposed on non-resident associations or other non-resident unincorporated entities owned by two or more persons is upon the entities rather than the individual owners or members thereof. Losses from the operation of such activities, required to file as a separate entity, may not be used to offset wages, salaries, or other types of employee's earnings or other compensation.
(b) On a resident partner or owner share of the net business profits during the effective period of this subchapter, of a non-resident association or other unincorporated entity not attributable to operations within the village and not levied against such association or other unincorporated entity.
(C) Business allocation percentage formula.
(1) A non-resident business entity doing business both inside and outside the village may at its option use and apply one of the following business allocation percentage formulas for the purpose of computing village income taxes:
(a) Records of net profits are known. Where the books and records of a taxpayer conducting a business or profession both inside and outside the boundaries of the village discloses with reasonable accuracy the percentage of its net profit attributable to that part of the business or profession conducted inside the boundaries of the village, then only that portion shall be considered as having taxable sites in the village for purposes of village income taxes.
(b) Records of net profit are unknown.
1. In the absence of such books and records, the following formula may be used to compute the share of the total net profits earned by a business or profession from activities conducted both inside and outside the boundaries of the village that is taxable under this subchapter:
RTP + P + S | = | percentage to be applied to the total net profits of non-resident business |
(number of business locations) |
2. The steps described below should be followed to reach a determination of the income tax owed by a company using the business allocation percentage method.
a. Step1: (RTP) = real and tangible personal property.
i. Compute the average net book value of the real and tangible personal property owned or used during the taxable period to the average net book value of all of the real and tangible personal property owned or used during the same period, wherever situated.
ii. Real property also includes property rented or leased by the taxpayer and the value of the property shall be determined by multiplying the annual rental by eight.
iii. Example 1: (RTP) Real and tangible property.
Corporation having a place of business in Bellville, Paduca and Honolulu: | ||
Total real and tangible personal property: | ||
Bellville, Paduca and Honolulu: | $500,000 | |
Bellville only | ||
Rented property | $4,160* | |
Owned property | $195,840 | |
Subtotal | $200,000 | $200,000 or 40% |
*Rental payments in Bellville | $520 annually | |
520 x 8 equals $4,160 | ||
b. Step 2: P = payroll.
i. Compute the percentage of the wages, salaries and other compensation paid during the taxable period to employees for services performed in the village are of the total wages, salaries and other compensation paid during the same period to employed persons, wherever their services are performed.
ii. Example 2: (P) Payroll.
Same corporation having a place of business in Bellville, Paduca and Honolulu: | ||
Total payroll: | ||
Bellville, Paduca and Honolulu: | $200,000 | |
Bellville only: | $$60,000 or 30% | |
c. Step 3: (SR) = sales receipts.
i. Compute the percentage of the gross receipts from sales made and services performed during the taxable period in the village are of the total gross receipts during the same period from sales and services, wherever made or performed.
ii. Example 3 (SR) sales receipts.
Same corporation having a place of business in Bellville, Paduca and Honolulu: | ||
Total sales receipts: | ||
Bellville, Paduca and Honolulu | $400,000 | |
Belville only | $100,000 or 25% | |
The business allocation of 31.6% was arrived at as shown below:
(RTP) 40% + (P) 30% + (SR) 25% | = | 31.6% |
3 |
d. Step 4: Taxable net profit. The total net profit derived from business activities conducted inside and outside the village is then multiplied by the business allocation percentage figure to arrive at taxable net profit.
Total net profit at all three locations | $45,000 |
Business allocation percentage | .316 |
Taxable net profit | $14,220 |
e. Step 5: Income tax to be paid. The total tax to be paid is determined by multiplying the taxable net profits by the village tax rate of 1%.
Taxable net profit | $14,220 |
Village income tax rage | .01 |
Village tax to be paid by corporation | $142.20 |
(2) In the event the foregoing business allocation formula does not produce an equitable result, another basis may, be substituted, under uniform regulations, so as to produce an equitable result.
(D) Exemptions.
(1) The following tax imposed by this subchapter shall not be levied on:
(a) Military pay or allowance of the Armed Forces of the United States.
(b) The income of tax-exempt religious, fraternal, charitable, scientific, literary, or educational institutions to the extent that such income is derived from tax-exempt real estate, tax-exempt tangible or intangible property or tax-exempt activities.
(c) Social security benefits, unemployment, insurance benefits, welfare benefits and qualified pensions (as defined by the Internal Revenue Service) paid as a result of retirements.
(d) Earnings and income in the village of all persons under 18 years of age, whether residents or non-residents.
(e) Compensation paid to an individual for personal services performed within the village, if the individual does not reside in the village, performs such personal services in the village on 12 or fewer days in the calendar year, and, if the individual is an employee, the principal place of business of the individual’s employer is located outside the village. This division does not apply to professional entertainers or professional athletes or to promoters of professional entertainment or sports events and their employees, as reasonably defined by the village.
(2) An exemption form shall be filed annually with the Fiscal Officer on a form prescribed by the Fiscal Officer. In the case of a retired person this exemption form shall be filed once every three years. This exemption form shall be made a part of the annual tax return of the village.
(Ord. 33-01, Art. 3, passed 12-3-2001)