(a) Duty of Withholding.
(1) It is the duty of each employer who employs one or more persons whether as an employee, officer, director or otherwise, on a salary, wage or other personal service compensation basis, to deduct each time any such compensation is paid, allocated or set aside to an employee the tax of one and a quarter percent (1.25%) of such qualifying wages subject to the Municipal income tax paid by said employer to said employee. However, the Tax Commissioner shall have the authority to grant to employers with three (3) or less resident employees permission for such employees to file individually. The tax shall be deducted by the employer from:
A. The gross amount of all salaries, wages, bonuses, incentive payments, fees, commissions or other forms of compensation allocated, set aside or paid residents of the Municipality, regardless of the place where the services are rendered; and
B. All compensation allocated, set aside or paid nonresidents for services rendered, work performed or other activities engaged in within the Municipality.
C. An employer is liable for the payment of the tax required to be deducted and withheld, whether or not such tax in fact has been withheld.
(2) All employers within or doing business within the Municipality are required to make the collections and deductions specified, regardless of the fact that the services on account of which any particular deduction is required as to residents of the Municipality were performed outside the Municipality.
(3) Employers who do not maintain a permanent office or place of business in the Municipality, but who are subject to tax on net profits attributable to the Municipality, under the method of business apportionment percentage formula provided for, are considered to be employers within the Municipality, and subject to the requirements of withholding.
(4) The mere fact that the tax is not withheld will not relieve the employee of the responsibility of filing a return and paying the tax on the compensation paid. If the employer has withheld the tax and failed to pay the tax withheld to the Tax Commissioner, the employee is not liable for the tax so withheld.
(5) Commissions and fees paid to professionals, brokers and others who are independent contractors, and not employees of the payor, are not subject to withholding or collection of the tax at the source. Such taxpayers must in all instances file a declaration and return and pay the tax.
(6) Where a nonresident receives compensation for personal services rendered or performed partly within and partly without the Municipality, the withholding employer shall deduct, withhold and remit the tax on that portion of the compensation which is earned within the Municipality in accordance with the following rules of apportionment:
A. If the nonresident is a salesman, agent or other employee whose compensation depends directly on the volume of business transacted or chiefly effected by him, the deducting and withholding shall attach to the portion of the entire compensation which the volume of business transacted or chiefly effected by the employee within the Municipality bears to the total volume of business transacted by him within and outside the Municipality.
B. The deducting and withholding of personal service compensation of other nonresident employees, including officers of corporations, shall attach to the proportion of the personal service compensation of such employee which the total number of his working hours within the Municipality is of the total number of working hours.
C. The fact that nonresident employees are subject to call at any time does not permit the apportionment of pay for time worked within the Municipality on a seven-day per week basis. The percentage of time worked in the Municipality will be computed on the basis of a forty-hour week unless the employer notifies the Tax Commissioner that a greater or less number of hours per week is worked.
1. The determination of tax liability of nonresidents working in and out of the corporate limits is to be computed on the formula of the total number of days worked in the Municipality divided by the total number of days worked during the year and the resulting percentage applied to the total annual income from wages including sick leave and vacation pay. Where no record can be substantiated of the number of days worked, the figure 254 is to be used as the total number of days worked.
E. Wage continuation plans paid by the employer or third party agent on behalf of the employer for purpose of health, rest, recuperation or other reward are deemed to have the same situs as the primary job assignment or job location of the employee and are taxable on the same ratio as the normal earnings of such employee for this primary job assignment.
(7) An employer shall withhold the tax on the full amount of any advances made to an employee on account of commissions.
(8) An employer required to withhold the tax on compensation paid to an employee shall, in determining the amount on which the tax is to be withheld, ignore any amount allowed and paid to the employee for expenses necessarily and actually incurred by the employee in the actual performance of his services, provided such expenses are incurred in earning compensation, including commissions, and are not deducted as a business expense by the employee.
(9) An employer whose records show that an employee is a nonresident of the Municipality, and has no knowledge to the contrary, shall be relieved of the responsibility of withholding the tax on personal service compensation paid to such employee for services rendered or work done outside the Municipality by such employee, provided however, that such employer must withhold the tax on all personal service compensation paid such employee after the Tax Commissioner notifies such employer in writing that such employee is a resident of the Municipality. All employees are required to notify the employer of any change of residence and the date thereof.
(10) An employer shall not be required to withhold the tax from the qualifying wages earned by a resident of the Municipality for work done or services performed in another municipality which imposes a tax upon such qualifying wages of such resident if such employer withholds the tax on such resident's qualifying wages for such other municipality. Where such municipal tax is for a smaller amount than the tax imposed by Chapter 171, the employer shall furnish the Tax Commissioner with a list of resident employees for whom such lesser tax is withheld.
(b) Return and Payment of Tax Withheld and Status of Employers.
(1) The Tax Commissioner may require an employer to file returns of and to remit taxes withheld more frequently than quarterly in cases where the employer will be present within the corporate limits of the Municipality for a period of less than a year.
(2) If more than the amount of tax required to be deducted is withheld from the employee's pay, the excess shall be refunded by the employer to the employee. If less than the amount of tax required to be deducted is deducted and withheld by the employer in any pay period or pay periods, the deficiency shall be deducted in subsequent pay periods.
(c) Fractional Parts of Cent. In deducting and withholding the tax at the source and in payment of any tax due, a fractional part of a cent shall be disregarded unless it amounts to one- half cent (1/2¢) or more in which case it shall be increased to one cent (1¢).
(Ord. 2006-70. Passed 12-14-06.)