a. Where salaries, wages, commissions, licensing and royalty income, and other trade compensations are paid for any business, trade, occupation, profession or other activity in the City or net profits earned within the City, such net profit license fee shall be computed by obtaining the percentage which the compensation or net profit bears to the total compensation or net profit.
b. Except as provided in Subsection f. of this Section, net profits shall be apportioned as follows:
1. For business entities with both payroll and sales revenue in more than one (1) tax district, by multiplying the net profit by a fraction, the numerator of which is the payroll factor, described in Subsection c. of this Section, plus the sales factor, described in Subsection d. of this Section, and the denominator of which is two (2); and,
2. For business entities with sales revenue in more than one (1) tax district, by multiplying the net profit by the sales factor as set forth in Subsection d. of this Section.
c. The payroll factor is a fraction, the numerator of which is the total amount paid or payable in the City during the tax period by the person or business entity for compensation and the denominator of which is the total compensation paid or payable by the person or business entity everywhere during the tax period. Compensation is paid or payable in the City based on the time the individual's service is performed within the City.
d. The sales factor is a fraction, the numerator of which is the total sales revenue of the person or business entity in the City during the tax period and the denominator of which is the total sales revenue of the person or business entity everywhere during the tax period.
1. The sale, lease or rental of tangible personal property is in the City if:
(a) The property is delivered or shipped to a purchaser, other than the United States government, or to the designee of the purchaser within the City regardless of the free on board (f.o.b.) point or other conditions of the sale; or,
(b) The property is shipped from an office, store, warehouse, factory or other place of storage in the City and the purchaser is the United States government.
2. Sales revenues, other than revenues from the sale, lease or rental of tangible personal property or the lease or rental of real property, are apportioned to the City based upon a fraction, the numerator of which is the time spent in performing such income-producing activity within the City and the denominator of which is the total time spent performing that income-producing activity.
3. Sales revenue from the sale, lease or rental of real property is allocated to the tax district where the property is located.
e. All partnerships, S corporations and all other entities where income is “passed through” to the owners are subject to the provisions of this Subchapter. The occupational license fee imposed in this Subchapter is assessed against income before it is “passed through” these entities to the owners.
f. If the apportionment provisions of this Section do not fairly represent the extent of the person’s or business entity's activity in the City, the person or business entity may petition the City or the City may require, in respect to all or any part of the person’s or business entity's business activity, if reasonable:
1. Separate accounting;
2. The exclusion of any one (1) or more of the factors;
3. The inclusion of one (1) or more additional factors which will fairly represent the person’s or business entity's business activity in the City; or,
4. The employment of any other method to effectuate an equitable allocation and apportionment of net profits.
(Ord. BG2020-23, 9/1/2020)