(A) Collection at source; withholding from qualifying wages.
(1) (a) Each employer, agent of an employer, or other payer located or doing business in the municipality shall withhold from each employee an amount equal to the qualifying wages of the employee earned by the employee in the municipality multiplied by the applicable rate of the municipality’s income tax, except for qualifying wages for which withholding is not required under division (B) or division (A)(4) or (A)(6) of this section. An employer, agent of an employer, or other payer shall deduct and withhold the tax from qualifying wages on the date that the employer, agent, or other payer directly, indirectly, or constructively pays the qualifying wages to, or credits the qualifying wages to the benefit of, the employee.
(b) In addition to withholding the amounts required under division (A)(1)(a) of this section, an employer, agent of an employer, or other payer may also deduct and withhold, on the request of an employee, taxes for the municipal corporation in which the employee is a resident.
(2) An employer, agent of an employer, or other payer shall remit to the Tax Commissioner of the municipality the greater of the income taxes deducted and withheld or the income taxes required to be deducted and withheld by the employer, agent, or other payer, along with any report required by the Tax Commissioner to accompany such payment, according to the following schedule:
(a) Any employer, agent of an employer, or other payer not required to make payments under division (A)(2)(b) of this section of taxes required to be deducted and withheld shall make quarterly payments to the Tax Commissioner not later than the last day of the month following the end of each calendar quarter.
(b) Taxes required to be deducted and withheld shall be remitted monthly to the Tax Commissioner if the total taxes deducted and withheld or required to be deducted and withheld by the employer, agent, or other payer on behalf of the municipal corporation in the preceding calendar year exceeded $2,399, or if the total amount of taxes deducted and withheld or required to be deducted and withheld on behalf of the municipality in any month of the preceding calendar quarter exceeded $200. Payment under this division (A)(2)(b) shall be made so that the payment is received by the Tax Commissioner not later than 15 days after the last day of each month.
(3) An employer, agent of an employer, or other payer shall make and file a return showing the amount of tax withheld by the employer, agent, or other payer from the qualifying wages of each employee and remitted to the Tax Commissioner. A return filed by an employer, agent, or other payer under this division shall be accepted by the municipality as the return required of an employee whose sole income subject to the tax under this chapter is the qualifying wages reported by the employee’s employer, agent of an employer, or other payer, unless the municipality requires all resident individual taxpayers to file a tax return under § 95A.09(A) of this chapter,
(4) An employer, agent of an employer, or other payer is not required to withhold municipal income tax with respect to an individual’s disqualifying disposition of an incentive stock option if, at the time of the disqualifying disposition, the individual is not an employee of either the corporation with respect to whose stock the option has been issued or of such corporation’s successor entity.
(5) (a) An employee is not relieved from liability for a tax by the failure of the employer, agent of an employer, or other payer to withhold the tax as required under this chapter or by the employer’s, agent’s, or other payer’s exemption from the requirement to withhold the tax.
(b) The failure of an employer, agent of an employer, or other payer to remit to the municipality the tax withheld relieves the employee from liability for that tax unless the employee colluded with the employer, agent, or other payer in connection with the failure to remit the tax withheld.
(6) Compensation deferred before June 26, 2003, is not subject to any municipal corporation income tax or municipal income tax withholding requirement to the extent the deferred compensation does not constitute qualifying wages at the time the deferred compensation is paid or distributed.
(7) Each employer, agent of an employer, or other payer required to withhold taxes is liable for the payment of that amount required to be withheld, whether or not such taxes have been withheld, and such amount shall be deemed to be held in trust for the municipality until such time as the withheld amount is remitted to the Tax Commissioner.
(8) On or before the last day of February of each year, an employer shall file a withholding reconciliation return with the Tax Commissioner listing the names, addresses, and Social Security numbers of all employees from whose qualifying wages tax was withheld or should have been withheld for the municipality during the preceding calendar year, the amount of tax withheld, if any, from each such employee’s qualifying wage, the total amount of qualifying wages paid to such employee during the preceding calendar year, the name of every other municipal corporation for which tax was withheld or should have been withheld from such employee during the preceding calendar year, any other information required for federal income tax reporting purposes on Internal Revenue Service form W-2 or its equivalent form with respect to such employee, and other information as may be required by the Tax Commissioner. Beginning with tax year 2016, employers with more than 25 employees are required to submit W-2’s electronically to the Commissioner in the same format thereon as provided to the Social Security Administration or other electronic format approved by the Commissioner. All payments not subject to withholding shall be reported on a form by the Commissioner.
(9) The officer or the employee of the employer, agent of an employer, or other payer with control or direct supervision of or charged with the responsibility for withholding the tax or filing the reports and making payments as required by this division (A), shall be personally liable for a failure to file a report or pay the tax due as required by this division (A). The dissolution of an employer, agent of an employer, or other payer does not discharge the officer’s or employee’s liability for a failure of the employer, agent of an employer, or other payer to file returns or pay any tax due.
(10) An employer is required to deduct and withhold municipal income tax on tips and gratuities received by the employer’s employees and constituting qualifying wages only to the extent that the tips and gratuities are under the employer’s control. For the purposes of this division, a tip or gratuity is under the employer’s control if the tip or gratuity is paid by the customer to the employer for subsequent remittance to the employee, or if the customer pays the tip or gratuity by credit card, debit card, or other electronic means.
(11) A Tax Commissioner shall consider any tax withheld by an employer at the request of an employee when such tax is not otherwise required to be withheld by this chapter to be tax required to be withheld and remitted for the purposes of this division (A).
(B) Collection at source; occasional entrant.
(1) The following terms as used in this division (B):
(a) EMPLOYER includes a person that is a related member to or of an employer.
(b) PROFESSIONAL ATHLETE means an athlete who performs services in a professional athletic event for wages or other remuneration.
(c) PROFESSIONAL ENTERTAINER means a person who performs services in the professional performing arts for wages or other remuneration on a per-event basis.
(d) PUBLIC FIGURE means a person of prominence who performs services at discrete events, such as speeches, public appearances, or similar events, for wages or other remuneration on a per-event basis.
(e) FIXED LOCATION means a permanent place of doing business in this state, such as an office, warehouse, storefront, or similar location owned or controlled by an employer.
(f) WORKSITE LOCATION means a construction site or other temporary worksite in this state at which the employer provides services for more than 20 days during the calendar year. WORKSITE LOCATION does not include the home of an employee.
(g) PRINCIPAL PLACE OF WORK means the fixed location to which an employee is required to report for employment duties on a regular and ordinary basis. If the employee is not required to report for employment duties on a regular and ordinary basis to a fixed location, PRINCIPAL PLACE OF WORK means the worksite location in this state to which the employee is required to report for employment duties on a regular and ordinary basis. If the employee is not required to report for employment duties on a regular and ordinary basis to a fixed location or worksite location, PRINCIPAL PLACE OF WORK means the location in this state at which the employee spends the greatest number of days in a calendar year performing services for or on behalf of the employee’s employer.
1. If there is not a single municipal corporation in which the employee spent the “greatest number of days in a calendar year” performing services for or on behalf of the employer, but instead there are two or more municipal corporations in which the employee spent an identical number of days that is greater than the number of days the employee spent in any other municipal corporation, the employer shall allocate any of the employee’s qualifying wages subject to division (B)(2)(a)1. of this section among those two or more municipal corporations. The allocation shall be made using any fair and reasonable method, including, but not limited to, an equal allocation among such municipal corporations or an allocation based upon the time spent or sales made by the employee in each such municipal corporation. A municipal corporation to which qualifying wages are allocated under this division shall be the employee’s PRINCIPAL PLACE OF WORK with respect to those qualifying wages for the purposes of this section.
2. For the purposes of this division (B)(1)(g), the location at which an employee spends a particular day shall be deemed in accordance with division (B)(2)(b) of this section, except that “location” shall be substituted for “municipal corporation” wherever “municipal corporation” appears in that division.
(2) (a) Subject to divisions (B)(3), (B)(5), and (B)(6) of this section, an employer is not required to withhold municipal income tax on qualifying wages paid to an employee for the performance of personal services in a municipal corporation that imposes such a tax if the employee performed such services in the municipal corporation on 20 or fewer days in a calendar year, unless one of the following conditions applies:
1. The employee’s principal place of work is located in the municipality.
2. The employee performed services at one or more presumed worksite locations in the municipality. For the purposes of this division, PRESUMED WORKSITE LOCATION means a construction site or other temporary worksite in this state at which the employer provides services that can reasonably be expected by the employer to last more than 20 days in a calendar year. Services can “reasonably be expected by the employer to last more than 20 days” if either of the following applies at the time the services commence:
a. The nature of the services are such that it will require more than 20 days of actual services to complete the services; or
b. The agreement between the employer and its customer to perform services at a location requires the employer to perform actual services at the location for more than 20 days.
3. The employee is a resident of the municipality and has requested that the employer withhold tax from the employee’s qualifying wages as provided in § 95A.05(A) of this chapter.
4. The employee is a professional athlete, professional entertainer, or public figure, and the qualifying wages are paid for the performance of services in the employee’s capacity as a professional athlete, professional entertainer, or public figure within the municipality.
(b) For the purposes of division (B)(2)(a) of this section, an employee shall be considered to have spent a day performing services in a municipal corporation only if the employee spent more time performing services for or on behalf of the employer in that municipal corporation than in any other municipal corporation on that day. For the purposes of determining the amount of time an employee spent in a particular location, the time spent performing one or more of the following activities shall be considered to have been spent at the employee’s principal place of work:
1. Traveling to the location at which the employee will first perform services for the employer for the day;
2. Traveling from a location at which the employee was performing services for the employer to any other location;
3. Traveling from any location to another location in order to pick up or load, for the purpose of transportation or delivery, property that has been purchased, sold, assembled, fabricated, repaired, refurbished, processed, remanufactured, or improved by the employee’s employer;
4. Transporting or delivering property described in division (B)(2)(b)3. of this section, provided that, upon delivery of the property, the employee does not temporarily or permanently affix the property to real estate owned, used, or controlled by a person other than the employee’s employer; and/or
5. Traveling from the location at which the employee makes the employee’s final delivery or pick-up for the day to either the employee’s principal place of work or a location at which the employee will not perform services for the employer.
(3) If the principal place of work of an employee is located in a municipal corporation that imposes an income tax in accordance with this chapter, the exception from withholding requirements described in division (B)(2)(a) of this section shall apply only if, with respect to the employee’s qualifying wages described in that division, the employer withholds and remits tax on such qualifying wages to the municipal corporation in which the employee’s principal place of work is located.
(4) (a) Except as provided in division (B)(4)(b) of this section, if, during a calendar year, the number of days an employee spends performing personal services in a municipal corporation exceeds the 20-day threshold described in division (B)(2)(a) of this section, the employer shall withhold and remit tax to that municipal corporation for any subsequent days in that calendar year on which the employer pays qualifying wages to the employee for personal services performed in that municipal corporation.
(b) An employer required to begin withholding tax for a municipal corporation under division (B)(4)(a) of this section may elect to withhold tax for that municipal corporation for the first 20 days on which the employer paid qualifying wages to the employee for personal services performed in that municipal corporation.
(c) If an employer makes the election described in division (B)(4)(b) of this section, the taxes withheld and paid by such an employer during those first 20 days to the municipal corporation in which the employee’s principal place of work is located are refundable to the employee.
(5) Without regard to the number of days in a calendar year on which an employee performs personal services in any municipal corporation, an employer shall withhold municipal income tax on all of the employee’s qualifying wages for a taxable year and remit that tax only to the municipal corporation in which the employer’s fixed location is located if the employer qualifies as a small employer as defined in § 95A.03 of this chapter. To determine whether an employer qualifies as a small employer for a taxable year, a Tax Commissioner may require the employer to provide the Tax Commissioner with the employer’s federal income tax return for the preceding taxable year.
(6) Divisions (B)(2)(a) and (B)(4) of this section shall not apply to the extent that a Tax Commissioner and an employer enter into an agreement regarding the manner in which the employer shall comply with the requirements of § 95A.05(A) of this chapter.
(Ord. 8463, passed 11-2-2015; Am. Ord. 8542, passed 12-5-2016)
Statutory reference:
Definitions, see R.C. § 718.01
Occasional entrant, withholding, see R.C. § 718.011
Withholding from qualifying wages, see R.C. § 718.03