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(A) (1) The legislative authority of the municipality shall maintain an Income Tax Board of Review to hear appeals as provided in R.C. Chapter 718.
(2) The Income Tax Board of Review shall consist of three members. Two members shall be appointed by the legislative authority of the municipality, and may not be employees, elected officials, or contractors with the municipality at any time during their term or in the five years immediately preceding the date of appointment. One member shall be appointed by the top administrative official of the municipality. This member may be an employee of the municipality, but may not be the director of finance or equivalent officer, or the Tax Commissioner or other similar official or an employee directly involved in municipal tax matters, or any direct subordinate thereof.
(3) The term for members of the Local Board of Tax Review appointed by the legislative authority of the municipality shall be two years. There is no limit on the number of terms that a member may serve should the member be reappointed by the legislative authority. The board member appointed by the top administrative official of the municipality shall serve at the discretion of the administrative official.
(4) Members of the Board of Tax Review appointed by the legislative authority may be removed by the legislative authority as set forth in R.C. § 718.11(A)(4).
(5) A member of the board who, for any reason, ceases to meet the qualifications for the position prescribed by this section shall resign immediately by operation of law.
(6) A vacancy in an unexpired term shall be filled in the same manner as the original appointment within 60 days of when the vacancy was created. Any member appointed to fill a vacancy occurring prior to the expiration of the term for which the member’s predecessor was appointed shall hold office for the remainder of such term. No vacancy on the board shall impair the power and authority of the remaining members to exercise all the powers of the board.
(7) If a member is temporarily unable to serve on the board due to a conflict of interest, illness, absence, or similar reason, the legislative authority or top administrative official that appointed the member shall appoint another individual to temporarily serve on the board in the member’s place. This appointment shall be subject to the same requirements and limitations as are applicable to the appointment of the member temporarily unable to serve.
(B) Whenever a Tax Commissioner issues an assessment, the Tax Commissioner shall notify the taxpayer in writing at the same time of the taxpayer’s right to appeal the assessment, the manner in which the taxpayer may appeal the assessment, and the address to which the appeal should be directed, and to whom the appeal should be directed.
(C) Any person who has been issued an assessment may appeal the assessment to the board by filing a request with the board. The request shall be in writing, shall specify the reason or reasons why the assessment should be deemed incorrect or unlawful, and shall be filed within 60 days after the taxpayer receives the assessment.
(D) The Local Board of Tax Review shall schedule a hearing to be held within 60 days after receiving an appeal of an assessment under division (C) of this section, unless the taxpayer requests additional time to prepare or waives a hearing. If the taxpayer does not waive the hearing, the taxpayer may appear before the board and/or may be represented by an attorney at law, certified public accountant, or other representative. The board may allow a hearing to be continued as jointly agreed to by the parties. In such a case, the hearing must be completed within 120 days after the first day of the hearing unless the parties agree otherwise.
(E) The board may affirm, reverse, or modify the Tax Commissioner’s assessment or any part of that assessment. The board shall issue a final determination on the appeal within 90 days after the board’s final hearing on the appeal, and send a copy of its final determination by ordinary mail to all of the parties to the appeal within 15 days after issuing the final determination. The taxpayer or the Tax Commissioner may appeal the board’s final determination as provided in R.C. § 5717.011.
(F) The Local Board of Tax Review created pursuant to this section shall adopt rules governing its procedures, including a schedule of related costs, and shall keep a record of its transactions. The rules governing the Local Board of Tax Review procedures shall be in writing, and may be amended as needed by the Local Board of Tax Review. Such records are not public records available for inspection under R.C. § 149.43. For this reason, any documentation, copies of returns or reports, final determinations, or working papers for each case must be maintained in a secure location under the control of the Tax Commissioner. No member of the Local Board of Tax Review may remove such documentation, copies of returns or reports, final determinations, or working papers from the hearing. Hearings requested by a taxpayer before a Local Board of Tax Review created pursuant to this section are not meetings of a public body subject to R.C. § 121.22. For this reason, such hearings shall not be open to the public, and only those parties to the case may be present during the hearing.
(Ord. 8463, passed 11-2-2015)
Statutory reference:
Local Board of Tax Review, see R.C. § 718.11
(A) (1) (a) Civil actions to recover municipal income taxes and penalties and interest on municipal income taxes shall be brought within the latter of:
1. Three years after the tax was due or the return was filed, whichever is later; or
2. One year after the conclusion of the qualifying deferral period, if any.
(b) The time limit described in division (A)(1)(a) of this section may be extended at any time if both the Tax Commissioner and the employer, agent of the employer, other payer, or taxpayer consent in writing to the extension. Any extension shall also extend for the same period of time the time limit described in division (C) of this section.
(2) As used in this section, QUALIFYING DEFERRAL PERIOD means a period of time beginning and ending as follows:
(a) Beginning on the date a person who is aggrieved by an assessment files with a Local Board of Tax Review the request described in § 95A.18 of this chapter. That date shall not be affected by any subsequent decision, finding, or holding by any administrative body or court that the Local Board of Tax Review with which the aggrieved person filed the request did not have jurisdiction to affirm, reverse, or modify the assessment or any part of that assessment.
(b) Ending the later of the sixtieth day after the date on which the final determination of the Local Board of Tax Review becomes final or, if any party appeals from the determination of the Local Board of Tax Review, the sixtieth day after the date on which the final determination of the Local Board of Tax Review is either ultimately affirmed in whole or in part or ultimately reversed and no further appeal of either that affirmation, in whole or in part, or that reversal is available or taken.
(B) Prosecutions for an offense made punishable under a resolution or ordinance imposing an income tax shall be commenced within three years after the commission of the offense, provided that in the case of fraud, failure to file a return, or the omission of 25% or more of income required to be reported, prosecutions may be commenced within six years after the commission of the offense.
(C) A claim for a refund of municipal income taxes shall be brought within the time limitation provided in § 95A.09(F) of this chapter.
(D) (1) Notwithstanding the fact that an appeal is pending, the petitioner may pay all or a portion of the assessment that is the subject of the appeal. The acceptance of a payment by the municipality does not prejudice any claim for refund upon final determination of the appeal.
(2) If upon final determination of the appeal an error in the assessment is corrected by the Tax Commissioner, upon an appeal so filed or pursuant to a final determination of the Local Board of Tax Review created under § 95A.18 of this chapter, of the Ohio Board of Tax Appeals, or any court to which the decision of the Ohio Board of Tax Appeals has been appealed, so that the amount due from the party assessed under the corrected assessment is less than the amount paid, there shall be issued to the appellant or to the appellant’s assigns or legal representative a refund in the amount of the overpayment as provided by § 95A.09(F) of this chapter, with interest on that amount as provided by division (D) of this section.
(E) No civil action to recover municipal income tax or related penalties or interest shall be brought during either of the following time periods:
(1) The period during which a taxpayer has a right to appeal the imposition of that tax or interest or those penalties; or
(2) The period during which an appeal related to the imposition of that tax or interest or those penalties is pending.
(Ord. 8463, passed 11-2-2015)
Statutory reference:
Statute of limitations, see R.C. § 718.12
(A) Pursuant to R.C. § 718.30, the municipality, pursuant to this chapter, grants authority to the Tax Commissioner to adopt rules to administer the income tax imposed by the municipality.
(B) All rules adopted under this section shall be published and posted on the internet.
(Ord. 8463, passed 11-2-2015)
Statutory reference:
Adoption of rules, see R.C. § 718.30
(A) This chapter shall continue in full force and effect insofar as the levy of taxes is concerned until repealed, and insofar as the collection of taxes levied hereunder and actions and proceedings for collecting any tax so levied or enforcing any provisions of this chapter are concerned, it shall continue in full force and effect until all of the taxes levied in the aforesaid period are fully paid and any and all suits and prosecutions for the collection of taxes or for the punishment of violations of this chapter have been fully terminated, subject to the limitations contained in § 95A.19.
(B) Annual returns due for all or any part of the last effective year of this chapter shall be due on the date provided in § 95A.09(A) as though the same were continuing.
(Ord. 8463, passed 11-2-2015)
If any sentence, clause, section or part of this chapter, or any tax imposed against, or exemption from tax granted to, any taxpayer or forms of income specified herein is found to be unconstitutional, illegal or invalid, such unconstitutionality, illegality, or invalidity shall affect only such clause, sentence, section or part of this chapter so found and shall not affect or impair any of the remaining provisions, sentences, clauses, sections or other parts of this chapter. It is hereby declared to be the intention of the legislative authority of the municipality that this chapter would have been adopted had such unconstitutional, illegal or invalid sentence, clause, section or part thereof not been included in this chapter.
(Ord. 8463, passed 11-2-2015)
NET PROFIT TAXES; ELECTION TO BE SUBJECT TO SUBCHAPTER
(1) The State Tax Commissioner shall serve as the sole administrator of the municipal net profit tax for which the taxpayer as defined in § 95A.81 of this chapter is liable for the term of the election;
(B) (1) A taxpayer shall make the initial election on or before the first day of the third month after the beginning of the taxpayer’s taxable year by notifying the Tax Commissioner and the city, on a form prescribed by the Tax Commissioner.
(2) (a) The election, once made by the taxpayer, applies to the taxable year in which the election is made and to each subsequent taxable year until the taxpayer notifies the Tax Commissioner and the city of its termination of the election.
(b) A notification of termination shall be made, on a form prescribed by the Tax Commissioner, on or before the first day of the third month of any taxable year.
(1) Prescribe all forms necessary to administer those sections;
(2) Adopt such rules as the Tax Commissioner finds necessary to carry out those sections;
(3) Appoint and employ such personnel as are necessary to carry out the duties imposed upon the Tax Commissioner by those sections.
(D) the Tax Commissioner shall not be considered a TAX ADMINISTRATOR, as that term is defined in R.C. § 718.01 and § 95A.03 of this chapter.
(Ord. 8660, passed 2-20-2018)
If a term used in §§ 95A.80 to 95A.95 of this chapter that is not otherwise defined in this chapter is used in a comparable context in both the laws of the United States relating to federal income tax and in R.C. Title LVII and the use is not consistent, then the use of the term in the laws of the United States relating to federal income tax shall have control over the use of the term in R.C. Title LVII, unless the term is defined in R.C. Chapter 5703, in which case the definition in that chapter shall control. Any reference in this chapter to the Internal Revenue Code includes other laws of the United States related to federal income taxes. If a term is defined in both this section and §
95A.03
of this chapter, the definition in this section shall control for all uses of that term in §§
95A.80 to 95A.95
of this chapter. As used in §§
95A.80 to 95A.95
of this chapter only:
(A) ADJUSTED FEDERAL TAXABLE INCOME, for a person required to file as a C corporation, or for a person that has elected to be taxed as a C corporation as described in division R.C. § 718.01(D)(5) and § 95A.03 of this chapter, means a C corporation’s federal taxable income before net operating losses and special deductions as determined under the Internal Revenue Code, adjusted as follows:
(1) Deduct intangible income to the extent included in federal taxable income. The deduction shall be allowed regardless of whether the intangible income relates to assets used in a trade or business or assets held for the production of income.
(2) Add an amount equal to 5% of intangible income deducted under division (A)(1) of this section, but excluding that portion of intangible income directly related to the sale, exchange, or other disposition of property described in section 1221 of the Internal Revenue Code.
(3) Add any losses allowed as a deduction in the computation of federal taxable income if the losses directly relate to the sale, exchange, or other disposition of an asset described in section 1221 or 1231 of the Internal Revenue Code.
(4) (a) Except as provided in division (A)(4)(b) of this section, deduct income and gain included in federal taxable income to the extent the income and gain directly relate to the sale, exchange, or other disposition of an asset described in section 1221 or 1231 of the Internal Revenue Code.
(b) Division (A)(4)(a) of this section does not apply to the extent the income or gain is income or gain described in section 1245 or 1250 of the Internal Revenue Code.
(5) Add taxes on or measured by net income allowed as a deduction in the computation of federal taxable income.
(6) In the case of a real estate investment trust or regulated investment company, add all amounts with respect to dividends to, distributions to, or amounts set aside for or credited to the benefit of investors and allowed as a deduction in the computation of federal taxable income.
(7) Deduct, to the extent not otherwise deducted or excluded in computing federal taxable income, any income derived from a transfer agreement or from the enterprise transferred under that agreement under R.C. § 4313.02.
(8) Deduct exempt income to the extent not otherwise deducted or excluded in computing adjusted federal taxable income.
(9) Deduct any net profit of a pass-through entity owned directly or indirectly by the taxpayer and included in the taxpayer’s federal taxable income unless an affiliated group of corporations includes that net profit in the group’s federal taxable income in accordance with § 95A.86 (E)(3)(b) of this chapter.
(10) Add any loss incurred by a pass-through entity owned directly or indirectly by the taxpayer and included in the taxpayer’s federal taxable income unless an affiliated group of corporations includes that loss in the group’s federal taxable income in accordance with § 95A.86(E)(3)(b) of this chapter.
If the taxpayer is not a C corporation, is not a disregarded entity that has made the election described in § 95A.03 of this chapter, and is not a publicly traded partnership that has made the election described in § 95A.03, the taxpayer shall compute adjusted federal taxable income under this section as if the taxpayer were a C corporation, except guaranteed payments and other similar amounts paid or accrued to a partner, former partner, shareholder, former shareholder, member, or former member shall not be allowed as a deductible expense unless such payments are in consideration for the use of capital and treated as payment of interest under section 469 of the Internal Revenue Code or United States treasury regulations. Amounts paid or accrued to a qualified self-employed retirement plan with respect to a partner, former partner, shareholder, former shareholder, member, or former member of the taxpayer, amounts paid or accrued to or for health insurance for a partner, former partner, shareholder, former shareholder, member, or former member, and amounts paid or accrued to or for life insurance for a partner, former partner, shareholder, former shareholder, member, or former member shall not be allowed as a deduction.
Nothing in division (A) of this section shall be construed as allowing the taxpayer to add or deduct any amount more than once or shall be construed as allowing any taxpayer to deduct any amount paid to or accrued for purposes of federal self-employment tax.
(B) ASSESSMENT means a notice of underpayment or nonpayment of a tax issued pursuant to § 95A.90 of this chapter.
(C) MUNICIPAL TAXABLE INCOME means income apportioned or sitused to the municipal corporation under § 95A.82 of this chapter, as applicable, reduced by any pre-2017 net operating loss carry forward available to the person for the municipal corporation.
(E) TAXABLE YEAR means the calendar year or the taxpayer’s fiscal year ending during the calendar year, or fractional part thereof, upon which the calculation of the taxpayer’s adjusted federal taxable income is based pursuant to this chapter. If a taxpayer’s taxable year is changed for federal income tax purposes, the taxable year for purposes of §§ 95A.80 to 95A.95 of this chapter is changed accordingly but may consist of an aggregation of more than one taxable year for federal income tax purposes. The Tax Commissioner may prescribe by rule an appropriate period as the taxable year for a taxpayer that has had a change of its taxable year for federal income tax purposes, for a taxpayer that has two or more short taxable years for federal income tax purposes as the result of a change of ownership, or for a new taxpayer that would otherwise have no taxable year.
(F) TAXPAYER has the same meaning as in § 95A.03 of this chapter, except that TAXPAYER does not include natural persons or entities subject to the tax imposed under R.C. Chapter 5745. TAXPAYER may include receivers, assignees, or trustees in bankruptcy when such persons are required to assume the role of a taxpayer.
(Ord. 8660, passed 2-20-2018)
This section applies to any taxpayer that is engaged in a business or profession in the city and that has made the election under § 95A.80 of this chapter.
(A) Except as otherwise provided in division (B) of this section, net profit from a business or profession conducted both within and without the boundaries of the city shall be considered as having a taxable situs in the city for purposes of municipal income taxation in the same proportion as the average ratio of the following:
(1) The average original cost of the real property 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 original cost of all of 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, tangible personal or 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.
(2) Wages, salaries, and other compensation paid during the taxable period to individuals employed in the business or profession for services performed in the city to wages, salaries, and other compensation paid during the same period to individuals employed in the business or profession, wherever the individual’s services are performed, excluding compensation from which taxes are not required to be withheld under § 95A.05(B)(1) of this chapter.
(3) Total gross receipts of the business or profession from sales and rentals made and services performed during the taxable period in the city to total gross receipts of the business or profession during the same period from sales, rentals, and services, wherever made or performed.
(B) (1) If the apportionment factors described in division (A) of this section do not fairly represent the extent of a taxpayer’s business activity in the city, the taxpayer may request, or the Tax Commissioner may require, that the taxpayer use, with respect to all or any portion of the income of the taxpayer, an alternative apportionment method involving one or more of the following:
(a) Separate accounting;
(b) The exclusion of one or more of the factors;
(c) The inclusion of one or more additional factors that would provide for a more fair apportionment of the income of the taxpayer to the municipal corporation;
(d) A modification of one or more of the factors.
(2) A taxpayer request to use an alternative apportionment method shall be in writing and shall accompany a tax return, timely filed appeal of an assessment, or timely filed amended tax return. The taxpayer may use the requested alternative method unless the Tax Commissioner denies the request in an assessment issued within the period prescribed by § 95A.90(A).
(3) The Tax Commissioner may require a taxpayer to use an alternative apportionment method as described in division (B)(1) of this section only by issuing an assessment to the taxpayer within the period prescribed by § 95A.90(A).
(C) As used in division (A)(2) of this section, “wages, salaries, and other compensation” includes only wages, salaries, or other compensation paid to an employee for services performed at any of the following locations:
(1) A location that is owned, controlled, or used by, rented to, or under the possession of one of the following:
(a) The employer;
(b) A vendor, customer, client, or patient of the employer, or a related member of such a vendor, customer, client, or patient;
(c) A vendor, customer, client, or patient of a person described in division (C)(1)(b) of this section, or a related member of such a vendor, customer, client, or patient.
(2) Any location at which a trial, appeal, hearing, investigation, inquiry, review, court-martial, or similar administrative, judicial, or legislative matter or proceeding is being conducted, provided that the compensation is paid for services performed for, or on behalf of, the employer or that the employee’s presence at the location directly or indirectly benefits the employer;
(3) Any other location, if the Tax Commissioner determines that the employer directed the employee to perform the services at the other location in lieu of a location described in division (C) (1) or (2) of this section solely in order to avoid or reduce the employer’s municipal income tax liability. If the Tax Commissioner makes such a determination, the employer may dispute the determination by establishing, by a preponderance of the evidence, that the Tax Commissioner’s determination was unreasonable.
(D) For the purposes of division (A)(3) of this section, receipts from sales and rentals made and services performed shall be sitused to the city as follows:
(1) Gross receipts from the sale of tangible personal property shall be sitused to the City of Bowling Green only if, regardless of where title passes, the property meets either of the following criteria:
(a) The property is shipped to or delivered within the city from a stock of goods located within the city.
(b) The property is delivered within the city from a location outside the city, provided the taxpayer is regularly engaged through its own employees in the solicitation or promotion of sales within the city and the sales result from such solicitation or promotion.
(2) Gross receipts from the sale of services shall be sitused to the city to the extent that such services are performed in the city.
(3) To the extent included in income, gross receipts from the sale of real property located in the city shall be sitused to the city.
(4) To the extent included in income, gross receipts from rents and royalties from real property located in the city shall be sitused to the city.
(5) Gross receipts from rents and royalties from tangible personal property shall be sitused to the city based upon the extent to which the tangible personal property is used in the city.
(E) Commissions received by a real estate agent or broker relating to the sale, purchase, or lease of real estate shall be sitused to the city in which the real estate is located. Net profit reported by the real estate agent or broker shall be allocated to the city based upon the ratio of the commissions the agent or broker received from the sale, purchase, or lease of real estate located in the city to the commissions received from the sale, purchase, or lease of real estate everywhere in the taxable year.
(F) If, in computing a taxpayer’s adjusted federal taxable income, the taxpayer deducted any amount with respect to a stock option granted to an employee, and if the employee is not required to include in the employee’s income any such amount or a portion thereof because it is exempted from taxation under § 95A.03 of this chapter by the city or substantially similar provision of the codified ordinances of another municipal corporation, the taxpayer shall add the amount that is exempt from taxation to the taxpayer’s net profit that was apportioned to the city. In no case shall a taxpayer be required to add to its net profit that was apportioned to the city any amount other than the amount upon which the employee would be required to pay tax were the amount related to the stock option not exempted from taxation. This division applies solely for the purpose of making an adjustment to the amount of a taxpayer’s net profit that was apportioned to the city under this section.
(G) When calculating the ratios described in division (A) of this section for the purposes of that division or division (B) of this section, the owner of a disregarded entity shall include in the owner’s ratios the property, payroll, and gross receipts of such disregarded entity.
(Ord. 8660, passed 2-20-2018)
(A) Any information gained as a result of returns, investigations, hearings, or verifications required or authorized by §§ 95A.80 to 95A.95 of this chapter is confidential, and no person shall disclose such information, except for official purposes, in accordance with a proper judicial order, or as provided in R.C. § 4123.271 or R.C. § 5703.21. The Tax Commissioner may furnish the Internal Revenue Service with copies of returns filed. This section does not prohibit the publication of statistics in a form which does not disclose information with respect to particular taxpayers.
(B) In May and November of each year, the Tax Commissioner shall provide the City Tax Administrator with the following information for every taxpayer that filed tax returns with the Commissioner under §§ 95A.80 to 95A.95 of this chapter and that had municipal taxable income apportionable to the city under this chapter for any prior year:
(1) The taxpayer’s name, address, and federal employer identification number;
(2) The taxpayer’s apportionment ratio for, and amount of municipal taxable income apportionable to, the city pursuant to § 95A.82 of this chapter;
(3) The amount of any pre-2017 net operating loss carryforward utilized by the taxpayer;
(4) Whether the taxpayer requested that any overpayment be carried forward to a future taxable year;
(5) The amount of any credit claimed under R.C. § 718.94.
(C) Not later than 30 days after each distribution made to municipal corporations under R.C. § 718.83, the Tax Commissioner shall provide to the city a report stating the name and federal identification number of every taxpayer that made estimated payments that are attributable to the city and the amount of each such taxpayer’s estimated payment.
(D) The information described under divisions (B) and (C) of this section shall be provided to the individual or individuals designated by the City Tax Administrator under R.C. § 718.83(D).
(E) (1) The city expects that the Tax Commissioner will, pursuant to R.C. § 718.84(E), provide tax returns and other information it receives in the performance of its administration of the municipal net profits tax for taxpayers making the election provided in § 95A.80 of this chapter. The Tax Administrator shall review these returns and information, as well as the information received pursuant to divisions (B) and (C) of this section, and has discretion to refer any taxpayer for audit by the Tax Commissioner. Such referral shall be made on a form prescribed by the Commissioner and shall include any information that forms the basis for the referral.
(2) If the Tax Commissioner declines to audit a taxpayer referred by the Tax Administrator under this section, the city reserves its right to pursue any and all remedies, whether at law or in equity, to ensure that the correct tax liability has been calculated and paid by the taxpayer.
(Ord. 8660, passed 2-20-2018)
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