(A) Duty of withholding.
(1) 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 paid to residents of the municipality, regardless of the place where the services are rendered; and
(b) All compensation paid non-residents 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 allocation 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 Administrator, 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 non-resident 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 non-resident 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 or her within and outside the municipality.
(b) The deducting and withholding of personal service compensation of other non-resident 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 non- resident employees are subject to call at any time does not permit the allocation 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 40-hour week unless the employer notifies the Tax Administrator that a greater or less number of hours per week is worked. The determination of tax liability of non-residents 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.
(d) Wages of itinerants are not subject to withholding.
(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 non-resident 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 Administrator notifies the 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 wages and other compensation earned by a resident of the municipality for work done or services performed in another municipality which imposes a tax upon such wages and other compensation of such resident if such employer withholds the tax on such resident’s wages or other compensation for such other municipality. Where such municipal tax is for a smaller amount than the tax imposed by this subchapter the employer shall furnish the Tax Administrator with a list of resident employees for whom such lesser tax is withheld.
(11) The Tax Administrator shall have the authority to enter into agreement with other taxing municipalities permitting an employer to withhold the entire tax on the wages of a floater either for the taxing municipality in which the employer has his principal place of business or the taxing municipality in which the employee resides.
(B) Return and payment of tax withheld and status of employers.
(1) The Tax Administrator 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 or more in which case it shall be increased to one cent.
(Ord. 1-05, passed 1-24-05)