§ 111.01 DEFINITIONS.

BUSINESS. Any enterprise, activity, trade, occupation, profession or undertaking of any nature conducted for gain or profit. BUSINESS shall not include a board of trade, chambers of commerce, trade associations or unions or other associations performing services usually performed by trade associations or unions as recognized by the Internal Revenue Service. BUSINESS shall not include funds, foundations, corporations or associations organized and operated for the exclusive and sole purpose of religious, charitable, scientific, literary, educational, civic or fraternal purposes, where no part of the earnings, incomes or receipts of such unit, group or association, inures to the benefit of any private shareholder or other person.

BUSINESS ENTITY. Each separate corporation, limited liability company, business development corporation, partnership, limited partnership, registered limited liability partnership, sole proprietorship, association, joint stock company, receivership, trust, professional service organization or other legal entity through which business is conducted;

CITY. Campbellsville, Kentucky.

COMPENSATION. Wages, salaries, commissions or any other form of remuneration paid or payable by an employer for services performed by an employee, which are required to be reported for federal income tax purposes and adjusted as follows:

(1) Include any amounts contributed by an employee to any retirement, profit sharing or deferred compensation plan, which are deferred for federal income tax purposes under a salary reduction agreement or similar arrangement, including but not limited to salary reduction arrangements under I.R.C. §§ 401(a), 401(k), 402(e), 403(a), 403(b), 408, 414(h) or 457; and

(2) Include any amounts contributed by an employee to any welfare benefit, fringe benefit or other benefit plan made by salary reduction or other payment method which permits employees to elect to reduce federal taxable compensation under the Internal Revenue Code, including but not limited to I.R.C. §§ 125 and 132.

CONCLUSION OF THE FEDERAL AUDIT. The date that the adjustments made by the Internal Revenue Service to net income as reported on the business entity's federal income tax return become final and unappealable.

CORPORATION. A corporation of joint stock company including S corporations organized under the laws of the United States, Kentucky, another state, territory or foreign country or a dependency thereof, to otherwise existing under color of law as a corporation including a nonprofit corporation and a joint stock company and recognized as such for federal income tax purposes.

DOMESTIC SERVANT. An individual employed to drive his employer as a chauffeur or employed on the grounds or in the home of his or her employer, to cook, clean, wash, garden, transport or otherwise care for or wait upon the employer, the employer's family and guests or to care for the person, home, grounds and/or vehicles of the employer, the employer's family and guests, including but not limited to maids, butlers, nurses, nursemaids, gardeners, cooks' launderers and chauffeurs engaged to service the employer, the employer's family and guests, but not including individuals who are employed by a cleaning service, personal nursing service, chauffeuring service or other entity which offers the services of its employees to the public.

EMPLOYEE. Any person who renders services to another person or any business entity for compensation, including an officer of a corporation and any officer, employee or elected official of the United States, a state or any political subdivision of a state, or any agency of instrumentality of any one or more of the above. A person classified as an independent contractor under the Internal Revenue Code shall not be considered an EMPLOYEE.

EMPLOYER. The person for whom an individual performs or performed any service, of whatever nature, as the employee of that person, except that:

(1) If the person for whom the individual performs or performed the services does not have control of the payment of the wages for the services, the term EMPLOYER means the person having control of the payment of the wages; and

(2) In the case of a person paying wages on behalf of a nonresident alien individual, foreign partnership or foreign corporation, not engaged in trade or business within the United States, the term EMPLOYER means that person.

FEDERAL INCOME TAX RETURN. All forms filed for federal income tax purposes including all schedules.

FIDUCIARY. A guardian, trustee, executor, administrator, receiver, conservator or any individual or corporation acting in a fiduciary capacity for any other person. This includes all persons required to file under KRS 141.190.

FINAL DETERMINATION OF THE FEDERAL AUDIT. The revenue agent's report or other documents reflecting the final and unappealable adjustments made by the Internal Revenue Service.

FISCAL YEAR. Fiscal year as defined in I.R.C. § 7701(a)(24).

INTERNAL REVENUE CODE. The Internal Revenue Code in effect on December 31, of the year in which the tax is due, exclusive of any amendments made subsequent to that date, other than amendments that extend provisions in effect on December 31, of the year in which the tax is due, that would otherwise terminate.

ITINERANT MERCHANT. An individual who does not have a permanent business location in the city and who sells items of merchandise.

KENTUCKY STATE INCOME TAX RETURN. All forms filed for state income tax purposes including all schedules.

LICENSE FEE. A tax imposed on:

(1) Salaries, wages, commissions and other compensation earned by persons within the city for work done and services performed or rendered in the city; and

(2) The net profits of self-employed persons, corporations, S corporations, associations, partnerships, limited liability companies, joint ventures, fiduciaries, itinerant merchants or any other entity resulting from businesses, trades, occupations, professions or activities conducted in the city.

LICENSEE. Any person required to file a separate return or to pay a license fee thereon under this chapter.

LIMITED LIABILITY COMPANY. An unincorporated association formed under KRS Chapter 275, or similar statute of another state.

NET PROFIT. Gross income as defined in I.R.C. § 61, minus all the deductions from gross income allowed by I.R.C. Chapter 1, and adjusted as follows:

(1) Include any amount claimed as a deduction for state tax or local tax which is computed, in whole or in part, by reference to gross or net income and which is paid or accrued to any state of the United States, local taxing authority in a state, the District of Columbia, the Commonwealth of Puerto Rico, any territory or possession of the United States, or any foreign country or political subdivision thereof;

(2) Include any amount claimed as a deduction that directly or indirectly is allocable to income which is either exempt from taxation or otherwise not taxed;

(3) Include any amount claimed as a net operating loss carryback or carryforward allowed under I.R.C. § 172;

(4) Include any amount of income and expenses passed through separately as required by the Internal Revenue Code to an owner of a business entity that is a pass-through entity for federal tax purposes; and

(5) Exclude any amount of income that is exempt from state taxation by the Kentucky Constitution, or the Constitution and statutory laws of the United States.

NEXUS. A minimum connection between a person/business entity and the taxing jurisdiction brought about when the person/business entity purposefully avails itself of the privileges and protection of the jurisdiction while engaging in business or practicing a trade, occupation or profession, without excluding by implication other activities which may create a nexus.

OCCUPATION TAX ADMINISTRATOR. The official collector and administrator of the occupational tax, to be appointed by the city.

PARTNERSHIP. The relationship between two or more who join together to carry on a trade or business. Each partner contributes money, property, labor or skills, and each expects to share in the profits and losses. A partner can be an individual person, corporation, trust, estate or another partnership.

PERSON. Every natural person, whether a resident or non-resident of the city. Whenever the word PERSON is used in a clause prescribing and imposing a penalty in the nature of a fine or imprisonment, the word, as applied to a partnership or other form of unincorporated enterprise, shall mean the partners or members thereof, and as applied to corporations, shall mean the officers and directors thereof.

QUESTIONNAIRE. The registration form required by the occupational tax office to be completed before the commencement of business within city.

RENTAL UNIT. Any room or rooms connected or other structure or portion thereof constituting a separate, independent establishment of premises for rent, lease or sublease to the occupant thereof.

RETURN or REPORT. Any properly completed and, if required, signed form, statement, certification, declaration or any other document permitted or required to be submitted or filed with the city.

SALARIES, WAGES, COMMISSIONS AND OTHER COMPENSATION. When applied to a person employed by others shall have the same meaning and shall include the gross amount of all salaries, wages, commissions, fees (including director fees), bonuses or any other money payments of any kind, or other considerations having a monetary value, which a person receives or becomes entitled to, or is given credit for by an employer, without deducting for withholding taxes, social security benefits, any form of insurance or retirement benefits, or other deductions made by an employer in calculating "take home-pay".

SALES REVENUE. Receipts from the sale, lease or rental of goods, services or property.

SOLE PROPRIETOR. A natural person engaged in any business, profession or occupation, but not as an employee.

TAX DISTRICT. Any city or city with the authority to levy net profits or occupational license taxes.

TAXABLE NET PROFIT. In case of a business entity having payroll or sales revenue only within the city, means net profit as defined in this section.

TAXABLE NET PROFIT. In case of a business entity having payroll or sales revenue both within and without the city means net profit as defined in this section, and as apportioned under § 111.04 below.

TAXABLE YEAR. The calendar year or fiscal year ending during the calendar year, upon the basis of which net income is computed.

TAXPAYER. Any person or business made liable for taxation or for the payment of amounts withheld from employees under the terms of this chapter.

TRADE, OCCUPATION or PROFESSION. Include any and all activities and the rendering of any and all services of all kinds for net profit or gain of any kind when applied to persons so engaged for themselves whether the person be a resident of city or not.

(Ord. 09-03, passed 6-13-2009)

§ 111.02 FEE; GENERALLY.

(A) Every person or business engaged in any trade, occupation or profession, or other activity or anyone required to file a return under this chapter in the city shall be required to complete and execute the questionnaire prescribed by the occupational tax office. Each person shall be required to complete a separate questionnaire for each separate business before the commencement of business or in the event of a status change, other than change of address. Licensees are required to notify the occupational tax office of changes of address, or the cessation of business activity, and of other changes which render inaccurate the information supplied in the completed questionnaire.

(B) Every natural person and every entity defined in § 111.01 above engaging in any activity for profit, or filing Kentucky Income Tax forms 740, 741, 765, 720 or 720S, shall be required to file and pay to the Occupational Tax Administrator an annual occupational license fee resulting from engaging in each activity. The license fee shall be measured by 1% of compensation defined in § 111.01 above and 1% of the net profits defined in § 111.01 for each separate business or entity.

(1) Each person, business and entity above operating for profit entirely within the city shall attach a copy of their appropriate Kentucky Income Tax Return (form 720 or 720S along with 720L, 740, 741 or 765) and supporting schedules (e.g., Federal Schedule C, E or F.).

(2) All partnerships and LLCs (not their partners or members) and S corporations (not their shareholders) are subject to this chapter, that is, the occupational license fee is not "passed through" these entities. In the case of guaranteed payments to partners, the partners are subject to the occupational license fee on any like payments. The partnership will be subject to the occupational license fee on any income shown on Schedule K, page 3, of Kentucky Form 765, less the guaranteed payments.

(C) Subject to this chapter is all income derived from the hire, rental or leasing of personal property, including those persons engaged in farm activity. All wages, salaries, commissions or other income earned or received by persons, associations, partnerships, corporations, S corporations, joint ventures or any renting or leasing real estate if the person, association, partnership, corporation, joint venture or other entity owns any interest in real estate in the city used for commercial or industrial purposes.

(D) Persons, associations, partnerships, corporations, joint ventures or any other entity will be subject to the occupational license fee on any income shown on Federal Schedule E.

(E) Every person or business engaged in farm activity for profit will be subject to the occupational license fee on any net income shown on Federal Schedule F.

(F) Sole proprietors engaged in any business activity for profit will be subject to the occupational license fee on any income shown on Federal Schedule C.

(G) Wages earned either within or outside the city may not be used as a credit against the net profits of a business

(H) A person practicing a business, profession, trade or occupation shall be deemed to be subject to the net profits licenses fee if the person has a nexus with the city sufficient to justify the imposition of the license fee in a manner consistent with the commerce clause and the due process clause of the Fourteenth Amendment to the Constitution of the United States and other applicable federal law. If the person has a sufficient nexus with the city, but also has a sufficient nexus with other cities or counties of the state, other states of the United States, and/or other nations, then the net profits derived from activities conducted within the city shall be determined by the apportionment formula set out in § 111.04 below herein (or other applicable section). It shall not be necessary that there be an independently established nexus between the city and each activity from which the licensee has derived income subject to apportionment. Consequently, the "net profit" of the corporation, fiduciary, partnership or other association shall be subject to apportionment and taxation based on unitary business principles. To the extent that the licensee submits satisfactory proof that any income is not from a unitary source, such income may be excluded.

(I) Establishing "nexus": without excluding by implication other activities which may create a nexus, one or more of the following connections between a person/business entity in the city shall normally establish a sufficient nexus:

(1) Location of a place of business in the city;

(2) Frequent and continuing entry into the city in the course of business by an officer or employee of a business;

(3) Delivery of goods to residents in the city other than through the mails or by common carrier;

(4) Contracting to buy or sell goods in the city; and

(5) Contracting substantial business activity in the city leading to a contract to sell goods.

(J) Paid preparer certification in lieu of filing of return:

(1) Upon the certification of the taxpayer and the certification of a "paid tax preparer", provided on a form approved by the Occupational Tax Administrator, that the net profit or other income of an employee, taxpayer or other entity shown upon the approved form is and has been calculated by the paid tax preparer certifying the form based on actual filed tax returns which are and shall remain for the applicable federal statute of limitation on file in the preparer's office;

(2) The filing shall be deemed consent by the taxpayer and preparer for the Administrator to review the forms on file at any time deemed necessary by the Administrator;

(3) Upon filing § 1.03 shall be deemed to have been complied with without the necessity of deposit of a copy of the returns or forms with the Administrator; and

(4) Notwithstanding the above the paid preparer and taxpayer shall make the return or forms available to the Administrator immediately upon written request from the Administrator.

(Ord. 09-03, passed 6-13-2009)

§ 111.03 TAX PAYMENT REQUIRED.

(A) Generally.

(1) Occupational license fee is required generally as set forth in § 111.02 above.

(2) All partnerships, S corporations, and all other entities where income is "passed through" to the owners are subject to this chapter. The occupational license tax imposed in this chapter is assessed against income before it is "passed through" these entities to the owners.

(3) If any business entity dissolves, ceases to operate or withdraws from the city during any taxable year, or if any business entity in any manner surrenders or loses its charter during any taxable year, the dissolution, cessation of business, withdrawal or loss or surrender of charter shall not defeat the filing of returns and the assessment and collection of any occupational license tax for the period of that taxable year during which the business entity had business activity in the city.

(4) If a business entity makes, or is required to make, a federal income tax return, the occupational license tax shall be computed for the purposes of this chapter on the basis of the same calendar or fiscal year required by the federal government, and shall employ the same methods of accounting required for federal income tax purposes.

(B) Exemptions.

(1) The occupational license tax imposed in this section shall not apply to the following persons or business entities:

(a) Any bank, trust company, combined bank and trust company, combined trust, banking and title business organized and doing business in this state, any savings and loan association whether state or federally chartered;

(b) Any compensation received by members of the State National Guard for active duty training, unit training assemblies and annual field training;

(c) Any compensation received by precinct workers for election training or work at election booths in state, city and local primary, regular or special elections;

(d) Public service corporations that pay an ad valorem tax on property valued and assessed by the State Department of Revenue pursuant to the provisions of KRS 136.120. Licensees whose businesses are predominantly non-public service who are also engaged in public service activity are required to pay a license fee on their net profit derived from the non-public service activities apportioned to the city;

(e) Persons or business entities that have been issued a license under KRS Chapter 243 to engage in manufacturing or trafficking in alcoholic beverages. Persons engaged in the business of manufacturing or trafficking in alcoholic beverages are required to file a return, but may exclude the portion of their net profits derived from the manufacturing or trafficking in alcoholic beverages;

(f) Insurance companies incorporated under the laws of and doing business in the Commonwealth of Kentucky except as provided in KRS 91 A.080; and

(g) Any profits, earnings, distributions of an investment fund which would qualify under KRS 154.20-250 to 154.20-284 to the extent any profits, earnings or distributions would not be taxable to an individual investor.

(2) All natural persons aged 65 and older shall be exempt from the provisions of the occupational license fee as to the first $2,000 of salaries, wages, commissions or other compensation earned by those persons in the city for work done or services performed or rendered in the city, or exempt as to the first $2,000 of net profits of any business, trade occupation or profession conducted in the city. It shall be the duty of all employers to withhold on all wages. Each individual person entitled to this refund must file FORM-ERC65 provided by or obtainable from the occupational tax office. A W-2 and proof of age must be provided to receive the refund. No more than one exemption will be allowed per person or business. This exemption may be used on either personal wages or net profits.

(3) A person engaged in agriculture business (raising crops and livestock) who employs less than five employees on a regular time basis, (450 hours during a quarter), may file a return and pay the withholding tax at the end of the taxable year.

(4) Compensation received for domestic services rendered by those persons classified as domestic servants by § 111.01 above.

(5) Those persons qualifying under KRS 68.197(2).

(Ord. 09-03, passed 6-13-2009)

Disclaimer: This Code of Ordinances and/or any other documents that appear on this site may not reflect the most current legislation adopted by the Municipality. American Legal Publishing provides these documents for informational purposes only. These documents should not be relied upon as the definitive authority for local legislation. Additionally, the formatting and pagination of the posted documents varies from the formatting and pagination of the official copy. The official printed copy of a Code of Ordinances should be consulted prior to any action being taken. For further information regarding the official version of any of this Code of Ordinances or other documents posted on this site, please contact the Municipality directly or contact American Legal Publishing toll-free at 800-445-5588.

Hosted by: American Legal Publishing

Back to Code Library

Previous Doc

Next Doc