(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)