CHAPTER 192 - 2016 MUNICIPAL INCOME TAX

(a) The tax on income and the withholding tax established by this chapter are authorized by Article XVIII, Section 3 of the Ohio Constitution. The tax on income and the withholding tax established by this chapter are deemed to be levied in accordance with, and to be consistent with, the provisions and limitations of RC Chapter 718. This chapter is deemed to incorporate the provisions of RC Chapter 718.

(b) The tax is an annual tax levied on the income of every person residing, earning or receiving income in the municipal corporation, and shall be measured by municipal taxable income. The municipality shall tax income at a uniform rate. The tax is levied on municipal taxable income, as defined herein.

(Ord. No. 1412-15. Passed 11-23-15, eff. 1-1-16)

§ 192.02 Purposes of Tax

(a) To provide funds for the purposes of general municipal operations, procurement of fixed assets or permanent improvements, payment of debt charges, the elimination of deficits in city funds and for all other lawful purposes, there shall be, and is hereby levied a tax on qualifying wages as defined in this chapter, on net profits, and on all other municipal taxable income, as hereinafter provided.

(b) Eight-ninths (8/9) of all monies derived from the tax so levied shall be unrestricted and may be applied to any of the purposes described in division (a) of this section.

(c) One-ninth (1/9) of all monies derived from the tax so levied shall be credited to a special revenue fund to be known as the Restricted Income Tax Fund. Moneys credited to the Restricted Income Tax Fund may be applied to only the following purposes:

(1) Elimination of any deficit balance in any fund of the City, provided that such deficit balance existed as of December 31, 1984, or exists at any subsequent time during a fiscal emergency period, as defined in RC 118.01; or

(2) Payment of the principal of or interest or any premium on any bonds or notes issued by the City to finance the construction, purchase or acquisition of fixed assets or permanent improvements; or

(3) Payment of the costs of constructing or acquiring (whether by outright purchase, lease or lease- purchase and irrespective of whether payment is made in installments or in a lump sum) of fixed assets of permanent improvements.

(d) The tax imposed by this chapter shall be levied on the income of every person residing in or earning or receiving income in the City and this tax shall be measured by municipal taxable income. The City is levying this tax under the limitations specified in RC Chapter 718 and incorporates the provisions of that chapter within this ordinance.

(Ord. No. 1412-15. Passed 11-23-15, eff. 1-1-16)

§ 192.03 Rate and Taxable Income

For the purposes specified in Section 192.02, on and after January 1, 1967, an annual tax of one-half of one percent (0.5%) per annum shall be imposed upon the hereinafter specified income; provided that on and after July 1, 1968, the rate of tax shall be a total of one percent (1%) per annum; and that on and after March 1, 1979, the rate of such tax shall be a total of one and five-tenths percent (1.5%) per annum; and that on and after January 1, 1981, the rate of tax shall be two percent (2%) per annum; and that on and after January 1, 2017, the rate of tax shall be two and one-half percent (2.5%) per annum. Such tax shall be imposed upon all taxable income as follows:

(a) On all qualifying wages, net profits, rental income and other taxable income earned and/or received on and after January 1, 1967 by residents of the City;

(b) (1) On all qualifying wages, earned and/or received on and after January 1, 1967, by nonresidents of the City for work done or services performed or rendered within the City or attributable to the City; on all net profits earned and/or received by a nonresident from the operation or conduct of any business or profession within the City; and on all other taxable income, including rental income, earned and/or received by a nonresident derived from or attributable to sources, events or transactions within the City;

(2) For nonresidents employed at a place of business or profession within the City, only those qualifying wages earned and/or received by such nonresident that are specifically attributable to a place or location worked that is outside the City will be treated as earned outside the City;

(c) (1) On the portion attributable to the City of the net profits earned and/or received on and after January 1, 1967, of all resident associations, pass- through entities or other unincorporated business entities treated as a pass-through entity for federal income tax purposes or professions or other activities, derived from sales made, work done, services performed or rendered, and business, or other activities conducted in the City and/or derived from sales made, work done, services performed or rendered and business or other activities attributable to the City;

(2) On the portion of the distributive share of the net profits earned and/or received on and after January 1, 1967, of a resident partner or owner of a resident association, pass-through entity or other unincorporated business entity treated as a pass- through entity for federal income tax purposes not attributable to the City and upon which the City’s income tax has not been imposed and levied;

(d) (1) On the portion attributable to the City of the net profits earned and/or received on and after January 1, 1967, of all nonresident associations, pass- through entities or other unincorporated business entities treated as a pass-through entity for federal income tax purposes, professions or other activities, derived from sales made, work done, services performed or rendered, and business, or other activities conducted in the City and/or derived from sales made, work done, services performed or rendered and business or other activities attributable to the City, whether or not such association, pass-through entity or other unincorporated business entity treated as a pass-through entity for federal income tax purposes has an office or place of business in the City;

(2) On the portion of the distributive share of the net profits earned and/or received on and after January 1, 1967, of a resident partner or owner of a nonresident association, pass-through entity or other unincorporated business entity treated as a pass-through entity for federal income tax purposes not attributable to the City and upon which the City’s income tax has not been imposed and levied from wherever such business is located;

(e) On the portion attributable to the City of the net profits earned and/or received on and after January 1, 1967, of all corporations and all other entities and business activities not defined herein as associations, pass-through entity or unincorporated business entity treated as a pass-through entity for federal income tax purposes derived from sales made, work done, services performed or rendered, and business, or other activities conducted in the City, and/or derived from sales made, work done, services performed or rendered, and business, or other activities attributable to the City, whether or not such corporations, entities or business activities have an office or place of business in the City;

(f) On the net profits of an electric company, combined company or telephone company apportioned and attributable to the City in accordance with RC 718.01(F)(6) and RC Chapter 5745;

(g) On all income derived from prizes, awards, gaming, wagering, lotteries or other similar games of chance by a resident from whatever source and from anywhere derived and by a nonresident from whatever source when the prize, award, gaming, wagering, lottery or other similar game of chance takes place in the City. For purposes of this statute, the purchase of a lottery ticket or similar instrument shall be deemed to occur in the City when said instrument is purchased in the City;

(h) On all income earned and/or received from covenants not to compete or similar agreements and on all income attributable to cancellation of indebtedness to the extent reported on the taxpayer’s federal income tax return;

(i) On all the guardian, executor, conservator, trustee or administrator fees earned and/or received by a taxpayer in connection with the operation or conduct of a business or profession;

(j) On all other compensation, net profits and income earned and/or received by the taxpayer that is not specifically exempted from the tax imposed by this chapter and RC Chapter 718;

(k) (1) For taxable years beginning on or after January 1, 2004, the net profits from a business or profession shall be taxed only to the extent of the taxpayer’s adjusted federal taxable income except that nothing shall be construed as limiting the ability of the Tax Administrator to administer, audit, or enforce the provisions of this chapter including making all necessary adjustments and allocations to adjusted federal taxable income to produce a fair and proper allocation of net profits to the City;

(2) Division (k)(1) of this section shall not apply to any taxpayer required to file a return under RC 5745.03 or to the net profits from a sole proprietorship;

(l) For taxable years beginning on or after January 1, 2004, in the case of a taxpayer who has a net profit from a business or profession that is operated as a sole proprietorship, or in the case of a taxpayer who has a net profit from a business and the taxpayer is an individual, the City shall not tax or use as the base for determining the amount of the net profit that shall be considered as having a taxable situs in the City, an amount other than the net profit required to be reported on Internal Revenue Service Schedules C or F from such sole proprietorship for the taxable year; and

For taxable years beginning on or after January 1, 2004, in the case of a taxpayer who has a net profit from rental activity required to be reported on Internal Revenue Service Schedule E, the City shall not tax or use as the base for determining the amount of the net profit that shall be considered as having a taxable situs in the City, an amount other than the net profit from rental activities required to be reported by the taxpayer on Schedule E for the taxable year.

(Ord. No. 182-16. Passed 7-13-16, eff. 7-17-16*)

*Note: The tax rate effective January 1, 2017, was approved by the electorate on November 8, 2016.

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