To provide funds for the purpose of general municipal operations, maintenance of equipment, new equipment, extension, enlargement and improvement of municipal services and facilities and capital improvements of the City of Clyde, there be and hereby is levied a tax upon the earnings at the rate of one percent (1%), in addition to the one-half of one percent (.5%) tax imposed in Section 181.025, upon the following:
(a) On all income, qualifying wages, commissions and other compensation earned and/or received on and after January 1, 1997, by resident individuals of the City of Clyde. For clarification “income” includes, but is not limited to:
(1) Lottery, gambling and sports winnings, and games of chance. This provision is effective for tax year 2008 and subsequent tax years.
A. If the taxpayer is considered a professional gambler for federal income tax purposes, related deductions as permitted by the Internal Revenue Code shall be allowed against gambling and sports winnings.
B. If the taxpayer is not considered a professional gambler for federal income tax purposes, a deduction equal to the amount of up to one hundred thousand dollars ($100,000) of income combined from lottery, gambling and sports winnings, and games of chance, or a deduction of one hundred thousand dollars ($100,000), whichever is less, shall be allowed, provided that in no case shall the deduction exceed the income amount of combined lottery, gambling and sports winnings, and games of chance. If said income is payable to the taxpayer in more than one year, the deduction applies only in the first year in which the income is received.
(2) For further clarification, “income” includes third-party sick pay to the extent allowed by the Internal Revenue Code.
(b) On all income, qualifying wages, commissions and other compensation earned and/or received on and after January 1, 1997, by non-resident individuals of the City of Clyde, for work done or services performed or rendered in the City of Clyde. Separation pay, termination pay, reduction-in-force pay, and other compensation paid as a result of an employee leaving the service of an employer shall be allocable only to Clyde. However:
(1) The City shall not tax the compensation of a non-resident individual if all of the following apply:
A. The compensation is paid for personal services performed by the individual in the City on twelve or fewer days during the calendar year, in which case the individual shall be considered an “occasional entrant” for purposes of the City income tax. A day is a full day or any fractional part of a day.
B. In the case of an individual who is an employee, the principal place of business of the individual’s employer is located outside the City and the individual pays tax on compensation described in subsection (b) to the municipality, if any, in which the employer’s principal place of business is located, and no portion of that tax is refunded to the individual.
C. The individual is not a professional entertainer or professional athlete, the promoter of a professional entertainment or sports event, or an employee of such a promoter, all as may be reasonably defined by the City.
(2) Beginning with the thirteenth day an individual deemed to have been an occasional entrant to the City performs services within the City, the employer of said individual shall begin withholding the City income tax from remuneration paid by the employer to the individual, and shall remit the withheld income tax to the City in accordance with the requirements of this ordinance. Since the individual can no longer be considered to have been an occasional entrant, the employer is further required to remit taxes on income earned in the City by the individual for the first twelve days.
(3) If the individual is self-employed, it shall be the responsibility of the individual to remit the appropriate income tax to the City.
(c) On the net profits attributable to Clyde, earned on and after January 1, 1997, of all resident unincorporated businesses, professions and other activities derived from work done or services rendered or performed and business or other activities conducted in the City of Clyde.
(d) On the portion of the distributive share of the net profits earned and/or received on and after January 1, 1997 of a resident individual, partner or owner of a resident unincorporated business entity attributable to Clyde and not levied against such unincorporated business entity.
(e) On the net profits attributable to Clyde earned on and after January 1, 1997, of all non-resident unincorporated businesses, professions or other activities, derived from work done or services performed or rendered and business or other activities conducted in the City of Clyde.
(f) On the portion of the distributive share of the net profits earned and/or received on and after January 1, 1997, of a resident individual, partner or owner of a non- resident unincorporated business entity not attributable to Clyde and not levied against such unincorporated business entity.
(g) On the net profits earned on and after January 1, 1997, of all corporations derived from work done or services performed or rendered and business or other activities conducted in the City of Clyde.
(h) The portion of the net profits attributable to the City of Clyde of a taxpayer conducting a business, profession or other activity both within and without the boundaries of the City of Clyde shall be determined as provided in Section 718.02 of the Revised Code of Ohio and in accordance with the Rules and Regulations adopted by the Council of the City of Clyde pursuant to this chapter. The formula for determining the allocation percentage is as follows:
(1) Net profit from a business or profession conducted both within and without the boundaries of the City of Clyde shall be considered as having a taxable situs in the City of Clyde for purposes of income taxation in the same proportion as the average ratio of:
A. The average original cost of the real and tangible personal property owned or used by the taxpayer in the business or profession in the City of Clyde 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 this paragraph, 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.
B. Wages, salaries and other compensation paid during the taxable period to persons employed in the business or profession for services performed in the City of Clyde to wages, salaries and other compensation paid during the same period to person employed in the business or profession, wherever their services were performed. Wages, salaries, and other compensation shall be included to the extent that they represent qualifying wages.
C. Gross receipts of the business or profession from sales made and services performed during the taxable period in the City of Clyde to gross receipts of the business or profession during the same period from sales and services, wherever made or performed.
(2) In the event that the foregoing allocation formula dies not produce an equitable result, another basis may, under uniform regulations be substituted so as to produce such result. However, if the 3-factor apportionment formula (ORC 718.02) does produce an equitable result, the “books and records” method or other method may be substituted at the discretion of the Director.
(3) As used in Division (1) of this subsection, “Sales made in the City of Clyde” means:
A. All sales of tangible personal property which is delivered within the City of Clyde regardless of where title passes if shipped or delivered from a stock of goods within such City.
B. All sales of tangible personal property which is delivered within the City of Clyde regardless of where title passes even though transported from a point outside such City if the taxpayer is regularly engaged through its own employees in the solicitation or promotion of sales with the City of Clyde and the sales result from such solicitation or promotion.
C. All sales of tangible personal property which is shipped from a place within the City of Clyde to purchasers outside such City regardless of where title passes if the taxpayer is not, through its own employees, regularly engaged in the solicitation or promotion of sales at the place where delivery is made.
(i) Consolidated Returns.
(1) Any affiliated group which files a consolidated return for federal income tax purposes pursuant to Section 1501 of the Internal Revenue Code may file a consolidated return with the City. However, once the affiliated group has elected to file a consolidated return or a separate return with the Municipality, the affiliated group may not change their method of filing in any subsequent tax year without written approval from the City.
(2) In the case of a corporation that carried on transactions with its stockholders or with other corporations related by stock ownership, interlocking directorates or some other method, the Income Tax Administrator shall require such information, in addition to the return hereinafter provided for, as he may deem necessary to ascertain whether net profits are properly allocated to the City. If the Income Tax Administrator finds net profits are not properly allocated to the Municipality by reason of transactions with stockholders or with other corporations related by stock ownership, interlocking directorates or some other method, he may require the filing of a consolidated return or adjust such transactions so as to produce a fair and proper allocation of net profits to the City.
(j) (1) The portion of a net operating loss sustained in any taxable year allocable to the City may be applied against the portion of the net profit of succeeding years allocable to the City, until exhausted, but in no event for more than five taxable years. No portion of a net operating loss shall be carried back against net profits of any prior year.
(2) The portion of a new operating loss sustained shall be allocated to the Village in the same manner as provided herein for allocating net profits to the City.
(k) Each taxpayer may offset business losses only against business net profits from any business conducted in the City or in any municipality that does not levy an income tax on net profits therefrom.
(l) Exemptions. The provisions of this chapter shall not be construed as levying a tax upon the following:
(1) The Military pay or allowances of members of the Armed Forces of the United States and of members of their reserve components, including the National Guard.
(2) Unemployment compensation, payments from pension plans or similar payments, including disability payments received from private industry, or local, state, or federal governments, or from charitable, religious or educational organizations, and the proceeds of sick, accident, or liability insurance policies. The disability benefits excludable must be of a permanent nature as determined by a physician or government entity.
(3) Income, dues, and contributions received by religious, fraternal, charitable, scientific, literary, educational institutions or organizations, labor unions and similar organizations.
(4) Receipts by bona fide charitable, religious and educational organizations and associations, when those receipts are from casual entertainment, amusements, sports events, and health and welfare activities conducted by bona fide charitable, religious or educational organizations and associations, and only to the extent that the said receipts are income that is exempt from Federal Income Tax.
(5) Any association, organization, corporation, club or trust which is exempt from federal taxes on income by reason of its purpose(s), but only to the extent that the said income is exempt from federal income tax.
(6) Compensation for personal injuries or for damages to property by way of insurance or otherwise, but this exclusion does not apply to compensation paid for lost salaries or wages or to compensation from punitive damages.
(7) Earnings and income of all persons under eighteen (18) years of age whether residents or non-residents of the City.
(8) Compensation paid to a precinct election official, to the extent that such compensation does not exceed one thousand dollars ($1,000) annually.
(9) Parsonage allowance, to the extent of the rental allowance or rental value of a house provided as a part of an ordained minister’s compensation. The minister must be duly ordained, commissioned, or licensed by a religious body constituting a church or church denomination, and must have authority to perform all sacraments of the church.
(10) Expenses reported on Federal Form 2106, subject to audit and approval by the City of Clyde’s income tax office. They must exceed two percent (2%) of income taxable to the City before the remaining expenses are eligible for deduction, and the expenses must be allocated in the same manner in which the related income is allocated.
(11) Gains from involuntary conversion, cancellation of indebtedness, interest on federal obligations, items of income already taxed by the state from which the Municipality is specifically prohibited from taxing, and income of a decedent's estate during the period of administration (except such income from the operation of a business).
(12) The income of a public utility when that public utility is subject to the tax levied under Section 5727.24 or 5727.30 of the Ohio Revised Code. However, subject to Section 5745 of the Ohio Revised Code, starting January 1, 2002 this exemption does not apply to the income of an electric company or combined company, and starting January 1, 2004 it does not apply to the income of a telephone company, as both are defined in Section 5727.01 of the Revised Code.
(13) Income, salaries, wages, commissions and other compensation and net profits, the taxation of which is prohibited by the United States Constitution or any act of Congress limiting the power of the states or their political subdivisions to impose net income taxes on income derived from interstate commerce, and/or is prohibited by the Constitution of the State of Ohio or any act of the Ohio General Assembly limiting the power of a municipality to impose net income taxes.
(Ord. 2007-47. Passed 7-17-07.)