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(a) Determining municipal taxable income for individuals.
(1) “Municipal taxable income” for a resident of the Municipality is calculated as follows: “Income” reduced by “exempt income” to the extent such exempt income is otherwise included in income, reduced by allowable employee business expense deduction as found in § 881.03(c)(20)B. of this chapter, further reduced by any “pre-2017 net operating loss carryforward” equals “municipal taxable income.”
A. “Income” is defined in § 881.03(c)(14) of this chapter.
1. “Qualifying wages” is defined in § 881.03(c)(34).
2. “Net profit” is included in “income”, and is defined in § 881.03(c)(23) of this chapter. This section also provides that the net operating loss carryforward shall be calculated and deducted in the same manner as provided in § 881.03(c)(1)H. Treatment of net profits received by an individual taxpayer from rental real estate is provided in § 881.06(b)(5).
3. Section 881.03(c)(14) provides the following: offsetting and net operating loss carryforward treatment in § 881.03(c)(14)A.2.a.; resident’s distributive share of net profit from pass through entity treatment in § 881.03(c)(14)A.2.b.; treatment of S Corporation distributive share of net profit in the hands of the shareholder in § 881.03(c)(14)A.3.; restriction of amount of loss permitted to be carried forward for use by taxpayer in a subsequent taxable year in § 881.03(14)A.4.
4. “Pass through entity” is defined in § 881.03(c)(27).
B. “Exempt income” is defined in § 881.03(c)(11) of this chapter.
C. Allowable employee business expense deduction is described in § 881.03(c)(20)B. of this chapter, and is subject to the limitations provided in that section.
D. “Pre-2017 net operating loss carryforward” is defined in § 881.03(c)(32) of this chapter.
(2) “Municipal taxable income” for a nonresident of the municipality is calculated as follows: “Income” reduced by “exempt income”881.06(b) of this chapter, reduced by allowable employee business expense deduction as found in § 881.03(c)(20)B. of this chapter, further reduced by any “pre-2017 net operating loss carryforward” equals “municipal taxable income”.
A. “Income” is defined in § 881.03(c)(14) of this chapter.
1. “Qualifying wages” is defined in § 881.03(c)(34).
2. “Net profit” is included in “income,” and is defined in § 881.03(c)(23) of this chapter. This section also provides that the net operating loss carryforward shall be calculated and deducted in the same manner as provided in § 881.03(c)(1)H. “Net profit” for a nonresident individual includes any net profit of the nonresident, but excludes the distributive share of net profit or loss of only pass through entity owned directly or indirectly by the nonresident.
3. “Pass through entity” is defined in § 881.03(c)(27).
B. “Exempt income” is defined in § 881.03(c)(11) of this chapter.
C. “Apportioned or sitused to the municipality as provided in § 881.06(b) of this chapter” includes the apportionment of net profit income attributable to work done or services performed in the Municipality. Treatment of net profits received by an individual taxpayer from rental real estate is provided in § 881.06(b)(5).
D. “Allowable employee business expense deduction” as described in § 881.03(c)(20)B. of this chapter, is subject to the limitations provided in that section. For a nonresident of the municipality, the deduction is limited to the extent the expenses are related to the performance of personal services by the nonresident in the municipality.
E. “Pre-2017 net operating loss carryforward” is defined in § 881.03(c)(32) of this chapter.
(b) Domicile.
(1) As used in this section:
A. “Domicile” means the true, fixed and permanent home of the taxpayer to which whenever absent, the taxpayer intends to return.
B. An individual is presumed to be domiciled in the municipality for all or part of a taxable year if the individual was domiciled in the municipality on the last day of the immediately preceding taxable year or if the Tax Administrator reasonably concludes that the individual is domiciled in the municipality for all or part of the taxable year.
C. An individual may rebut the presumption of domicile described in division (b)(1)A. of this section if the individual establishes by a preponderance of the evidence that the individual was not domiciled in the municipality for all or part of the taxable year.
(2) For the purpose of determining whether an individual is domiciled in the municipality for all or part of a taxable year, factors that may be considered include, but are not limited to, the following:
A. The individual’s domicile in other taxable years;
B. The location at which the individual is registered to vote;
C. The address on the individual’s driver’s license;
D. The location of real estate for which the individual claimed a property tax exemption or reduction allowed on the basis of the individual’s residence or domicile;
E. The location and value of abodes owned or leased by the individual;
F. Declarations, written or oral, made by the individual regarding the individual’s residency;
G. The primary location at which the individual is employed.
H. The location of educational institutions attended by the individual’s dependents as defined in Section 152 of the Internal Revenue Code, to the extent that tuition paid to such educational institution is based on the residency of the individual or the individual’s spouse in the municipal corporation or state where the educational institution is located;
I. The number of contact periods the individual has with the municipality. For the purposes of this division, an individual has one “contact period” with the municipality if the individual is away overnight from the individual’s abode located outside of the municipality and while away overnight from that abode spends at least some portion, however minimal, of each of two consecutive days in the municipality. For purposes of this section, the state’s contact period test or bright-line test and resulting determination have no bearing on municipal residency or domicile.
(3) All applicable factors are provided in Ohio R.C. 718.012.
(c) Exemption for member or employee of General Assembly and certain judges.
(1) Only the municipal corporation of residence shall be permitted to levy a tax on the income of any member or employee of the Ohio General Assembly, including the Lieutenant Governor, whose income is received as a result of services rendered as such member or employee and is paid from appropriated funds of this state.
(2) Only the municipal corporation of residence and the city of Columbus shall levy a tax on the income of the Chief Justice or a Justice of the Supreme Court received as a result of services rendered as the Chief Justice or Justice. Only the municipal corporation of residence shall levy a tax on the income of a judge sitting by assignment of the Chief Justice or on the income of a district court of appeals judge sitting in multiple locations within the district, received as a result of services rendered as a judge.
(Ord. 15-O-2839, passed 11-17-2015)
(a) Collection at source; withholding from qualifying wages.
(1) A. Each employer, agent of an employer, or other payer located or doing business in the municipality shall withhold from each employee an amount equal to the qualifying wages of the employee earned by the employee in the municipality multiplied by the applicable rate of the municipality’s income tax, except for qualifying wages for which withholding is not required under § 881.05(b) of this chapter or division (a)(4) or (a)(6) of this section. An employer, agent of an employer, or other payer shall deduct and withhold the tax from qualifying wages on the date that the employer, agent, or other payer directly, indirectly, or constructively pays the qualifying wages to, or credits the qualifying wages to the benefit of, the employee.
B. In addition to withholding the amounts required under division (a)(1)A. of this section, an employer, agent of an employer, or other payer may also deduct and withhold, on the request of an employee, taxes for the municipal corporation in which the employee is a resident.
(2) An employer, agent of an employer, or other payer shall remit to the Tax Administrator of the municipality the greater of the income taxes deducted and withheld or the income taxes required to be deducted and withheld by the employer, agent, or other payer, along with any report required by the Tax Administrator to accompany such payment, according to the following schedule:
A. Any employer, agent of an employer, or other payer not required to make payments under division (a)(2)B. of this section of taxes required to be deducted and withheld shall make quarterly payments to the Tax Administrator not later than the last day of the month following the last day of each calendar quarter.
B. Taxes required to be deducted and withheld shall be remitted monthly to the Tax Administrator if the total taxes deducted and withheld or required to be deducted and withheld by the employer, agent, or other payer on behalf of the municipal corporation in the preceding calendar year exceeded two thousand three hundred ninety-nine dollars ($2,399), or if the total amount of taxes deducted and withheld or required to be deducted and withheld on behalf of the municipality in any month of the preceding calendar quarter exceeded two hundred dollars ($200.00). Payment under division (a)(2)B. of this section shall be made to the Tax Administrator not later than 15 days after the last day of each month.
(3) An employer, agent of an employer, or other payer shall make and file a return showing the amount of tax withheld by the employer, agent, or other payer from the qualifying wages of each employee and remitted to the Tax Administrator. A return filed by an employer, agent, or other payer under this division shall be accepted by the municipality as the return required of an employee whose sole income subject to the tax under this chapter is the qualifying wages reported by the employee’s employer, agent of an employer, or other payer, unless the municipality requires all resident individual taxpayers to file a tax return under § 881.09(a) of this chapter.
(4) An employer, agent of an employer, or other payer is not required to withhold municipal income tax with respect to an individual’s disqualifying disposition of an incentive stock option if, at the time of the disqualifying disposition, the individual is not an employee of either the corporation with respect to whose stock the option has been issued or of such corporation’s successor entity.
(5) A. An employee is not relieved from liability for a tax by the failure of the employer, agent of an employer, or other payer to withhold the tax as required under this chapter or by the employer’s, agent’s, or other payer’s exemption from the requirement to withhold the tax.
B. The failure of an employer, agent of an employer, or other payer to remit to the municipality the tax withheld relieves the employee from liability for that tax unless the employee colluded with the employer, agent, or other payer in connection with the failure to remit the tax withheld.
(6) Compensation deferred before June 26, 2003, is not subject to any municipal corporation income tax or municipal income tax withholding requirement to the extent the deferred compensation does not constitute qualifying wages at the time the deferred compensation is paid or distributed.
(7) Each employer, agent of an employer, or other payer required to withhold taxes is liable for the payment of that amount required to be withheld, whether or not such taxes have been withheld, and such amount shall be deemed to be held in trust for the municipality until such time as the withheld amount is remitted to the Tax Administrator.
(8) On or before the last day of February of each year, an employer shall file a withholding reconciliation return with the Tax Administrator listing the names, addresses, and social security numbers of all employees from whose qualifying wages tax was withheld or should have been withheld for the municipality during the preceding calendar year, the amount of tax withheld, if any, from each such employee’s qualifying wage, the total amount of qualifying wages paid to such employee during the preceding calendar year, the name of every other municipal corporation for which tax was withheld or should have been withheld from such employee during the preceding calendar year, any other information required for federal income tax reporting purposes on Internal Revenue Service form W-2 or its equivalent form with respect to such employee, and other information as may be required by the Tax Administrator.
(9) The officer or the employee of the employer, agent of an employer, or other payer with control or direct supervision of or charged with the responsibility for withholding the tax or filing the reports and making payments as required by this section, shall be personally liable for a failure to file a report or pay the tax due as required by this section. The dissolution of an employer, agent of an employer, or other payer does not discharge the officer’s or employee’s liability for a failure of the employer, agent of an employer, or other payer to file returns or pay any tax due.
(10) An employer is required to deduct and withhold municipal income tax on tips and gratuities received by the employer’s employees and constituting qualifying wages only to the extent that the tips and gratuities are under the employer’s control. For the purposes of this division, a tip or gratuity is under the employer’s control if the tip or gratuity is paid by the customer to the employer for subsequent remittance to the employee, or if the customer pays the tip or gratuity by credit card, debit card, or other electronic means.
(11) A Tax Administrator shall consider any tax withheld by an employer at the request of an employee when such tax is not otherwise required to be withheld by this chapter to be tax required to be withheld and remitted for the purposes of this section.
(b) Collection at source; occasional entrant.
(1) For the purpose of this division (b), the following definitions shall apply unless the context clearly indicates or requires a different meaning.
A. “Employer” includes a person that is a related member to or of an employer.
B. “Fixed location” means a permanent place of doing business in this state, such as an office, warehouse, storefront, or similar location owned or controlled by an employer.
C. “Principal place of work.”
1. Means the fixed location to which an employee is required to report for employment duties on a regular and ordinary basis. If the employee is not required to report for employment duties on a regular and ordinary basis to a fixed location, “principal place of work” means the worksite location in this state to which the employee is required to report for employment duties on a regular and ordinary basis. If the employee is not required to report for employment duties on a regular and ordinary basis to a fixed location or worksite location, “principal place of work” means the location in this state at which the employee spends the greatest number of days in a calendar year performing services for or on behalf of the employee’s employer.
2. If there is not a single municipal corporation in which the employee spent the “greatest number of days in a calendar year” performing services for or on behalf of the employer, but instead there are two or more municipal corporations in which the employee spent an identical number of days that is greater than the number of days the employee spent in any other municipal corporation, the employer shall allocate any of the employee’s qualifying wages subject to division (b)(2)A.1. of this section among those two or more municipal corporations. The allocation shall be made using any fair and reasonable method, including, but not limited to, an equal allocation among such municipal corporations or an allocation based upon the time spent or sales made by the employee in each such municipal corporation. A municipal corporation to which qualifying wages are allocated under this division shall be the employee’s “principal place of work” with respect to those qualifying wages for the purposes of this section.
3. For the purposes of this division, the location at which an employee spends a particular day shall be deemed in accordance with division (b)(2)B. of this section, except that “location” shall be substituted for “municipal corporation” wherever “municipal corporation” appears in that division.
D. “Professional athlete” means an athlete who performs services in a professional athletic event for wages or other remuneration.
E. “Professional entertainer” means a person who performs services in the professional performing arts for wages or other remuneration on a per-event basis.
F. “Public figure” means a person of prominence who performs services at discrete events, such as speeches, public appearances, or similar events, for wages or other remuneration on a per-event basis.
G. “Worksite location” means a construction site or other temporary worksite in this state at which the employer provides services for more than 20 days during the calendar year. “Worksite location” does not include the home of an employee.
(2) A. Subject to divisions (b)(3), (b)(5), (b)(6), and (b)(7) of this section, an employer is not required to withhold municipal income tax on qualifying wages paid to an employee for the performance of personal services in a municipal corporation that imposes such a tax if the employee performed such services in the municipal corporation on 20 or fewer days in a calendar year, unless one of the following conditions applies:
1. The employee’s principal place of work is located in the municipality.
2. The employee performed services at one or more presumed worksite locations in the municipality. For the purposes of this division, “presumed worksite location” means a construction site or other temporary worksite in this state at which the employer provides services that can reasonably be expected by the employer to last more than 20 days in a calendar year. Services can “reasonably be expected by the employer to last more than 20 days” if either of the following applies at the time the services commence:
a. The nature of the services are such that it will require more than 20 days of actual services to complete the services;
b. The agreement between the employer and its customer to perform services at a location requires the employer to perform actual services at the location for more than 20 days.
3. The employee is a resident of the municipality and has requested that the employer withhold tax from the employee’s qualifying wages as provided in § 881.05(a) of this chapter.
4. The employee is a professional athlete, professional entertainer, or public figure, and the qualifying wages are paid for the performance of services in the employee’s capacity as a professional athlete, professional entertainer, or public figure within the municipality.
B. For the purposes of division (b)(2)A. of this section, an employee shall be considered to have spent a day performing services in a municipal corporation only if the employee spent more time performing services for or on behalf of the employer in that municipal corporation than in any other municipal corporation on that day. For the purposes of determining the amount of time an employee spent in a particular location, the time spent performing one or more of the following activities shall be considered to have been spent at the employee’s principal place of work:
1. Traveling to the location at which the employee will first perform services for the employer for the day;
2. Traveling from a location at which the employee was performing services for the employer to any other location;
3. Traveling from any location to another location in order to pick up or load, for the purpose of transportation or delivery, property that has been purchased, sold, assembled, fabricated, repaired, refurbished, processed, remanufactured, or improved by the employee’s employer;
4. Transporting or delivering property described in division (b)(2)B.3. of this section, provided that, upon delivery of the property, the employee does not temporarily or permanently affix the property to real estate owned, used, or controlled by a person other than the employee’s employer;
5. Traveling from the location at which the employee makes the employee’s final delivery or pick-up for the day to either the employee’s principal place of work or a location at which the employee will not perform services for the employer.
(3) If the principal place of work of an employee is located in a municipal corporation that imposes an income tax in accordance with this chapter, the exception from withholding requirements described in division (b)(2)A. of this section shall apply only if, with respect to the employee’s qualifying wages described in that division, the employer withholds and remits tax on such qualifying wages to the municipal corporation in which the employee’s principal place of work is located.
(4) A. Except as provided in division (b)(4)B. of this section, if, during a calendar year, the number of days an employee spends performing personal services in a municipal corporation exceeds the 20-day threshold described in division (b)(2)A. of this section, the employer shall withhold and remit tax to that municipal corporation for any subsequent days in that calendar year on which the employer pays qualifying wages to the employee for personal services performed in that municipal corporation.
B. An employer required to begin withholding tax for a municipal corporation under division (b)(4)A. of this section may elect to withhold tax for that municipal corporation for the first 20 days on which the employer paid qualifying wages to the employee for personal services performed in that municipal corporation.
C. If an employer makes the election described in division (b)(4)B. of this section, the taxes withheld and paid by such an employer during those first 20 days to the municipal corporation in which the employee’s principal place of work is located are refundable to the employee.
(5) Without regard to the number of days in a calendar year on which an employee performs personal services in any municipal corporation, an employer shall withhold municipal income tax on all of the employee’s qualifying wages for a taxable year and remit that tax only to the municipal corporation in which the employer’s fixed location is located if the employer qualifies as a small employer as defined in § 881.03 of this chapter. To determine whether an employer qualifies as a small employer for a taxable year, a Tax Administrator may require the employer to provide the Tax Administrator with the employer’s federal income tax return for the preceding taxable year.
(6) Divisions (b)(2)A. and (b)(4) of this section shall not apply to the extent that a Tax Administrator and an employer enter into an agreement regarding the manner in which the employer shall comply with the requirements of § 881.05(a) of this chapter.
(7) A. In the case of a person performing personal services at a petroleum refinery located in a municipal corporation that imposes a tax on income, an employer is not required to withhold municipal income tax on the qualifying wages of such a person if the person performs those services on 12 or fewer days in a calendar year, unless the principal place of work of the employer is located in another municipal corporation in this state that imposes a tax applying to compensation paid to the person for services performed on those days and the person is not liable to that other municipal corporation for tax on the compensation paid for such services. For the purposes of this division, a petroleum refinery is a facility with a standard industrial classification code facility classification of 2911, petroleum refining.
B. Notwithstanding division (b)(4) of this section, if, during a calendar year, the number of days an individual performs personal services at a petroleum refinery exceeds 12, the employer shall withhold tax for the municipal corporation for the first 12 days for which the employer paid qualifying wages to the individual and for all subsequent days in the calendar year on which the individual performed services at the refinery.
(c) Collection at source; casino and VLT.
(1) The municipality shall require a casino facility or a casino operator, as defined in Section 6(C)(9) of Article XV, Ohio Constitution, and Ohio R.C. 3772.01, respectively, or a lottery sales agent conducting video lottery terminals sales on behalf of the state to withhold and remit municipal income tax with respect to amounts other than qualifying wages as provided in this division (c).
(2) If a person’s winnings at a casino facility are an amount for which reporting to the Internal Revenue Service of the amount is required by Section 6041 of the Internal Revenue Code, as amended, the casino operator shall deduct and withhold municipal income tax from the person’s winnings at the rate of the tax imposed by the municipal corporation in which the casino facility is located.
(3) Amounts deducted and withheld by a casino operator are held in trust for the benefit of the municipal corporation to which the tax is owed.
A. On or before the tenth day of each month, the casino operator shall file a return electronically with the Tax Administrator of the municipality, providing the name, address, and social security number of the person from whose winnings amounts were deducted and withheld, the amount of each such deduction and withholding during the preceding calendar month, the amount of the winnings from which each such amount was withheld, the type of casino gaming that resulted in such winnings, and any other information required by the Tax Administrator. With this return, the casino operator shall remit electronically to the municipality all amounts deducted and withheld during the preceding month.
B. Annually, on or before the thirty-first day of January, a casino operator shall file an annual return electronically with the Tax Administrator of the municipal corporation in which the casino facility is located, indicating the total amount deducted and withheld during the preceding calendar year. The casino operator shall remit electronically with the annual return any amount that was deducted and withheld and that was not previously remitted. If the name, address, or social security number of a person or the amount deducted and withheld with respect to that person was omitted on a monthly return for that reporting period, that information shall be indicated on the annual return.
C. Annually, on or before the thirty-first day of January, a casino operator shall issue an information return to each person with respect to whom an amount has been deducted and withheld during the preceding calendar year. The information return shall show the total amount of municipal income tax deducted from the person’s winnings during the preceding year. The casino operator shall provide to the Tax Administrator a copy of each information return issued under this division. The Administrator may require that such copies be transmitted electronically.
D. A casino operator that fails to file a return and remit the amounts deducted and withheld shall be personally liable for the amount withheld and not remitted. Such personal liability extends to any penalty and interest imposed for the late filing of a return or the late payment of tax deducted and withheld.
E. If a casino operator sells the casino facility or otherwise quits the casino business, the amounts deducted and withheld along with any penalties and interest thereon are immediately due and payable. The successor shall withhold an amount of the purchase money that is sufficient to cover the amounts deducted and withheld along with any penalties and interest thereon until the predecessor casino operator produces either of the following:
1. A receipt from the Tax Administrator showing that the amounts deducted and withheld and penalties and interest thereon have been paid;
2. A certificate from the Tax Administrator indicating that no amounts are due. If the successor fails to withhold purchase money, the successor is personally liable for the payment of the amounts deducted and withheld and penalties and interest thereon.
F. The failure of a casino operator to deduct and withhold the required amount from a person’s winnings does not relieve that person from liability for the municipal income tax with respect to those winnings.
(4) If a person’s prize award from a video lottery terminal is an amount for which reporting to the Internal Revenue Service is required by Section 6041 of the Internal Revenue Code, as amended, the video lottery sales agent shall deduct and withhold municipal income tax from the person’s prize award at the rate of the tax imposed by the municipal corporation in which the video lottery terminal facility is located.
(5) Amounts deducted and withheld by a video lottery sales agent are held in trust for the benefit of the municipal corporation to which the tax is owed.
A. The video lottery sales agent shall issue to a person from whose prize award an amount has been deducted and withheld a receipt for the amount deducted and withheld, and shall obtain from the person receiving a prize award the person’s name, address, and social security number in order to facilitate the preparation of returns required by this division (c).
B. On or before the tenth day of each month, the video lottery sales agent shall file a return electronically with the Tax Administrator of the municipality providing the names, addresses, and social security numbers of the persons from whose prize awards amounts were deducted and withheld, the amount of each such deduction and withholding during the preceding calendar month, the amount of the prize award from which each such amount was withheld, and any other information required by the Tax Administrator. With the return, the video lottery sales agent shall remit electronically to the Tax Administrator all amounts deducted and withheld during the preceding month.
C. A video lottery sales agent shall maintain a record of all receipts issued under division (c)(5) of this section and shall make those records available to the Tax Administrator upon request. Such records shall be maintained in accordance with Ohio R.C. 5747.17 and any rules adopted pursuant thereto.
D. Annually, on or before the thirty-first day of January, each video lottery terminal sales agent shall file an annual return electronically with the Tax Administrator of the municipal corporation in which the facility is located indicating the total amount deducted and withheld during the preceding calendar year. The video lottery sales agent shall remit electronically with the annual return any amount that was deducted and withheld and that was not previously remitted. If the name, address, or social security number of a person or the amount deducted and withheld with respect to that person was omitted on a monthly return for that reporting period, that information shall be indicated on the annual return.
E. Annually, on or before the thirty-first day of January, a video lottery sales agent shall issue an information return to each person with respect to whom an amount has been deducted and withheld during the preceding calendar year. The information return shall show the total amount of municipal income tax deducted and withheld from the person’s prize award by the video lottery sales agent during the preceding year. A video lottery sales agent shall provide to the Tax Administrator of the municipal corporation a copy of each information return issued under this division. The Tax Administrator may require that such copies be transmitted electronically.
F. A video lottery sales agent who fails to file a return and remit the amounts deducted and withheld is personally liable for the amount deducted and withheld and not remitted. Such personal liability extends to any penalty and interest imposed for the late filing of a return or the late payment of tax deducted and withheld.
(6) A. If a video lottery sales agent ceases to operate video lottery terminals, the amounts deducted and withheld along with any penalties and interest thereon are immediately due and payable. The successor of the video lottery sales agent that purchases the video lottery terminals from the agent shall withhold an amount from the purchase money that is sufficient to cover the amounts deducted and withheld and any penalties and interest thereon until the predecessor video lottery sales agent operator produces either of the following:
1. A receipt from the Tax Administrator showing that the amounts deducted and withheld and penalties and interest thereon have been paid;
2. A certificate from the Tax Administrator indicating that no amounts are due.
B. If the successor fails to withhold purchase money, the successor is personally liable for the payment of the amounts deducted and withheld and penalties and interest thereon.
(7) The failure of a video lottery sales agent to deduct and withhold the required amount from a person’s prize award does not relieve that person from liability for the municipal income tax with respect to that prize award.
(8) If a casino operator or lottery sales agent files a return late, fails to file a return, remits amounts deducted and withheld late, or fails to remit amounts deducted and withheld as required under this section, the Tax Administrator of a municipal corporation may impose the following applicable penalty:
A. For the late remittance of, or failure to remit, tax deducted and withheld under this section, a penalty equal to 50% of the tax deducted and withheld;
B. For the failure to file, or the late filing of, a monthly or annual return, a penalty of five hundred dollars ($500.00) for each return not filed or filed late. Interest shall accrue on past due amounts deducted and withheld at the rate prescribed in Ohio R.C. 5703.47.
(9) Amounts deducted and withheld on behalf of a municipal corporation shall be allowed as a credit against payment of the tax imposed by the municipal corporation and shall be treated as taxes paid for purposes of § 881.07 of this chapter. This division applies only to the person for whom the amount is deducted and withheld.
(10) The Tax Administrator shall prescribe the forms of the receipts and returns required under this section.
(Ord. 15-O-2839, passed 11-17-2015; Ord. 16-O-2883, passed 10-4-2016)
(a) Determining municipal taxable income for taxpayers who are not individuals. “Municipal taxable income” for a taxpayer who is not an individual for the municipality is calculated as follows: “Income” reduced by “Exempt income” to the extent otherwise included in income, multiplied by apportionment, further reduced by any “Pre-2017 net operating loss carryforward” equals “Municipal taxable income”.
(1) “Income” for a taxpayer that is not an individual means the “net profit” of the taxpayer.
A. “Net profit” for a person other than an individual is defined in § 881.03(c)(23).
B. “Adjusted federal taxable income” is defined in § 881.03(c)(1) of this chapter.
(2) “Exempt income” is defined in § 881.03(c)(11) of this chapter.
(3) “Apportionment” means the apportionment as determined by § 881.06(b) of this chapter.
(4) “Pre-2017 net operating loss carryforward” is defined in § 881.03(c)(32) of this chapter.
(b) Net profit; income subject to net profit tax; alternative apportionment. This division (b) applies to any taxpayer engaged in a business or profession in the municipality unless the taxpayer is an individual who resides in the municipality or the taxpayer is an electric company, combined company, or telephone company that is subject to and required to file reports under Ohio R.C. Chapter 5745.
(1) Except as otherwise provided in divisions (b)(2) and (b)(5) of this section, net profit from a business or profession conducted both within and without the boundaries of the municipality shall be considered as having a taxable situs in the municipality for purposes of municipal income taxation in the same proportion as the average ratio of the following:
A. The average original cost of the real property and tangible personal property owned or used by the taxpayer in the business or profession in the municipality 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 division, tangible personal or 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 individuals employed in the business or profession for services performed in the municipality to wages, salaries, and other compensation paid during the same period to individuals employed in the business or profession, wherever the individual’s services are performed, excluding compensation from which taxes are not required to be withheld under § 881.05(b) of this chapter;
C. Total gross receipts of the business or profession from sales and rentals made and services performed during the taxable period in the municipality to total gross receipts of the business or profession during the same period from sales, rentals, and services, wherever made or performed.
(2) A. If the apportionment factors described in division (b)(1) of this section do not fairly represent the extent of a taxpayer’s business activity in the municipality, the taxpayer may request, or the Tax Administrator of the municipality may require, that the taxpayer use, with respect to all or any portion of the income of the taxpayer, an alternative apportionment method involving one or more of the following:
1. Separate accounting;
2. The exclusion of one or more of the factors;
3. The inclusion of one or more additional factors that would provide for a more fair apportionment of the income of the taxpayer to the municipality;
4. A modification of one or more of the factors.
B. A taxpayer request to use an alternative apportionment method shall be in writing and shall accompany a tax return, timely filed appeal of an assessment, or timely filed amended tax return. The taxpayer may use the requested alternative method unless the Tax Administrator denies the request in an assessment issued within the period prescribed by § 881.19(a) of this chapter.
C. A Tax Administrator may require a taxpayer to use an alternative apportionment method as described in division (b)(2)A. of this section only by issuing an assessment to the taxpayer within the period prescribed by § 881.19(a) of this chapter.
D. Nothing in division (b)(2) of this section nullifies or otherwise affects any alternative apportionment arrangement approved by a Tax Administrator or otherwise agreed upon by both the Tax Administrator and taxpayer before January 1, 2016.
(3) As used in division (b)(1)B. of this section, “wages, salaries, and other compensation” includes only wages, salaries, or other compensation paid to an employee for services performed at any of the following locations:
A. A location that is owned, controlled, or used by, rented to, or under the possession of one of the following:
1. The employer;
2. A vendor, customer, client, or patient of the employer, or a related member of such a vendor, customer, client, or patient;
3. A vendor, customer, client, or patient of a person described in division (C)(1)(b) of this section, or a related member of such a vendor, customer, client, or patient.
B. Any location at which a trial, appeal, hearing, investigation, inquiry, review, court-martial, or similar administrative, judicial, or legislative matter or proceeding is being conducted, provided that the compensation is paid for services performed for, or on behalf of, the employer or that the employee’s presence at the location directly or indirectly benefits the employer;
C. Any other location, if the Tax Administrator determines that the employer directed the employee to perform the services at the other location in lieu of a location described in division (b)(3)A. or (b)(3)B. of this section solely in order to avoid or reduce the employer’s municipal income tax liability. If a Tax Administrator makes such a determination, the employer may dispute the determination by establishing, by a preponderance of the evidence, that the Tax Administrator’s determination was unreasonable.
(4) For the purposes of division (b)(1)C. of this section, and except as provided in division (c) of this section, receipts from sales and rentals made and services performed shall be sitused to a municipal corporation as follows:
A. Gross receipts from the sale of tangible personal property shall be sitused to the municipal corporation in which the sale originated. For the purposes of this division, a sale of property originates in a municipal corporation if, regardless of where title passes, the property meets any of the following criteria:
1. The property is shipped to or delivered within the municipal corporation from a stock of goods located within the municipal corporation.
2. The property is delivered within the municipal corporation from a location outside the municipal corporation, provided the taxpayer is regularly engaged through its own employees in the solicitation or promotion of sales within such municipal corporation and the sales result from such solicitation or promotion.
3. The property is shipped from a place within the municipal corporation to purchasers outside the municipal corporation, provided that the taxpayer is not, through its own employees, regularly engaged in the solicitation or promotion of sales at the place where delivery is made.
B. Gross receipts from the sale of services shall be sitused to the municipal corporation to the extent that such services are performed in the municipal corporation.
C. To the extent included in income, gross receipts from the sale of real property located in the municipal corporation shall be sitused to the municipal corporation.
D. To the extent included in income, gross receipts from rents and royalties from real property located in the municipal corporation shall be sitused to the municipal corporation.
E. Gross receipts from rents and royalties from tangible personal property shall be sitused to the municipal corporation based upon the extent to which the tangible personal property is used in the municipal corporation.
(5) The net profit received by an individual taxpayer from the rental of real estate owned directly by the individual or by a disregarded entity owned by the individual shall be subject to tax only by the municipal corporation in which the property generating the net profit is located and the municipal corporation in which the individual taxpayer that receives the net profit resides. A municipal corporation shall allow such taxpayers to elect to use separate accounting for the purpose of calculating net profit sitused under this division to the municipal corporation in which the property is located.
(6) A. Except as provided in division (b)(6)B. of this section, commissions received by a real estate agent or broker relating to the sale, purchase, or lease of real estate shall be sitused to the municipal corporation in which the real estate is located. Net profit reported by the real estate agent or broker shall be allocated to a municipal corporation based upon the ratio of the commissions the agent or broker received from the sale, purchase, or lease of real estate located in the municipal corporation to the commissions received from the sale, purchase, or lease of real estate everywhere in the taxable year.
B. An individual who is a resident of a municipal corporation that imposes a municipal income tax shall report the individual’s net profit from all real estate activity on the individual’s annual tax return for that municipal corporation. The individual may claim a credit for taxes the individual paid on such net profit to another municipal corporation to the extent that such credit is allowed under § 881.08(a) of this chapter.
(7) If, in computing a taxpayer’s adjusted federal taxable income, the taxpayer deducted any amount with respect to a stock option granted to an employee, and if the employee is not required to include in the employee’s income any such amount or a portion thereof because it is exempted from taxation under § 881.03(c)(11)L. and (c)(34)A.4. of this chapter, by a municipal corporation to which the taxpayer has apportioned a portion of its net profit, the taxpayer shall add the amount that is exempt from taxation to the taxpayer’s net profit that was apportioned to that municipal corporation. In no case shall a taxpayer be required to add to its net profit that was apportioned to that municipal corporation any amount other than the amount upon which the employee would be required to pay tax were the amount related to the stock option not exempted from taxation. This division applies solely for the purpose of making an adjustment to the amount of a taxpayer’s net profit that was apportioned to a municipal corporation under this section.
(8) When calculating the ratios described in division (b)(1) of this section for the purposes of that division or division (b)(2) of this section, the owner of a disregarded entity shall include in the owner’s ratios the property, payroll, and gross receipts of such disregarded entity.
(c) (1) As used in this division:
A. “Qualifying remote employee or owner” means an individual who is an employee of a taxpayer or who is a partner or member holding an ownership interest in a taxpayer that is treated as a partnership for federal income tax purposes, provided that the individual meets both of the following criteria:
1. The taxpayer has assigned the individual to a qualifying reporting location;
2. The individual is permitted or required to perform services for the taxpayer at a qualifying remote work location.
B. “Qualifying remote work location” means a permanent or temporary location at which an employee or owner chooses or is required to perform services for the taxpayer, other than reporting location of the taxpayer or any other location owned or controlled by a customer or client of the taxpayer. "Qualifying remote work location" may include the residence of an employee or owner and may be located outside of a municipal corporation that imposes an income tax in accordance with this chapter. An employee or owner may have more than one qualifying remote work location during a taxable year.
C. "Reporting location" means either of the following:
1. A permanent or temporary place of business, such as an office, warehouse, storefront, construction site, or similar location, that is owned or controlled directly or indirectly by the taxpayer.
2. Any location in this state owned or controlled by a customer or client of the taxpayer, provided that the taxpayer is required to withhold taxes under the applicable section of this chapter, on qualifying wages paid to an employee for the performance of personal services at that location.
D. "Qualifying reporting location" means on of the following:
1. The reporting location in this state at which an employee or owner performs services for the taxpayer on a regular or periodic basis during the taxable year;
2. If no reporting location exists in this state for an employee or owner under division (c) of this section, the reporting location in this state at which the employee's or owner's supervision regularly or periodically reports during the taxable year;
3. If no reporting location exists in this state for an employee or owner under (c)(1)D.1. or (c)(1)D.2. of this section, the location that the taxpayer otherwise assigns as the employee's or owner's qualifying reporting location, provided the assignment is made in good faith and is recorded and maintained in the taxpayer's business records. A taxpayer may change the qualifying reporting location designated for an employee or owner under the division at any time.
(2) For tax years ending on or after December 31, 2023, a taxpayer may elect to apply the provisions of this division to the apportionment of its net profit from a business or profession. For taxpayers that make this election, the provisions of division (d) of this section apply to such apportionment except as otherwise provided in this division.
A taxpayer shall make the election allowed under this division in writing on or with the taxpayer's net profit return or, if applicable, a timely filed amended net profit return or a timely filed appeal of an assessment. The election applies to the taxable year for which that return, or appeal is filed and for all subsequent taxable years, until the taxpayer revokes the election.
The taxpayer shall make the initial election with the Tax Administrator of each municipal corporation with which, after applying the apportionment provisions authorized in this division, the taxpayer is required to file a net profit tax return for that taxable year. A taxpayer shall not be required to notify the Tax Administrator of a municipal corporation in which a qualifying remote employee's or owner's qualifying remote work location is located, unless the taxpayer is otherwise required to file a net profit return with that municipal corporation due to business operations that are unrelated to the employee's or owner's activity at the qualifying remote work location.
After the taxpayer makes the initial election, the election applies to every municipal corporation in which the taxpayer conducts business. The taxpayer shall not be required to file a net profit return with a municipal corporation solely because a qualifying remote employee's or owner's qualifying remote work location is located in such municipal corporation.
Nothing in this division prohibits a taxpayer from making a new election under this division after properly revoking a prior election.
(3) For the purpose of calculating the ratios in division (c)(1)D.1. of this section, all of the following apply to a taxpayer that has made the election described in (c)(2):
A. For the purpose of division (c)(1)D.1. of this section, the average original cost of any tangible personal property used by a qualifying remote employee or owner at that individual's qualifying remote work location shall be sffused to that individual's qualifying reporting location.
B. For the purpose of division of (c)(1)D.1. of this section, any wages, salaries, and other compensation paid during the taxable period to a qualifying remote employee or owner for services performed at that individual's qualifying remote work location shall be sitused to that individual's qualifying reporting location.
C. For the purpose of division of (c)(1)D.1. of this section, and notwithstanding division (c)(4) of this section, any gross receipts of the business or profession from services performed during the taxable period by a qualifying remote employee or owner for services performed at the individual's qualifying remote work location shall be sitused to that individual's qualifying reporting location.
(4) Nothing in this division prevents a taxpayer from requesting, or a Tax Administrator from requiring that the taxpayer use, with respect to all or a portion of the income of the taxpayer, an alternative apportionment method as described in division (c)(1)D.2. of this section. However, a Tax Administrator shall not require an alternative apportionment method in such a manner that it would require a taxpayer to file a net profit return with a municipal corporation solely because a qualifying remote employee’s or owner’s qualifying remote work location is located in that municipal corporation.
(5) Except as otherwise provided in this division, nothing in this division is intended to affect the withholding of taxes on qualifying wages pursuant to of this chapter.
(d) Consolidated federal income tax return.
(1) For the purpose of this division, the following definitions shall apply unless the context clearly indicates or requires a different meaning.
A. “Affiliated group of corporations” means an affiliated group as defined in Section 1504 of the Internal Revenue Code, except that, if such a group includes at least one incumbent local exchange carrier that is primarily engaged in the business of providing local exchange telephone service in this state, the affiliated group shall not include any incumbent local exchange carrier that would otherwise be included in the group.
B. “Consolidated federal income tax return” means a consolidated return filed for federal income tax purposes pursuant to Section 1501 of the Internal Revenue Code.
C. “Consolidated federal taxable income” means the consolidated taxable income of an affiliated group of corporations, as computed for the purposes of filing a consolidated federal income tax return, before consideration of net operating losses or special deductions. “Consolidated federal taxable income” does not include income or loss of an incumbent local exchange carrier that is excluded from the affiliated group under division (d)(1)A. of this section.
D. “Incumbent local exchange carrier” has the same meaning as in Ohio R.C. 4927.01.
E. “Local exchange telephone service” has the same meaning as in Ohio R.C. 5727.01.
(2) A. For taxable years beginning on or after January 1, 2016, a taxpayer that is a member of an affiliated group of corporations may elect to file a consolidated municipal income tax return for a taxable year if at least one member of the affiliated group of corporations is subject to the municipal income tax in that taxable year and if the affiliated group of corporations filed a consolidated federal income tax return with respect to that taxable year.
1. The election is binding for a five-year period beginning with the first taxable year of the initial election unless a change in the reporting method is required under federal law.
2. The election continues to be binding for each subsequent five-year period unless the taxpayer elects to discontinue filing consolidated municipal income tax returns under division (d)(2)B. of this section; or
3. A taxpayer receives permission from the Tax Administrator. The Tax Administrator shall approve such a request for good cause shown.
B. An election to discontinue filing consolidated municipal income tax returns under this section must be made in the first year following the last year of a five-year consolidated municipal income tax return election period in effect under division (d)(2)A. of this section. The election to discontinue filing a consolidated municipal income tax return is binding for a five-year period beginning with the first taxable year of the election.
C. An election made under division (d)(2)A. or (d)(2)B. of this section is binding on all members of the affiliated group of corporations subject to a municipal income tax.
(3) A taxpayer that is a member of an affiliated group of corporations that filed a consolidated federal income tax return for a taxable year shall file a consolidated municipal income tax return for that taxable year if the Tax Administrator determines, by a preponderance of the evidence, that intercompany transactions have not been conducted at arm’s length and that there has been a distortive shifting of income or expenses with regard to allocation of net profits to the municipal corporation. A taxpayer that is required to file a consolidated municipal income tax return for a taxable year shall file a consolidated municipal income tax return for all subsequent taxable years unless the taxpayer requests and receives written permission from the Tax Administrator to file a separate return or a taxpayer has experienced a change in circumstances.
(4) A taxpayer shall prepare a consolidated municipal income tax return in the same manner as is required under the United States Department of Treasury regulations that prescribe procedures for the preparation of the consolidated federal income tax return required to be filed by the common parent of the affiliated group of which the taxpayer is a member.
(5) A. Except as otherwise provided in divisions (d)(5)B., (d)(5)C., and (d)(5)D. of this section, corporations that file a consolidated municipal income tax return shall compute adjusted federal taxable income, as defined in § 881.03(c)(1) of this chapter, by substituting “consolidated federal taxable income” for “federal taxable income” wherever “federal taxable income” appears in that division and by substituting “an affiliated group of corporation’s” for “a C corporation’s” wherever “a C corporation’s” appears in that division.
B. No corporation filing a consolidated municipal income tax return shall make any adjustment otherwise required under § 881.03(c)(1) of this chapter to the extent that the item of income or deduction otherwise subject to the adjustment has been eliminated or consolidated in the computation of consolidated federal taxable income.
C. If the net profit or loss of a pass-through entity having at least 80% of the value of its ownership interest owned or controlled, directly or indirectly, by an affiliated group of corporations is included in that affiliated group’s consolidated federal taxable income for a taxable year, the corporation filing a consolidated municipal income tax return shall do one of the following with respect to that pass-through entity’s net profit or loss for that taxable year:
1. Exclude the pass-through entity’s net profit or loss from the consolidated federal taxable income of the affiliated group and, for the purpose of making the computations required in § 881.06(b) of this chapter, exclude the property, payroll, and gross receipts of the pass-through entity in the computation of the affiliated group’s net profit sitused to a municipal corporation. If the entity’s net profit or loss is so excluded, the entity shall be subject to taxation as a separate taxpayer on the basis of the entity’s net profits that would otherwise be included in the consolidated federal taxable income of the affiliated group.
2. Include the pass-through entity’s net profit or loss in the consolidated federal taxable income of the affiliated group and, for the purpose of making the computations required in § 881.06(b) of this chapter, include the property, payroll, and gross receipts of the pass-through entity in the computation of the affiliated group’s net profit sitused to a municipal corporation. If the entity’s net profit or loss is so included, the entity shall not be subject to taxation as a separate taxpayer on the basis of the entity’s net profits that are included in the consolidated federal taxable income of the affiliated group.
D. If the net profit or loss of a pass-through entity having less than 80% of the value of its ownership interest owned or controlled, directly or indirectly, by an affiliated group of corporations is included in that affiliated group’s consolidated federal taxable income for a taxable year, all of the following shall apply:
1. The corporation filing the consolidated municipal income tax return shall exclude the pass-through entity’s net profit or loss from the consolidated federal taxable income of the affiliated group and, for the purposes of making the computations required in § 881.06(b) of this chapter, exclude the property, payroll, and gross receipts of the pass-through entity in the computation of the affiliated group’s net profit sitused to a municipal corporation;
2. The pass-through entity shall be subject to municipal income taxation as a separate taxpayer in accordance with this chapter on the basis of the entity’s net profits that would otherwise be included in the consolidated federal taxable income of the affiliated group.
(6) Corporations filing a consolidated municipal income tax return shall make the computations required under § 881.06(b) of this chapter by substituting “consolidated federal taxable income attributable to” for “net profit from” wherever “net profit from” appears in that section and by substituting “affiliated group of corporations” for “taxpayer” wherever “taxpayer” appears in that section.
(7) Each corporation filing a consolidated municipal income tax return is jointly and severally liable for any tax, interest, penalties, fines, charges, or other amounts imposed by a municipal corporation in accordance with this chapter on the corporation, an affiliated group of which the corporation is a member for any portion of the taxable year, or any one or more members of such an affiliated group.
(8) Corporations and their affiliates that made an election or entered into an agreement with a municipal corporation before January 1, 2016, to file a consolidated or combined tax return with such municipal corporation may continue to file consolidated or combined tax returns in accordance with such election or agreement for taxable years beginning on and after January 1, 2016.
(e) Tax credit for businesses that foster new jobs in Ohio. The municipality, by ordinance, may grant a refundable or nonrefundable credit against its tax on income to a taxpayer to foster job creation in the municipality. If a credit is granted under this section, it shall be measured as a percentage of the new income tax revenue the municipality derives from new employees of the taxpayer and shall be for a term not exceeding 15 years. Before the municipality passes an ordinance granting a credit, the municipality and the taxpayer shall enter into an agreement specifying all the conditions of the credit.
(f) Tax credits to foster job retention. The municipality, by ordinance, may grant a refundable or nonrefundable credit against its tax on income to a taxpayer for the purpose of fostering job retention in the municipality. If a credit is granted under this section, it shall be measured as a percentage of the income tax revenue the municipality derives from the retained employees of the taxpayer, and shall be for a term not exceeding 15 years. Before the municipality passes an ordinance allowing such a credit, the municipality and the taxpayer shall enter into an agreement specifying all the conditions of the credit.
(Ord. 15-O-2839, passed 11-17-2015; Ord. 23-O-3198, passed 12-5-2023)
(a) For the purpose of this section, the following definitions shall apply unless the context clearly indicates or requires a different meaning.
(1) “Estimated taxes” means the amount that the taxpayer reasonably estimates to be the taxpayer’s tax liability for a municipal corporation’s income tax for the current taxable year.
(2) “Tax liability” means the total taxes due to a municipal corporation for the taxable year, after allowing any credit to which the taxpayer is entitled, and after applying any estimated tax payment, withholding payment, or credit from another taxable year.
(b) (1) Every taxpayer shall make a declaration of estimated taxes for the current taxable year, on the form prescribed by the Tax Administrator, if the amount payable as estimated taxes is at least two hundred dollars ($200.00). For the purposes of this section:
A. Taxes withheld from qualifying wages shall be considered as paid to the municipal corporation for which the taxes were withheld in equal amounts on each payment date. If the taxpayer establishes the dates on which all amounts were actually withheld, the amounts withheld shall be considered as paid on the dates on which the amounts were actually withheld.
B. An overpayment of tax applied as a credit to a subsequent taxable year is deemed to be paid on the date of the postmark stamped on the cover in which the payment is mailed or, if the payment is made by electronic funds transfer, the date the payment is submitted. As used in this division, “date of the postmark” means, in the event there is more than one date on the cover, the earliest date imprinted on the cover by the postal service.
C. A taxpayer having a taxable year of less than 12 months shall make a declaration under rules prescribed by the Tax Administrator.
D. Taxes withheld by a casino operator or by a lottery sales agent under Ohio R.C. 718.031 are deemed to be paid to the municipal corporation for which the taxes were withheld on the date the taxes are withheld from the taxpayer’s winnings.
(2) Taxpayers filing joint returns shall file joint declarations of estimated taxes.
(3) The declaration of estimated taxes shall be filed on or before the date prescribed for the filing of municipal income tax returns under § 881.09(a)(7) of this chapter or on or before the fifteenth day of the fourth month of the first taxable year after the taxpayer becomes subject to tax for the first time.
(4) Taxpayers reporting on a fiscal year basis shall file a declaration on or before the fifteenth day of the fourth month after the beginning of each fiscal year or period.
(5) The original declaration or any subsequent amendment may be increased or decreased on or before any subsequent quarterly payment day as provided in this section.
(c) (1) The required portion of the tax liability for the taxable year that shall be paid through estimated taxes made payable to the municipality or Tax Administrator, including the application of tax refunds to estimated taxes and withholding on or before the applicable payment date, shall be as follows:
A. On or before the fifteenth day of the fourth month after the beginning of the taxable year, 22.5% of the tax liability for the taxable year;
B. On or before the fifteenth day of the sixth month after the beginning of the taxable year, 45% of the tax liability for the taxable year;
C. On or before the fifteenth day of the ninth month after the beginning of the taxable year, 67.5% of the tax liability for the taxable year;
D. On or before the fifteenth day of the twelfth month of the taxable year, 90% of the tax liability for the taxable year.
(2) A taxpayer may amend a declaration under rules prescribed by the Tax Administrator. When an amended declaration has been filed, the unpaid balance shown due on the amended declaration shall be paid in equal installments on or before the remaining payment dates. The amended declaration must be filed on the next applicable due date as outlined in (c)(1)a. through (c)(1)d. of this section.
(3) On or before the fifteenth day of the fourth month of the year following that for which the declaration or amended declaration was filed, an annual return shall be filed and any balance which may be due shall be paid with the return in accordance with § 881.09(a) of this chapter.
A. For taxpayers who are individuals, or who are not individuals and are reporting and filing on a calendar year basis, the annual tax return is due on the same date as the filing of the federal tax return, unless extended pursuant to Ohio R.C. 5747.08(G).
B. For taxpayers who are not individuals, and are reporting and filing on a fiscal year basis or any period other than a calendar year, the annual return is due on the fifteenth day of the fourth month following the end of the taxable year or period.
(4) An amended declaration is required whenever the taxpayer’s estimated tax liability changes during the taxable year. A change in estimated tax liability may either increase or decrease the estimated tax liability for the taxable year.
(d) (1) In the case of any underpayment of any portion of a tax liability, penalty and interest may be imposed pursuant to § 881.10 of this chapter upon the amount of underpayment for the period of underpayment, unless the underpayment is due to reasonable cause as described in division (e) of this section. The amount of the underpayment shall be determined as follows:
A. For the first payment of estimated taxes each year, 22.5% of the tax liability, less the amount of taxes paid by the date prescribed for that payment;
B. For the second payment of estimated taxes each year, 45% of the tax liability, less the amount of taxes paid by the date prescribed for that payment;
C. For the third payment of estimated taxes each year, 67.5% of the tax liability, less the amount of taxes paid by the date prescribed for that payment;
D. For the fourth payment of estimated taxes each year, 90% of the tax liability, less the amount of taxes paid by the date prescribed for that payment.
(2) The period of the underpayment shall run from the day the estimated payment was required to be made to the date on which the payment is made. For purposes of this section, a payment of estimated taxes on or before any payment date shall be considered a payment of any previous underpayment only to the extent the payment of estimated taxes exceeds the amount of the payment presently required to be paid to avoid any penalty.
(e) An underpayment of any portion of tax liability determined under division (d) of this section shall be due to reasonable cause and the penalty imposed by this section shall not be added to the taxes for the taxable year if any of the following apply:
(1) The amount of estimated taxes that were paid equals at least 90% of the tax liability for the current taxable year, determined by annualizing the income received during the year up to the end of the month immediately preceding the month in which the payment is due.
(2) The amount of estimated taxes that were paid equals at least 100% of the tax liability shown on the return of the taxpayer for the preceding taxable year, provided that the immediately preceding taxable year reflected a period of 12 months and the taxpayer filed a return with the municipal corporation under § 881.09(a) of this chapter for that year.
(3) The taxpayer is an individual who resides in the municipality but was not domiciled there on the first day of January of the calendar year that includes the first day of the taxable year.
(f) A Tax Administrator may waive the requirement for filing a declaration of estimated taxes for any class of taxpayers after finding that the waiver is reasonable and proper in view of administrative costs and other factors.
(Ord. 15-O-2839, passed 11-17-2015)
(a) Credit for tax paid to another municipality.
(1) Where a resident of the municipality is subject to a municipal income tax in another municipality, he or she shall be entitled to a credit as hereinafter set forth.
(2) Every individual taxpayer who resides in the municipality who receives net profits, salaries, commissions, or other personal compensation for work done or services performed or rendered outside of the municipality, if it be made to appear that he or she has paid a municipal income tax on the same income taxable under this chapter to another municipality, shall be allowed a credit against the tax imposed by this chapter of an amount not to exceed 0.5% so paid by him or her or in his or her behalf to such other municipality. The credit shall not exceed 0.5% of the tax assessed by this chapter on such income earned in such other municipality or municipalities where such tax is paid.
(3) A claim for refund or credit under this section shall be made in such manner as the Administrator may by regulation provide.
(b) Refundable credit for qualifying loss.
(1) For the purpose of this division (b), the following definitions shall apply unless the context clearly indicates or requires a different meaning.
A. “Nonqualified deferred compensation plan” means a compensation plan described in Section 3121(v)(2)(C) of the Internal Revenue Code.
B. “Qualifying loss.”
1. Except as provided in division (b)(1)B.2. of this section, “qualifying loss” means the excess, if any, of the total amount of compensation the payment of which is deferred pursuant to a nonqualified deferred compensation plan over the total amount of income the taxpayer has recognized for federal income tax purposes for all taxable years on a cumulative basis as compensation with respect to the taxpayer’s receipt of money and property attributable to distributions in connection with the nonqualified deferred compensation plan.
2. If, for one or more taxable years, the taxpayer has not paid to one or more municipal corporations income tax imposed on the entire amount of compensation the payment of which is deferred pursuant to a nonqualified deferred compensation plan, then the “qualifying loss” is the product of the amount resulting from the calculation described in division (b)(1)B.1. of this section computed without regard to division (b)(1)B.2. of this section and a fraction the numerator of which is the portion of such compensation on which the taxpayer has paid income tax to one or more municipal corporations and the denominator of which is the total amount of compensation the payment of which is deferred pursuant to a nonqualified deferred compensation plan.
3. With respect to a nonqualified deferred compensation plan, the taxpayer sustains a qualifying loss only in the taxable year in which the taxpayer receives the final distribution of money and property pursuant to that nonqualified deferred compensation plan.
C. “Qualifying tax rate” means the applicable tax rate for the taxable year for which the taxpayer paid income tax to a municipal corporation with respect to any portion of the total amount of compensation the payment of which is deferred pursuant to a nonqualified deferred compensation plan. If different tax rates applied for different taxable years, then the “qualifying tax rate” is a weighted average of those different tax rates. The weighted average shall be based upon the tax paid to the municipal corporation each year with respect to the nonqualified deferred compensation plan.
(2) A. Except as provided in division (b)(4) of this section, a refundable credit shall be allowed against the income tax imposed by a municipal corporation for each qualifying loss sustained by a taxpayer during the taxable year. The amount of the credit shall be equal to the product of the qualifying loss and the qualifying tax rate.
B. A taxpayer shall claim the credit allowed under this section from each municipal corporation to which the taxpayer paid municipal income tax with respect to the nonqualified deferred compensation plan in one or more taxable years.
C. If a taxpayer has paid tax to more than one municipal corporation with respect to the nonqualified deferred compensation plan, the amount of the credit that a taxpayer may claim from each municipal corporation shall be calculated on the basis of each municipal corporation’s proportionate share of the total municipal corporation income tax paid by the taxpayer to all municipal corporations with respect to the nonqualified deferred compensation plan.
D. In no case shall the amount of the credit allowed under this section exceed the cumulative income tax that a taxpayer has paid to a municipal corporation for all taxable years with respect to the nonqualified deferred compensation plan.
(3) A. For purposes of this section, municipal corporation income tax that has been withheld with respect to a nonqualified deferred compensation plan shall be considered to have been paid by the taxpayer with respect to the nonqualified deferred compensation plan.
B. Any municipal income tax that has been refunded or otherwise credited for the benefit of the taxpayer with respect to a nonqualified deferred compensation plan shall not be considered to have been paid to the municipal corporation by the taxpayer.
(4) The credit allowed under this section is allowed only to the extent the taxpayer’s qualifying loss is attributable to:
A. The insolvency or bankruptcy of the employer who had established the nonqualified deferred compensation plan; or
B. The employee’s failure or inability to satisfy all of the employer’s terms and conditions necessary to receive the nonqualified deferred compensation.
(c) Credit for person working in joint economic development district or zone. A municipality shall grant a credit against its tax on income to a resident of the municipality who works in a joint economic development zone created under Ohio R.C. 715.691 or a joint economic development district created under Ohio R.C. 715.70, 715.71, or 715.72 to the same extent that it grants a credit against its tax on income to its residents who are employed in another municipal corporation, pursuant to § 881.08(a) of this chapter.
(d) Credit for tax beyond statute for obtaining refund.
(1) Income tax that has been deposited or paid to the municipality, but should have been deposited or paid to another municipal corporation, is allowable by the municipality as a refund, but is subject to the three-year limitation on refunds as provided in § 881.09(f) of this chapter.
(2) Income tax that should have been deposited or paid to the municipality, but was deposited or paid to another municipal corporation, shall be subject to collection and recovery by the municipality. To the extent a refund of such tax or withholding is barred by the limitation on refunds as provided in § 881.09(f), the municipality will allow a non-refundable credit equal to the tax or withholding paid to the other municipality against the income tax the municipality claims is due. If the municipality’s tax rate is higher, the tax representing the net difference of the tax rates is also subject to collection by the municipality, along with any penalty and interest accruing during the period of nonpayment.
(3) No carryforward of credit will be permitted when the overpayment is beyond the three-year limitation for refunding of same as provided in § 881.09(f) of this chapter.
(4) Nothing in this section requires a municipality to allow credit for tax paid to another municipal corporation if the municipality has reduced credit for tax paid to another municipal corporation. Section 881.08(a) of this chapter regarding any limitation on credit shall prevail.
(Ord. 15-O-2839, passed 11-17-2015)
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