(A) Subject business entities.
(1) A business entity which has a branch or branches, office or offices, store or stores, warehouse or other place or places in which the entity’s business is transacted, located in the city shall be considered to be conducting, operating or carrying on a trade, business, profession, enterprise, undertaking or other activity to the full extent of the sum total of all transactions originating or consummated in, by or through the city branch, office, store, warehouse or other place of business, including: billings made on such transactions; services rendered; shipments made; goods, chattels, merchandise and the like, sold; or commissions, fees or other remuneration or payments earned as determined by division (A)(3) below.
(2) In the case of a partnership, association, or other unincorporated business owned by one or more persons, the license fee, generally, shall be upon the partnership, association or business enterprise as an entity and not ordinarily upon the partners or members thereof.
(3) In determining the proportion or amount of the subject net profits of a business entity doing business within the city, the business entity shall use and apply the business allocation percentage formula set forth in § 110.05 of this chapter. For explanation of the formula, see division (B) below.
(B) Business allocation percentage.
(1) The licensee shall use the formula set forth in § 110.05 of this chapter to compute the percentage of his or her entire net profits (derived from activities both within and outside the city) which is subject under this chapter, and to determine the license fee payable to the city.
(a) Factors. If the licensee was doing business in the city during such period, business allocation percentage shall be computed on the basis of the two following factors:
1. Business receipts within and without the city; and
2. Payrolls within and without the city.
(b) Definitions. For the purpose of this division (B)(1), the following definitions shall apply unless the context clearly indicates or requires a different meaning.
BUSINESS RECEIPTS. The sum total of gross receipts from sales plus gross credit or charges for work done and performed or services rendered.
PAYROLLS. The total wages, salaries and other personal service compensation.
(c) Computation. The business allocation percentage is computed by determining the percentages which city business receipts (see division (B)(4) below) bear to the licensee’s entire business receipts wheresoever derived (including those derived from the city); and which payrolls paid by the licensee in the city bear to the licensee’s entire payroll wherever paid (including in city payrolls), adding together the two percentages so arrived at, and dividing the total by two. However, if one of the factors (receipts or payrolls) is missing, the remaining percentage is the business allocation percentage. A factor is not to be deemed missing merely because the expenditures of the licensee for payrolls or the gross receipts of the licensee, are found to be situated, incurred or received entirely within or entirely without the city.
(2) After determining such business allocation percentage, the license fee shall be determined by applying that percentage to the entire net profits of the licensee wherever derived, (thus arriving at the subject net profit), and computing that percent of the resultant subject net profit as is set forth in § 110.04(A) of this chapter.
(3) In case it shall appear to the City Clerk/Treasurer/Tax Collector that any agreement, understanding or arrangement exists between the licensee and any other person, firm or corporation whereby the activity, business, income or capital of the licensee is improperly or inaccurately reflected, the City Clerk/Treasurer/Tax Collector may adjust items of income, deductions and capital, in computing any allocation percentage; provided, any income directly traceable thereto is also excluded from entire net income, so as equitable to determine the license fee.
(4) The percentage of the licensee’s business receipts within the city is determined by ascertaining the licensee’s business receipts within the city during the period covered by the report and dividing the sum of such business receipts by the licensee’s total business receipts within and without the city during that period. Receipts from the following are allocable to the city:
(a) Sales of the licensee’s tangible personal property sold to the buyer within the corporate limits of the city;
(b) Work done and performed or services rendered in the city;
(c) Rentals from property situated in the city where the rental of such property is a business activity; and
(d) All other business receipts earned in the city. All receipts of the period covered by the report (computed on the cash or accrual basis, in accordance with the method of accounting used in the computation of the licensee’s entire net income) must be taken into account.
(C) Compensation allocable to the city.
(1) The term COMPENSATION, as used in this section, may include not only payments in cash or property, but the gross credits to or charges by the licensee, under its normal and usual accounting practices. For example, a plant, factory or other establishment in the city, which processes material or manufactures parts for other plants or factories owned by the licensee, and which may receive credit for the performance of such service only by bookkeeping entries, may be chargeable under this section with the gross amount of such entries in applying the formula discussed hereunder. Furthermore, such bookkeeping entries may be considered in lieu of cash or property payment in determining the net profits of any licensee under this chapter even though the business allocation percentage formula may not be used by or be applicable to the licensee; provided, however, that, whenever such gross credits or charges are included in computing the net profits of any licensee who or which pays a license fee thereon under this chapter, the same licensee shall not be twice subject in the same fee period by the separate imposition of a fee upon such gross credits or charges.
(2) Compensation and other receipts from work done or services performed within the city are allocable to the city and subject under this chapter. All amounts so received, credited or charged by the licensee in payment for such work or services are so allocable, irrespective of whether done or performed by employees or agents of the licensee, by subcontractors or by any other person. It is immaterial where such amounts were payable or where they were received.
(3) Commissions or fees received by the licensee are allocated to the city if the services for which the commissions were paid were performed in the city. If the licensee’s services for which the commissions or fees were paid were performed for the licensee by salespersons or other agents or employees attached to or working out of a place of business of the licensee within the city, the licensee’s services will be deemed to have been performed in the city.
(4) Where a lump sum is received by the licensee in payment for services within and without the city, the amount attributable to services within the city is to be determined on the basis of the relative values of, or amounts of time spent in the performance of, such services within and without the city, or by some other reasonable method approved by the City Clerk/Treasurer/Tax Collector. Full details must be submitted with the licensee’s report.
(D) Other business receipts.
(1) All business receipts earned by the city licensee within the city are allocable to the city. However, business receipts are not considered to have been earned by the licensee in the city solely by reason of the fact that they were payable in or actually received in the city.
(2) Receipts for sales of capital assets (property not held by the licensee for sale to customers in the regular course of business) are not business receipts. Receipts from the sale of real property held by the licensee as a dealer for sale to customers in the regular course of business are business receipts and are allocable to the city if the real property was situated in the city. Receipts from sales of intangibles included in business capital, held by the licensee as a dealer for sale to customers in the regular course of business, are business receipts and are allocable to the city if the sales were made in the city through a regular place of business of the licensee in the city.
(Prior Code, § 110.06) (Ord. A-27, passed 3-24-1969)