Section
110.01 Definitions
110.02 Occupational license required
110.03 Business license fee required
110.04 Apportionment
110.05 Employers to withhold
110.06 Returns required
110.07 Extensions
110.08 Refunds
110.09 Federal audit provisions
110.10 Payment of tax not delayed; claims for refund or credit
110.11 Information to remain confidential
110.12 Use of occupational license tax
110.99 Penalty
For the purpose of this chapter, the following definitions shall apply unless the context clearly indicates or requires a different meaning.
“BUSINESS ENTITY.” Each separate corporation, limited liability company, business development corporation, partnership, limited partnership, sole proprietorship, association, joint stock company, receivership, trust, professional service organization, or other legal entity through which business is conducted.
“CITY.” The City of Dayton, Kentucky.
“COMPENSATION.” Wages, salaries, commissions, or any other form of remuneration paid or payable by an employer for services performed by an employee, which are required to be reported for federal income tax purposes and adjusted as follows:
(1) Include any amounts contributed by an employee to any retirement, profit sharing, or deferred compensation plan, which are deferred for federal income tax purposes under a salary reduction agreement or similar arrangement, including but not limited to salary reduction arrangements under Section 401(a), 401(k), 402(e), 403(a), 403(b), 408,414(h), or 457 of the Internal Revenue Code; and
(2) Include any amounts contributed by an employee to any welfare benefit, fringe benefit, or other benefit plan made by salary reduction or other payment method which permits employees to elect to reduce federal taxable compensation under the Internal Revenue Code, including but not limited to Sections 125 and 132 of the Internal Revenue Code.
“FISCAL YEAR.” As defined in Section 7701(a)(24) of the Internal Revenue Code.
“EMPLOYEE.” Any person who renders services to another person or business entity for compensation, including an officer of a corporation and any officer, employee, or elected official of the United States, a state, or any political subdivision of a state, or any agency or instrumentality of any one or more of the above. A person classified as an independent contractor under the Internal Revenue Code shall not be considered an employee.
“EMPLOYER.” As defined in Section 3401(d) of the Internal Revenue Code.
“GROSS RECEIPTS.” All revenues or proceeds derived from the sale, lease, or rental of goods, services, or property by a business entity reduced by the following:
(1) Sales and excise taxes paid; and
(2) Returns and allowances.
“INTERNAL REVENUE CODE.” The Internal Revenue Code in effect on December 31,2008, as amended.
“NET PROFIT.” Gross income as defined in Section 61 of the Internal Revenue Code minus all the deductions from gross income allowed by Chapter 1 of the Internal Revenue Code, and adjusted as follows:
(1) Include any amount claimed as a deduction for state tax or local tax which is computed, in whole or in part, by reference to gross or net income and which is paid or accrued to any state of the United States, local taxing authority in a state, the District of Columbia, the Commonwealth of Puerto Rico, any territory or possession of the United States, or any foreign country or political subdivision thereof;
(2) Include any amount claimed as a deduction that directly or indirectly is allocable to income which is either exempt from taxation or otherwise not taxed;
(3) Include any amount claimed as a net operating loss carryback or carryforward allowed under Section 172 of the Internal Revenue Code;
(4) Include any amount of income and expenses passed through separately as required by the Internal Revenue Code to an owner of a business entity that is a pass-through entity for federal tax purposes; and
(5) Exclude any amount of income that is exempt from state taxation by the Kentucky Constitution or the Constitution and statutory laws of the United States.
“SALES REVENUE.” Receipts from the sale, lease, or rental of goods, services, or property.
“TAX DISTRICT.” The City of Dayton, Kentucky.
“TAXABLE GROSS RECEIPTS.” In case of a business entity having payroll or sales revenues both within and without a tax district, means gross receipts as defined in this section, as apportioned under KRS 67.753.
“TAXABLE GROSS RECEIPTS.” In case of a business entity having payroll or sales revenue only in one tax district, means gross receipts as defined in this section.
“TAXABLE NET PROFIT.” In case of a business entity having payroll or sales revenue only in one tax district, means net profit as defined in this section.
“TAXABLE NET PROFIT.” In case of a business entity having payroll or sales revenue both within and without a tax district, means net profit as defined in this section, as apportioned under KRS 67.753.
“TAXABLE YEAR.” The calendar year or fiscal year ending during the calendar year, upon the basis of which net income or gross receipts is computed.
(Ord. 2017-21, passed 12-5-17)
Every person and business entity engaged in any business and every employer in the city shall be required to apply for and obtain an occupational license from the city before the commencement of business or in the event of a change of business status. Licensees are required to notify the city of any change in address, the cessation of business or any other changes that render the information supplied to the city in the license application inaccurate.
(Ord. 2017-21, passed 12-5-17)
Every person or business entity engaged in any business for profit and any person or business entity that makes a filing with the Internal Revenue Service or the Kentucky Revenue Cabinet shall be required to file and pay to the city an annual occupational license tax for the privilege of engaging in such activities within the city unless exempt by KRS 92.281 or other applicable statutes. The amount of the annual occupational license tax shall be in both of the following amounts:
(A) Based on the gross receipts of all businesses, trades, professions, or occupations from activities conducted within the city, the amount as outlined in the following table except as excluded herein:
Total Gross Receipts (Dollars) | Amount of Tax (Dollars) |
Total Gross Receipts (Dollars) | Amount of Tax (Dollars) |
§ 0 - 500 | § 25.00 |
501 - 5,000 | 70.00 |
5,001 - 10,000 | 100.00 |
10,001 - 25,000 | 140.00 |
25,001 - 50,000 | 170.00 |
50,001-100,000 | 200.00 |
100,001 - 200,000 | 270.00 |
200,001 - 300,000 | 400.00 |
300,001 - 400,000 | 540.00 |
400,001 - 500,000 | 680.00 |
500,001 - 600,000 | 810.00 |
600,001 - 700,000 | 945.00 |
700,001 - 800,000 | 1,080.00 |
800,001 - 900,000 | 1,220.00 |
900,001 - 1,000,000 | 1,350.00 |
1,000,001 - 2,000,000 | 1,490.00 |
2,000,001 - 3,000,000 | 1,620.00 |
3,000,001 - 4,000,000 | 1,750.00 |
4,000,001 - 5,000,000 | 1,890.00 |
5,000,001 - and over | 2,030.00 |
(1) Every person having coin-operated amusement and vending machines, as defined in this section, on his or her premises shall pay an annual license tax to the city in the amount of ten dollars ($10.00) per machine instead of the amounts listed in the table above.
(2) Every person engaged in the business of leasing or renting real property or portions thereof shall pay an annual license tax to the city in the amount of .01 times his or her gross receipts but not less than the amount of one hundred dollars ($100.00) instead of the amounts listed in the table above.
(3) Every person engaged as a vendor of fruit, ice cream, sherbet, peanuts, popcorn, candy, and other articles upon the street, shall pay a license tax as described in (E) below, but not less than the amount of fifty dollars ($50.00) per year or ten dollars ($10.00) per day instead of the amounts listed in the table above.
(4) Every person engaged in the business of selling fireworks shall pay an annual license tax to the city in the amount of one thousand dollars ($1,000.00) instead of the amounts listed in the table above.
(B) Based on the wages and compensation paid or payable in the City for work done or services performed or rendered in the city by every resident and nonresident who is an employee in amount of two and one-half percent (.025) of said wages and compensation.
(Ord. 2017-21, passed 12-5-17; Am. Ord. 2022-11, passed 5-3-22)
(A) Except as provided in division (D) of this section, gross receipts shall be apportioned as follows:
(1) For business entities with both payroll and sales revenue in more than one (1) tax district, by multiplying the gross receipts by a fraction, the numerator of which is the payroll factor, described in division (B) of this section, plus the sales factor, described in division (C) of this section, and the denominator of which is two (2); and
(2) For business entities with sales revenue in more than one (1) tax district, by multiplying the gross receipts by the sales factor as set forth in division (C) of this section.
(3) For the purpose of divisions (A) through (E) of this section, the business entity shall file an apportionment form provided by the city.
(B) The payroll factor is a fraction, the numerator of which is the total amount paid or payable in the city during the tax period by the business entity for compensation, and the denominator of which is the total compensation paid or payable by the business entity everywhere during the tax period. Compensation is paid or payable in the city based on the time the individual’s service is performed within the city.
(C) The sales factor is a fraction, the numerator of which is the total sales revenue of the business entity in the city during the tax period, and the denominator of which is the total sales revenue of the business entity everywhere during the tax period.
(1) The sale, lease, or rental of tangible personal property is in the city if:
(a) The property is deEvered or shipped to a purchaser, other than the United States government, or to the designee of the purchaser within the city regardless of the f.o.b. point or other conditions of the sale; or
(b) The property is shipped from an office, store, warehouse, factory, or other place of storage in the city and the purchaser is the United States government.
(2) Sales revenue, other than revenues from the sale, lease or rental of tangible personal property or the lease or rental of real property, are apportioned to the city based upon a fraction, the numerator of which is the time spent in performing such income-producing activity within the city and the denominator of which is the total time spent, performing that income-producing activity.
(3) Sales revenue from the sale, lease, or rental of real property is allocated to the tax district where the property is located.
(D) If the apportionment provisions of this section do not fairly represent the extent of the business entity’s activity in the city, the business entity may petition the city or the city may require, in respect to all or any part of the business entity’s business activity, if reasonable:
(1) Separate accounting;
(2) The exclusion of anyone (1) or more of the factors;
(3) The inclusion of one (1) or more additional factors which will fairly represent the business entity’s business activity in the city; or
(4) The employment of any other method to effectuate an equitable allocation and apportionment of gross receipts.
(E) When compensation is paid or payable for work done or services performed or rendered by an employee, both within and without the city, the license tax shall be measured by that part of the compensation paid or payable as a result of work done or service performed or rendered within the city. The license tax shall be computed by obtaining the percentage that the compensation for work performed or services rendered within the city bears to the total wages and compensation paid or payable. In order for the city to verify the accuracy of a taxpayer’s reported percentages under this subsection, the taxpayer shall maintain adequate records.
(F) All partnerships, S-corporations, and all other entities where income is “passed through” to the owners are subject to this chapter. The occupational license tax imposed in this chapter is assessed against income before it is “passed throughl' these entities to the owners.
(G) If any business entity dissolves, ceases to operate, or withdraws from the city during any taxable year, or if any business entity in any manner surrenders or loses its charter during any taxable year, the dissolution, cessation of business, withdrawal, or loss or surrender of charter shall not defeat the filing of returns and the assessment and collection of any occupational license tax for the period of that taxable year during which the business entity had business activity in the city.
(H) If a business entity makes, or is required to make, a federal income tax return, the occupational license tax shall be computed for the purposes of this chapter on the basis of the same calendar or fiscal year required by the federal government, and shall employ the same methods of accounting required for federal income tax purposes.
(Ord. 2017-21, passed 12-5-17)
(A) Every employer making payment of compensation to an employee shall deduct and withhold upon the payment of the compensation an occupational license tax calculated under § 110.03 imposed against the compensation and wages earned in the city. Amounts withheld shall be paid to the city in accordance with this chapter.
(B) Every employer required to deduct and withhold tax under this section shall, for the quarter ending after January 1 and for each quarter ending thereafter, on or before the end of the month following the close of each quarter, make a return and report to the city, and pay to the city, the tax required to be withheld under this section, unless the employer is permitted or required to report within a reasonable time after some other period as determined by the city.
(C) Every employer who fails to withhold or pay to the city any sums required by this chapter to be withheld and paid shall be personally and individually liable to the city for any sum or sums withheld or required to be withheld in accordance with the provisions of this section.
(D) The city shall have a lien upon all the property of any employer who fails to withhold or pay over to the city sums required to be withheld under this section. If the employer withholds, but fails to pay the amounts withheld to the city, the lien shall commence as of the date the amounts withheld were required to be paid to the city. If the employer fails to withhold, the lien shall commence at the time the liability of the employer is assessed by the city.
(E) Every employer required to deduct and withhold tax under this section shall annually on or before February 28 of each year complete and file on a form furnished or approved by the city a reconciliation of the occupational license tax withheld where compensation is paid or payable to employees. Either copies of federal forms W-2 and W-3, transmittal of wage and tax statements, or a detailed employee listing with the required equivalent information, as determined by the city, shall be submitted.
(F) Every employer shall furnish each employee a statement on or before January 31 of each year showing the amount of compensation and occupational license tax deducted by the employer from the compensation paid to the employee for payment to the city during the preceding calendar year.
(G) An employer shall be liable for the payment of the tax required to be deducted and withheld under this section.
(H) The president, vice president, secretary, treasurer or any other person holding an equivalent corporate office of any business entity subject to this section shall be personally and individually liable, both jointly and severally, for any tax required to be withheld from compensation paid or payable to one or more employees of the business entity, and neither the corporate dissolution or withdrawal of the business entity from the City, nor the cessation of holding any corporate office, shall discharge that liability; provided that the personal and individual liability shall apply to each and every person holding the corporate office at the time the tax becomes or became obligated. No person shall be personally and individually liable under this section unless such person had authority to collect, truthfully account for, or pay over the tax imposed by this chapter at the time that the taxes imposed by this chapter become or became due.
(I) Not withstanding divisions (G) and (H) of this section, every employee receiving compensation in the city subject to the tax imposed under § 110.03 shall be personally liable for any amount due. In all cases where the employer does not withhold the tax levied under this chapter from the employee, such employee or employees shall be responsible for filing with the city each quarter in the same manner as if they were the employer or as otherwise required by the city. If an employer fails to or is not required to withhold, report, or pay the license tax it shall become the duty of the employee to file with the City. The only employer that is not required to withhold, report, and pay the occupational license tax is the federal government including the United States Postal Service. The payment required to be made by an employee can be made quarterly, for the periods ending March 31, June 31, September 30, and December 31 of each year, or at anytime the employee wishes to make an estimated payment for the year in which wages are earned. All license fees must be received by February 28 for the preceding calendar year, together with a copy of the employee’s W-2 form. Employers not required to withhold, report, or pay the license tax must annually, during the month of January of each year, make a return to the city, in which is set forth the name and social security number of each employee of the employer during the preceding calendar year, giving the amount of salaries, wages, commissions, or other compensation earned during such preceding year by each such employee. This list shall include all current fu11-time employees, part time employees, temporary employees, and terminated employees whether it be voluntary or involuntary.
(Ord. 2017-21, passed 12-5-17)
(A) All business entity returns for the preceding taxable year shall be made by April 15 of each year, except returns made on the basis of a fiscal year, which shall be made by the fifteenth (15th) day of the fourth (4th) month following the close of the fiscal year. Blank forms for returns shall be supplied by the city or standard forms provided by the Kentucky Secretary of State.
(B) Every business entity shall submit a copy of its federal income tax return and all supporting statements and schedules at the time of filing its occupational license tax return with the City. Whenever, in the opinion of the city, it is necessary to examine the federal income tax return of any business entity in order to audit the return, the city may compel the business entity to produce for inspection a copy of any statements and schedules in support thereof that have not been previously filed. The city may also require copies of reports of adjustments made by the federal government.
(C) Every business entity subject to an occupational license tax governed by the provisions of this chapter shall keep records, render under oath statements, make returns, and comply with rules as the city from time to time may prescribe. Whenever the city deems it necessary, the city may require a business entity, by notice served to the business entity, to make a return, render statements under oath, or keep records, as the city deems sufficient to determine the tax liability of the business entity.
(D) The city may require, for the purpose of ascertaining the correctness of any return or for the purposes of making an estimate of the taxable income of any business entity, the attendance of a representative of the business entity or of any other person having knowledge on the premises.
(E) The full amount of the unpaid tax payable by any business entity, as appears from the face of the return, shall be paid to the city at the time prescribed for filing the occupational license tax return, determined without regard to any extension of time for filing the return.
(F) Every business entity making payments of six hundred dollars ($600.00) or more to persons other than employees for services performed within the city is responsible for maintaining the records of those payments and for completing IRS Form 1099 on or before February 28 of the year following the close of the calendar year in which such compensation was paid and to remit copies of the IRS Form 1099 or equivalent information to the city on or before February 28 of each year.
(Ord. 2017-21, passed 12-5-17) Penalty, see § 110.99
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