(a) Tax erroneously paid under this chapter shall not be refunded unless a claim for refund is made within three years from the date on which such payment was made or the return was due, or within three months after the final determination of the Federal tax liability, whichever is later. In addition, the following shall apply regarding refunds of tax withheld from non-qualified deferred compensation plans (NDCP):
(1) A taxpayer may be eligible for a refund if the taxpayer has suffered a loss from a NDCP. The loss will be considered sustained only in the taxable year in which the taxpayer receives the final distribution of money and property pursuant to the NDCP. Full loss is sustained if no distribution of money and property will be made by the NDCP.
(2) A taxpayer who receives income as a result of payments from a NDCP, and that income is less than the amount of income deferred to the NDCP and upon which municipal tax was withheld, then a refund will be issued on the amount representing the difference between the deferred income that was taxed and the income received from the NDCP. If different tax rates applied to the tax years in which deferrals, a weighted average of the different tax rates will be used to compute the refund amount.
(3) Refunds shall be allowed only if the loss is attributable to the bankruptcy of the employer who had established the NDCP, or the employee's failure or inability to satisfy all of the employer's terms and conditions necessary to receive the nonqualified compensation.
(b) Income tax that has been deposited with the City of Defiance, but should have been deposited with another municipality, is allowable by Defiance as a refund but is subject to the three-year limitation on refunds. Income tax that should have been deposited with Defiance, but was deposited with another municipality, shall be subject to recovery by Defiance. Defiance will allow a non-refundable credit for any amount owed Defiance that is in excess of the amount to be refunded by the other municipality, as long as the tax rate of the other municipality is the same or higher than Defiance's tax rate. If Defiance's tax rate is higher, the tax representing the net difference of the rates is also subject to collection by Defiance.
(c) Overpayments of withheld tax that have resulted due to incorrect withholding of an employee by an employer, and are not due as a result of excess withholding requested by the employee, shall be refunded to the employer. It shall be the responsibility of the employer, and not the City, to refund such overpayment to the employee. However, nothing in this subparagraph shall affect the right of a nonresident employee to apply directly to the City for refund of income tax withheld for days worked out of the City. (Ord. 7087. Passed 11-10-09.)