(a) Basis of Imposition. Subject to provisions of Ordinance #30, 1964 of the City of East Liverpool, Ohio, an annual tax shall be, and is hereby, levied on and after January 1, 1965, at the rate of one and one-half percent (1-1/2%) per annum upon the following, except as specifically excluded in Section 183.16
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(1) On all qualifying wages, commissions, other compensation, and other taxable income earned or received by residents of the Municipality, regardless of the source of the earnings, the place or places in or at which the services were rendered , or the location at which the earning were paid. All such earnings, whether received or earned directly or through an agent, and whether paid in cash or in property are taxable.
A. The following are items which are subject to the tax imposed by the Ordinance: salaries, wages, bonuses, incentive payments, commissions or other compensation paid to an individual in cash or in kind on an hourly, daily, weekly, monthly, annual, or other basis, including, but not limited to, the following: severance. or termination pay; wage continuation payments made as a result of early retirement or employment termination; wage continuation payments made as a result of sickness or temporary disability and whether paid by the recipient's employer or by a third party; vacation or holiday pay; tips or gratuities received; group term insurance premiums paid on an employee's behalf; employee contributions to tax sheltered annuities, non-qualified pension plans, or into employer or third party trusts or pension plans as permitted by the Internal Revenue Service or employer contributions to non-qualified pension plans or deferred compensation plans, and which may be excludable from wages for federal tax purposes; ordinary income portion of stock options or employee stock purchase plans; supplemental unemployment benefits (SUB Pay); strike pay; jury pay; working condition fringe benefits subject to tax by the Internal Revenue Service; guardian, executor, conservator, trustee, or administrator fees; bonuses; gifts of any type; compensation paid to domestic servants, casual employees and other types of employees; back pay; retroactive pay increases; ordinary income portion of lump sum distributions which become subject to federal tax because the recipient did not roll over the distribution within the time required by the Internal Revenue Service; any form of income not listed above but included in the definition of "qualifying wages" as defined in Section 3121 (a) of the Internal Revenue Code, and adjusted in accordance with Section 718.03 (A) of the Ohio Revised Code.
B. Residents who are able to itemize deductions on their federal tax return and deduct thereon unreimbursed employee business expenses, may deduct those same expenses from their income subject to East Liverpool City income tax. In support of said deduction the taxpayer must furnish a copy of their federal Form 2106 and Schedule A as filed with the Internal Revenue Service. The unreimbursed employee business expenses are deductible only on those wages on which East Liverpool City income tax is paid.
C. Where compensation is paid or received in property, its fair market value at the time of payment or receipt shall be subject to the tax imposed by the Ordinance. Except in the case of a home or parsonage furnished by a church or an integral agency of a church to a duly ordained, commissioned, licensed, or designated minister, board, lodging, utilities, and similar items received by an employee in lieu of additional cash compensation shall be subject to the tax.
1. Board and lodging provided by the employer on the employer's premises shall not be considered wages or compensation if the employee is required to accept the board and lodging as a condition of employment.
2. Meals provided by the employer on the employer's premises for the convenience of the employer shall not be considered wages or compensation to the employee.
(2) On all qualifying wages, commissions, other compensation, and other taxable income earned or received by nonresidents for work done, or services performed or rendered, in the Municipality, whether such compensation or remuneration is received or earned directly or through an agent and whether paid in cash or in property. The location of the place at which payment is made is immaterial.
A. The items which are subject to the tax imposed by the Ordinance are the same as those listed and defined in Section 183.02.
B. Nonresidents who are able to itemize deductions on their federal tax return and deduct thereon unreimbursed employee business expenses, may deduct those same expenses from their income subject to East Liverpool City income tax. In support of said deduction the taxpayer must furnish a copy of their federal Form 2106 and Schedule A as filed with the Internal Revenue Service. The unreimbursed employee business expenses are deductible only on those wages on which East Liverpool City income tax is paid.
C. The items subject to tax under Section 183.02 are the same for individuals who are not residents of the Municipality, for work done, or services performed or rendered in the Municipality.
(3) On the portion attributable to the Municipality of the net profits earned by all resident unincorporated businesses, pass-through entities, professions or other activities, derived from work done or services performed or rendered, and business or other activities conducted in the Municipality. On the portion of the distributive share of the net profits earned by a resident owner of a resident unincorporated business entity or pass-through entity not attributable to the Municipality and not levied against such unincorporated business entity or passthrough entity.
(4) On the portion attributable to the Municipality on the net profits by all nonresident unincorporated businesses, pass-through entities, professions or other activities, derived from work done or services performed or rendered and business or other activities conducted in the Municipality, whether or not such unincorporated business entity has an office or place of business in the Municipality. On the portion of the distributive share of the net profits earned by a resident owner of a nonresident unincorporated business entity or pass-through entity not attributable to the Municipality and not levied against such unincorporated business entity or pass-through entity.
A. A non-resident entity which has a branch or branches, office or offices and/or store or stores, warehouse, or other place or places in which the entity's business is transacted, located in the Municipality, shall be considered to be conducting, operating, prosecuting, 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 such East Liverpool branch, office, store, warehouse, or other place of business, including billings made on such transactions, or services rendered, or shipments made, or goods, chattels, merchandise, ect. sold, or commissions, fees, or other remuneration or payments earned, regardless of whether paid in cash or in property.
(5) On the portion attributable to the Municipality of the net profits earned by all corporations that are not pass-through entities from work done or services performed or rendered and business or other activities conducted in the Municipality, whether or not such corporations have an office or place of business in the Municipality.
A. A non-resident corporation which has a branch or branches, office or offices and/or store or stores, warehouse, or other place or places in which the corporation's business is transacted, located in the Municipality, shall be considered to be conducting, operating, prosecuting 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 such East Liverpool branch, office, store, warehouse or other place of business, including billings made on such transactions, or services rendered, or shipments made, or goods, chattels, merchandise, ect. sold, or commissions, fees, or other remuneration or payments earned regardless of whether paid in case or in property.
(6) On all income six hundred dollars ($600.00) and over received from gaming, wagering, lotteries, sports winnings, or schemes of chance by residents, and all income received from gaming, wagering, lotteries or schemes of chance by nonresidents as a result of activities located in the Municipality, including the purchase in the Municipality of lottery tickets, as reported on IRS Form W-2G, Form 5754 and or any other Form required by the Internal Revenue Service that reports winnings from gambling, prizes and lottery winnings. In no circumstance shall deductions be allowed against these winnings. However, deductions shall be allowed against gambling and sports winnings if the taxpayer is considered a professional gambler for federal income tax purposes.
(7) Royalty Income- earned by a taxpayer from a royalty interest in the production of an oil or gas well, whether managed, extracted or operated by the taxpayer individually or through an agent or other representative, shall be included in the computation of net profits from a business activity to the extent that such royalty interest constitutes a business activity of the taxpayer. Where the gross income received by a taxpayer from royalty interest in the production of an oil or gas well in a taxable year exceeds one thousand dollars ($1000.00), it shall be prima facie evidence that the income was derived from a business activity of such taxpayer and the net income from such royalty interest shall be subject to tax.
(b) Businesses Both In and Outside the Municipal Boundaries. This section does not apply to taxpayers that are subject to and required to file reports under Chapter 5745 of the Ohio Revised Code. Except as otherwise provided in subsection (c) hereof, net profit from a business or profession conducted both within and without the boundaries of a municipal corporation shall be considered as having taxable situs in such municipal corporation for purposes of municipal income taxation in the same proportion as the average ratio of the following:
(1) Multiply the entire net profits of the business by an apportionment percentage to be determined by:
A. The average original cost of the real and tangible personal property owned or used by the taxpayer in the business or profession in such municipal corporation 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 the preceding paragraph, real property shall include property rented or leased by the taxpayer and the value of such property shall be determined by multiplying the annual rental thereon by eight;
B. Wages, salaries, and other compensation paid during the taxable period to persons employed in the business or profession for services performed in such municipal corporation to wages, salaries, and other compensation paid during the same period to persons employed in the business or profession, wherever their services are performed, excluding compensation that is not taxable by the municipal corporation under Section 718.011 of the Ohio Revised Code;
C. Gross receipts of the business or profession from sales made and services performed during the taxable period in such municipal corporation to gross receipts of the business or profession during the same period from sales and services, wherever made or performed.
D. Adding together the percentages determined in accordance with subsection (b)(1)A., B., and C., hereof, or such of the aforesaid percentages as are applicable to the particular taxpayer and dividing the total so obtained by the number of percentages used in deriving such total.
1. A factor is applicable even though it may be apportioned entirely in or outside the Municipality.
2. Provided however, that in the event a just and equitable result cannot be obtained under the formula provided for herein, the Tax Administrator, upon application of the taxpayer, shall have the authority to substitute other factors or methods calculated to effect a fair and proper apportionment.
(2) Net profits as disclosed on any return filed pursuant to the provisions of the Ordinance shall be computed by the same accounting method used in reporting net income to the Internal Revenue Service (providing such method does not conflict with any provisions of the Ordinance). Net profits, shown on returns filed pursuant to the Ordinance must be reconciled with the net income reported to the Internal Revenue Service.
(c) As used in subsection (b) hereof “sales made in a municipal corporation" mean:
(1) All sales of tangible personal property delivered, within such municipal corporation regardless of where title passes if shipped or delivered from a stock of goods within such municipal corporation:
(2) All sales of tangible personal property delivered within such municipal corporation regardless of where title passes even though transported from a point outside such municipal corporation if 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) All sales of tangible personal property shipped from a place within such municipal corporation to purchasers outside such municipal corporation regardless of where title passes if the taxpayer is not, through its own employees, regularly engaged in the solicitation or promotion of sales at the place where delivery is made.
(d) Rents received by the taxpayer are to be included only if and to the extent that the rental, ownership, management or operation of the real estate from which such rents are derived (whether so rented, managed or operated by the taxpayer individually or through agents or other representatives) constitutes a business activity of the taxpayer in whole or in part.
(1) Where the gross monthly rental of any real properties, regardless of number and value, aggregate in excess of one hundred dollars ($100.00) per month, it shall be prima facie evidence that the rental, ownership, management or operation of such properties is a business activity of such taxpayer, and the net income of such rental properties shall be subject to tax; provided that in the case of commercial property, the owner shall be considered engaged in a business activity when the rental is based on a fixed or fluctuating percentage of gross or net sales, receipts or profits of the lessee, whether or not such rental exceeds one hundred dollars ($100.00) per month; provided further that in the case of farm property, the owner shall be considered engaged in a business activity when he shares in the crops or when the rental is based on a percentage of the gross or net receipts derived from the farm, whether or not the gross income exceeds one thousand two hundred dollars ($1,200) per year; and provided further that the person who operates a rooming house of five or more rooms rented shall be considered in the business whether or not the gross income exceeds three hundred dollars ($300.00) per month.
(2) In determining the amount of gross monthly rental of any real property, periods during which (by reason of vacancy or any other cause) rents are not received shall not be taken into consideration by the taxpayer.
(3) Rents received by a taxpayer engaged in the business of buying and selling real estate shall be considered as part of business income.
(4) Real property, as the term is used in this Regulation, shall include commercial property, residential property, farm property, and any and all other types of real estate.
(5) In determining the taxable income from rentals, the deductible expenses shall be of the same nature, extent and amount as are allowed by the Internal Revenue Service for federal income tax purposes.
(6) Residents of this Municipality-are subject to such taxation on the net income from rentals (to the extent above specified), regardless of the location of the real property owned.
(7) Non-residents of the Municipality are subject to such taxation only if the real property is situated within this Municipality. Non-residents, in determining whether gross monthly rentals exceed one hundred dollars ($100.00) shall take into consideration only real estate situated within this Municipality.
(8) S corporations, general partnerships, limited partnerships, limited liability companies, limited liability partnerships, and other associations, subject to the provisions of subsections (a) and (b) hereof, must include in gross receipts income from rentals and leases of real and tangible personal property.
(e) Net Operating Loss (NOL).
(1) The Municipality does not allow a net operating loss carryback or carryforward.
(2) Nothing in Section 718.01 of the Ohio Revised Code requires a municipal corporation to allow a net operating loss carryforward.
(Ord. 60-2012. Passed 11-19-12.)