An annual tax for the purposes specified in Section 791.01 shall be imposed on and after January 1, 1967, provided that on or after July 1, 1982, the rate of such tax shall be a total of two percent per annum, and provided, further, that on or after December 1, 1994, the rate of such tax shall be a total of two and eighty-five one hundredths percent (2.85%) per annum. Such tax shall be imposed upon the following income:
(a) On all income, salaries, wages, commissions, lottery winnings, gambling and sports winnings, income from games of chance and other compensation earned and/or received on and after January 1, 1967, by residents of the City. Lottery, gambling and sports losses shall be deductible against lottery, gambling and sports winnings, and the Administrator shall provide by rules and regulations the manner in which to determine such losses.
(b) On all income, salaries, wages, commissions and other compensation earned and/or received on and after January 1, 1967, by nonresidents of the City for work done or services performed or rendered within the City. Income earned and/or received as holiday, sick, and/or vacation pay is taxable to the City of Euclid. Separation pay, termination pay, reduction-in-force pay, and other compensation paid as a result of an employee leaving the service of an employer shall be allocable only to the City of Euclid. However, the City shall tax the income of a nonresident individual performing services in the City for 12 or fewer days (a day is considered a full day or any fractional part of a day) in a calendar year only if one of the following applies:
(1) The individual is an employee of another person, the principal place of business of the individual's employer is located in another municipal corporation in this state that imposes a tax applying to compensation paid to the individual for services performed on those days, and the individual is not liable to that other municipal corporation for tax on the compensation paid for such services.
(2) The individual is a professional entertainer or professional athlete, the promoter of a professional entertainment or sports event, or an employee of such a promoter, all as may be reasonably defined by the municipal corporation.
(c) (1) On the portion attributable to the City on the net profits earned on and after January 1, 1967, of all resident unincorporated business entities or professions or other activities, derived from sales made, work done, services performed or rendered and business or other activities conducted in the City;
(2) On the portion of the distributive share of the net profits earned and/or received on and after January 1, 1967, of a resident partner or owner of a resident unincorporated business entity not attributable to the City and not levied against such unincorporated business entity;
(d) (1) On the portion attributable to the City of the new profits earned on or after January 1, 1967, of all nonresident unincorporated business entities, professions or other activities, derived from sales made, work done, services performed or rendered and business and other activities conducted in the City, whether or not such unincorporated business entity has an office or place of business in the City;
(2) On the portion of the distributive share of the net profits earned and/or received on or after January 1, 1967, of a resident partner or owner of a nonresident unincorporated business entity not attributable to the City and not levied against such unincorporated business entity;
(e) On the portion attributable to the City of the net profits earned on and after January 1, 1967, of all corporations derived from sales made, work done, services performed or rendered and business or other activities conducted in the City, whether or not such corporations have an office or place of business in the City.
(f) Effective for tax years 2004 and later, the distributive share of income paid to an S corporation shareholder shall be taxable in the following manner:
(1) If no portion of the net profits of the S corporation are allocated or apportioned to the State of Ohio, the distributive share is taxable only to the extent that it represents wages or net earnings from self-employment.
(2) If any portion of the net profits of the S corporation are allocated or apportioned to the State of Ohio, the full amount of the distributive share is taxable.
(g) Stock options given as compensation shall be taxed under Section 791.03(a) of this chapter. Stock options shall be taxed when exercised, regardless of the treatment by the Internal Revenue Service. The employer is required to withhold on the difference between the fair market value of the stock when exercised and the amount paid by the employee to exercise the option.
(Ord. 141-1982. Passed 6-21-82; Ord. 200-1994. Passed 8-22-94; Approved by Voters 11-8-94; Ord. 228-2003. Passed 12-1-03; Ord. 207-2009. Passed 12-7-09.)