(a) Each employer (as hereinbefore defined) who employs one or more persons on a salary, wage, commission or other compensation basis shall deduct from compensation paid to any employee subject to this Chapter, the tax of one percent (1%) of such qualifying salary, wage, bonus, incentive payment, commission or other compensation due by such employer to the employee. The tax shall be deducted by the employer from:
(1) The gross amount of all qualifying salaries, wages, bonuses, incentive payments, commissions or other form of compensation paid to employees who are nonresidents of the Municipality, for services rendered, work performed or other activities engaged in to earn such compensation within the Municipality; and
(2) The gross amount of all qualifying salaries, wages, bonuses, incentive payments, commissions or other form of compensation paid to employees who are residents of the Municipality, regardless of the place where the services are rendered.
(b) All employers who, or which, maintain an office or other place of business in the Municipality are required to make the collection and deductions specified in this section, regardless of the fact the services on account of which any particular deduction is required as to residents of the Municipality were performed at a place of business of any such employer situated outside the Municipality.
(c) The mere fact that the tax is not withheld shall not relieve the employee of the responsibility of filing a return and paying the tax on the compensation received.
(d) Commissions and fees paid to professional men, brokers and others who are independent contractors and not employees of the payer, are not subject to withholding or collection of the tax at the source. Such taxpayers shall in all instances, file returns and pay the tax pursuant to the provisions of Section 183.03 or 181.03. (See Sections 183.06 and 183.07)
(e) In the case of employees who are nonresidents of the Municipality, the amount to be deducted is one percent (1%) of the compensation paid with respect to personal services rendered in the Municipality subject to the exceptions in Section 181.03(f)(16).
Where a nonresident is a salesman, agent or other employee whose compensation on the basis of commission depends directly on the volume of business transacted by him, the deducting and withholding shall attach to the portion of the entire compensation which the volume of business transacted by the employee within the Municipality bears to the volume of business transacted by him within and outside the Municipality.
The deducting and withholding of personal service compensation of all other employees (including officers of corporations) shall attach to the portion of the personal service compensation of such employee (according to the ratio) which the total number of working days employed within the Municipality bears to the total number of working days employed within and outside the Municipality. If it is impossible to apportion the earnings as provided above because of the peculiar nature of the service of the employee, or the unusual basis of compensation, apportionment shall be made in accordance with the facts and the tax deducted and withheld accordingly.
The occasional entry into the Municipality of a nonresident employee who performs the duties for which he is employed entirely outside the Municipality, but enters the Municipality for the purpose of reporting, receiving instructions, accounting, etc. incidental to his duties outside the Municipality, shall not be deemed to take such employee out of the class of those rendering their services entirely outside the Municipality.
(f) An employer shall withhold the tax on the full amount of any advances made to an employee on account of commissions, whether by way of drawing account or otherwise (but see subsection (g) hereof), where such advances are in excess of commissions earned.
(g) An employer required to withhold the tax on compensation paid to an employee shall, in determining the amount on which the tax is to be withheld, ignore any amount allowed and paid by the employer to the employee for expenses necessarily and actually incurred by the employee in the actual performance of his services. Provided, that such expenses shall be of the kind and in the amount recognized and allowed as deductible expenses for federal income tax purposes.
(h) It shall not be required of contractors, or subcontractors, with employees working in the Municipality, who have properly applied for and received a building permit to construct, rebuild or otherwise perform any activity for which a building permit is required and paid the Municipality tax thereon, to collect income tax of one percent (1%) for income received by employees for the permitted project only. This does not effect the obligation of an employer to collect and pay taxes for employees earning income in the Municipality from any source other than a permitted project.
(Ord. 2003-79. Passed 12-2-03.)
(Ord. 2003-79. Passed 12-2-03.)