(a) It is the duty of each employer (as hereinbefore defined) who employs one or more persons on a salary, wage, commission, or other compensation basis, to deduct from compensation paid to any employee subject to the Ordinance, the tax of one and one-half percent of such salary, wage, bonus, incentive payment, commission or other compensation due by said employer to said employee. The tax shall be deducted by the employer from:
(1) All 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) From the gross amount of all 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 collections and deductions specified in this section, regardless of the fact that 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 will 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 persons, 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 must in all instances file returns and pay the tax pursuant to the provisions of Section 880.02. (See also Section 880.19(c) and (d).)
(e) In the case of employees who are nonresidents of the Municipality, the amount to be deducted is one and one-half percent of the compensation paid with respect to personal services rendered in the Municipality.
Where a nonresident receives compensation for personal services rendered or performed partly within and partly outside the Municipality, the withholding employer shall deduct, withhold and remit that portion of the compensation which is earned within the Municipality in accordance with the following rules of apportionment:
(1) If the nonresident is a salesperson, agent, or other employee whose compensation on the basis of commissions depends directly on the volume of business transacted by him or her, 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 or her within and outside the Municipality.
(2) 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 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.
(3) If it is impossible to apportion the earnings as provided above, because A. the peculiar nature of the service of the employee, or B. the unusual basis of compensation, apportionment shall be made in accordance with the facts and the tax deducted and withheld accordingly.
(4) The occasional entry into the Municipality of a nonresident employee who performs the duties for which he or she is employed entirely outside the Municipality, but enters the Municipality for the purpose of reporting, receiving instructions, accounting, etc., incidental to his or her 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 or her services, provided that such expenses must be of the kind and in the amount recognized and allowed as a deductible expense for Federal Income Tax purposes.
(Res. 580. Passed 12-8-70; Ord. 00-024. Passed 8-1-00.)