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All of the Tax Administrator's written correspondence to a taxpayer or other person shall include the name and contact information of an individual designated to receive inquiries regarding the correspondence. The individual may be the Tax Administrator or an employee of the Tax Administrator.
(Ord. C46-23. Passed 11-20-23.)
EFFECTIVE FOR TAX YEARS BEGINNING ON OR AFTER JANUARY 1, 2018
(a) A taxpayer as defined in subsection 194.81(c) may elect to be subject to Sections 194.80 to 194.95 of the Codified Ordinances of Grove City in lieu of the provisions set forth in the remainder of this chapter. Notwithstanding any other provision of this chapter, upon the taxpayer’s election, both of the following shall apply:
(1) The tax commissioner shall serve as the sole administrator of the municipal net profit tax for which the taxpayer is liable for the term of the election;
(b) (1) A taxpayer shall make the initial election on or before the fifteenth day of the fourth month after the beginning of the taxpayer’s taxable year by providing to the tax commissioner a list of all municipal corporations in which the taxpayer conducted business during the previous taxable year, on a form prescribed by the tax commissioner.
(2) At least quarterly, the tax commissioner shall notify each municipal corporation that a taxpayer lists in its election under division (b)(1) of this section that the taxpayer has made the election.
(3) A. The election, once made by the taxpayer, applies to the taxable year in which the election is made and to each subsequent taxable year until the taxpayer notifies the tax commissioner and each municipal corporation in which the taxpayer conducted business during the previous taxable year of its termination of the election.
B. A notification of termination shall be made, on a form prescribed by the tax commissioner, on or before the first day of the third month of any taxable year.
C. Upon a timely and valid termination of the election, the taxpayer is no longer subject to Sections 194.80 to 194.95 of this chapter, and is instead subject to the provisions set forth in the remainder of this chapter.
D. At least quarterly, the tax commissioner shall notify each municipal corporation reported on a taxpayer's most recent return or declaration filed with the commissioner of the taxpayer's termination of its election.
(4) The tax commissioner shall provide to all municipal corporations imposing a tax on income on or after January 1, 2018, a list of taxpayers that are subject to sections 718.80 to 718.95 of the Revised Code, including the taxpayers' names, addresses, and federal employee identification numbers. The list shall be made available via the portal created under section 718.841 of the Revised Code.
(c) (1) A. On or before the thirty-first day of January each year, the Tax Administrator shall certify to the tax commissioner the rate of the tax in effect on the first day of January of that year.
B. If, after the thirty-first day of January of any year, the electors of Grove City approve an increase in the rate of the municipal corporation’s tax on income that takes effect within that year, the Tax Administrator shall certify to the tax commissioner the new rate of tax not less than sixty days before the effective date of the increase, after which effective date the commissioner shall apply the increased rate.
(2) The Tax Administrator that receives a notification under subsection (b)(2) of this section, shall submit to the tax commissioner and within the time prescribed by division (c)(3) of this section, on a form prescribed by the commissioner, the following information regarding the taxpayer and any member of an affiliated group of corporations included on the taxpayer's consolidated tax return, when applicable:
A. The amount of any net operating loss that the taxpayer is entitled to carry forward to a future tax year;
B. The amount of any net operating loss carryforward utilized by the taxpayer in prior years;
C. Any credits granted by Grove City to which the taxpayer is entitled, the amount of such credits, whether the credits may be carried forward to future tax years, and, if the credits may be carried forward, the duration of any such carryforward;
D. Any overpayments of tax that the taxpayer has elected to carry forward to a subsequent tax year;
E. Any other information Grove City deems relevant in order to effectuate the tax commissioner’s efficient administration of the tax on Grove City’s behalf.
(3) A municipal corporation shall submit the information required under division (c)(2) of this section to the tax commissioner within ninety days after the taxpayer files its final return or within fifteen days after the end of the taxable year for which the taxpayer made the initial election under division (b)(1) of this section, whichever occurs first. For the purposes of this section, "final return" means the return filed with the municipal corporation for the taxable year immediately preceding the taxable year for which the taxpayer made the election under division (b)(1) of this section.
(4) If the Tax Administrator fails to timely comply with subsections (c)(1),(2), or (3) of this section, the tax commissioner may notify the director of budget and management, who, upon receiving such notification, shall withhold a portion of each payment made to Grove City under Section 194.83 of the Codified Ordinances of Grove City. The commissioner shall specify the percentage of the payment to be withheld, not to exceed fifty percent (50%) of the amount of the payment otherwise due to Grove City under that section. The director shall compute the withholding on the basis of the tax rate most recently certified to the tax commissioner until Grove City complies with subsections (c)(1), (2), and (3) of this section.
If, after any such withholding, the municipal corporation complies with divisions (c)(1), (2), and (3) of this section, the tax commissioner shall notify the director of budget and management, who shall provide payment to the municipal corporation under section 718.83 of the Revised Code of such amounts withheld under this division.
(1) Prescribe all forms necessary to administer those sections;
(2) Adopt such rules as the tax commissioner finds necessary to carry out those sections;
(3) Appoint and employ such personnel as are necessary to carry out the duties imposed upon the tax commissioner by those sections.
(f) Nothing in this chapter shall be construed to make any section of this chapter, other than Sections 194.01 and 194.80 to 194.95, applicable to the tax commissioner’s administration of Grove City’s municipal income tax or to any taxpayer that has made the election under this section.
(g) The tax commissioner shall not be considered the Tax Administrator, as that term is defined in Section 194.02 of this chapter.
(Ord. C10-18. Passed 2-23-18; Ord. C46-23. Passed 11-20-23.)
If a term used in Sections 194.80 to 194.95 of this chapter that is not otherwise defined in this chapter is used in a comparable context in both the laws of the United States relating to federal income tax and in Title LVII of the ORC and the use is not consistent, then the use of the term in the laws of the United States relating to federal income tax shall have control over the use of the term in Title LVII of the ORC, unless the term is defined in Chapter 5703 of the ORC, in which case the definition in that chapter shall control. Any reference in this chapter to the Internal Revenue Code includes other laws of the United States related to federal income taxes. If a term is defined in both this section and Section 194.01 of this chapter, the definition in this section shall control for all uses of that term in Sections 194.80 through 194.95 of this chapter.
(a) “Municipal taxable income” means income apportioned or sitused to Grove City under Section 194.82 of this chapter, as applicable, reduced by any pre-2017 net operating loss carryforward available to the person for Grove City.
(b) “Adjusted federal taxable income” for a person required to file as a C corporation, or for a person that has elected to be taxed as a C corporation as described in subsection (c)(24)E. of Section 194.02 of this chapter, means a C corporation’s federal taxable income before net operating losses and special deductions as determined under the Internal Revenue Code adjusted as follows:
(1) Deduct intangible income to the extent included in federal taxable income. The deduction shall be allowed regardless of whether the intangible income relates to assets used in a trade or business or assets held for the production of income.
(2) Add an amount equal to five percent (5%) of intangible income deducted under subsection (b)(1) of this section, but excluding that portion of intangible income directly related to the sale, exchange, or other disposition of property described in Section 1221 of the Internal Revenue Code.
(3) Add any losses allowed as a deduction in the computation of federal taxable income if the losses directly relate to the sale, exchange, or other disposition of an asset described in Section 1221 or 1231 of the Internal Revenue Code.
(4) A. Except as provided in subsection (b)(4)B. of this section, deduct income and gain included in federal taxable income to the extent the income and gain directly relate to the sale, exchange, or other disposition of an asset described in Section 1221 or 1231 of the Internal Revenue Code.
B. Subsection (b)(4)A. of this section does not apply to the extent the income or gain is income or gain described in Section 1245 or 1250 of the Internal Revenue Code.
(5) Add taxes on or measured by net income allowed as a deduction in the computation of federal taxable income.
(6) In the case of a real estate investment trust or regulated investment company, add all amounts with respect to dividends to, distributions to, or amounts set aside for or credited to the benefit of investors and allowed as a deduction in the computation of federal taxable income.
(7) Deduct, to the extent not otherwise deducted or excluded in computing federal taxable income, any income derived from a transfer agreement or from the enterprise transferred under that agreement under Section 4313.02 of the ORC.
(8) Deduct exempt income to the extent not otherwise deducted or excluded in computing adjusted federal taxable income.
(9) Deduct any net profit of a pass-through entity owned directly or indirectly by the taxpayer and included in the taxpayer’s federal taxable income unless an affiliated group of corporations includes that net profit in the group’s federal taxable income in accordance with subsection (e)(3)B. of Section 194.86 of this chapter.
(10) Add any loss incurred by a pass-through entity owned directly or indirectly by the taxpayer and included in the taxpayer’s federal taxable income unless an affiliated group of corporations includes that loss in the group’s federal taxable income in accordance with subsection (e)(3)B. of Section 194.86 of this chapter.
If the taxpayer is not a C corporation, is not a disregarded entity that has made the election described in subsection (c)(48)B. of Section 194.02 of this chapter, and is not a publicly traded partnership that has made the election described in subsection (c)(24)E. of Section 194.02 of this chapter, the taxpayer shall compute adjusted federal taxable income under this section as if the taxpayer were a C corporation, except guaranteed payments and other similar amounts paid or accrued to a partner, former partner, shareholder, former shareholder, member, or former member shall not be allowed as a deductible expense unless such payments are a pension or retirement benefit payment paid to a retired partner, retired shareholder, or retired member or are in consideration for the use of capital and treated as payment of interest under Section 469 of the Internal Revenue Code or United States treasury regulations. Amounts paid or accrued to a qualified self-employed retirement plan with respect to a partner, former partner, shareholder, former shareholder, member, or former member of the taxpayer, amounts paid or accrued to or for health insurance for a partner, former partner, shareholder, former shareholder, member, or former member, and amounts paid or accrued to or for life insurance for a partner, former partner, shareholder, former shareholder, member, or former member shall not be allowed as a deduction.
Nothing in subsection (b) of this section shall be construed as allowing the taxpayer to add or deduct any amount more than once or shall be construed as allowing any taxpayer to deduct any amount paid to or accrued for purposes of federal self-employment tax.
(c) “Taxpayer” has the same meaning as in Section 194.01 of this chapter, except that “taxpayer” does not include natural persons or entities subject to the tax imposed under Chapter 5745 of the ORC. “Taxpayer” may include receivers, assignees, or trustees in bankruptcy when such persons are required to assume the role of a taxpayer.
(e) “Assessment” means a notice of underpayment or nonpayment of a tax issued pursuant to Section 194.90 of this chapter.
(Ord. C10-18. Passed 2-23-18; Ord. C46-23. Passed 11-20-23.)
This section applies to any taxpayer that is engaged in a business or profession in the City and that has made the election under Section 194.80 of this chapter.
(a) Except as otherwise provided in subsection (b) of this section, net profit from a business or profession conducted both within and without the boundaries of Grove City shall be considered as having a taxable situs in Grove City for purposes of municipal income taxation in the same proportion as the average ratio of the following:
(1) The average original cost of the real property and tangible personal property owned or used by the taxpayer in the business or profession in the City 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, tangible personal or 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:
(2) Wages, salaries, and other compensation paid during the taxable period to individuals employed in the business or profession for services performed in the City to wages, salaries, and other compensation paid during the same period to individuals employed in the business or profession, wherever the individual’s services are performed, excluding compensation from which taxes are not required to be withheld under subsection 194.04(c) of this chapter:
(3) Total gross receipts of the business or profession from sales and rentals made and services performed during the taxable period in the City to total gross receipts of the business or profession during the same period from sales, rentals, and services, wherever made or performed.
(b) (1) If the apportionment factors described in subsection (a) of this section do not fairly represent the extent of a taxpayer’s business activity in the City, the taxpayer may request, or the tax commissioner may require, that the taxpayer use, with respect to all or any portion of the income of the taxpayer, an alternative apportionment method involving one or more of the following:
A. Separate accounting:
B. The exclusion of one or more of the factors:
C. The inclusion of one or more additional factors that would provide for a more fair apportionment of the income of the taxpayer to Grove City:
D. A modification of one or more of the factors.
(2) A taxpayer request to use an alternative apportionment method shall be in writing and shall accompany a tax return, timely filed appeal of an assessment, or timely filed amended tax return. The taxpayer may use the requested alternative method unless the tax commissioner denies the request in an assessment issued within the period prescribed by subsection (a) of Section 194.90 of this chapter.
(3) The tax commissioner may require a taxpayer to use an alternative apportionment method as described in subsection (b)(1) of this section only by issuing an assessment to the taxpayer within the period prescribed by subsection (a) of Section 194.90 of this chapter.
(c) As used in subsection (a)(2) of this section, “wages, salaries, and other compensation” includes only wages, salaries, or other compensation paid to an employee for services performed at any of the following locations:
(1) A location that is owned, controlled, or used by, rented to, or under the possession of one of the following:
A. The employer;
B. A vendor, customer, client, or patient of the employer, or a related member of such a vendor, customer, client, or patient:
C. A vendor, customer, client, or patient of a person described in subsection (c)(1)B. of this section, or a related member of such a vendor, customer, client, or patient.
(2) Any location at which a trial, appeal, hearing, investigation, inquiry, review, court-martial, or similar administrative, judicial, or legislative matter or proceeding is being conducted, provided that the compensation is paid for services performed for, or on behalf of, the employer or that the employee’s presence at the location directly or indirectly benefits the employer;
(3) Any other location, if the tax commissioner determines that the employer directed the employee to perform the services at the other location in lieu of a location described in subsection (c)(1) or (2) of this section solely in order to avoid or reduce the employer’s municipal income tax liability. If the tax commissioner makes such a determination, the employer may dispute the determination by establishing, by a preponderance of the evidence, that the tax commissioner’s determination was unreasonable.
(d) For the purposes of subsection (a)(3) of this section, receipts from sales and rentals made and services performed shall be sitused to the City as follows:
(1) Gross receipts from the sale of tangible personal property shall be sitused to Grove City only if, regardless of where title passes, the property meets either of the following criteria:
A. The property is shipped to or delivered within Grove City from a stock of goods located within Grove City.
B. The property is delivered within Grove City from a location outside Grove City, provided the taxpayer is regularly engaged through its own employees in the solicitation or promotion of sales within Grove City and the sales result from such solicitation or promotion.
(2) Gross receipts from the sale of services shall be sitused to Grove City to the extent that such services are performed in Grove City.
(3) To the extent included in income, gross receipts from the sale of real property located in Grove City shall be sitused to Grove City.
(4) To the extent included in income, gross receipts from rents and royalties from real property located in Grove City shall be sitused to Grove City.
(5) Gross receipts from rents and royalties from tangible personal property shall be sitused to Grove City based upon the extent to which the tangible personal property is used in Grove City.
(e) Commissions received by a real estate agent or broker relating to the sale, purchase, or lease of real estate shall be sitused to Grove City if the real estate is located in Grove City. Net profit reported by the real estate agent or broker shall be allocated to Grove City based upon the ratio of the commissions the agent or broker received from the sale, purchase, or lease of real estate located in Grove City to the commissions received from the sale, purchase, or lease of real estate everywhere in the taxable year.
(f) If, in computing a taxpayer’s adjusted federal taxable income, the taxpayer deducted any amount with respect to a stock option granted to an employee, and if the employee is not required to include in the employee’s income any such amount or a portion thereof because it is exempted from taxation under subsections (c)(12)L. and (c)(35) of Section 194.02 of this chapter, the taxpayer shall add the amount that is exempt from taxation to the taxpayer’s net profit that was apportioned to Grove City. In no case shall a taxpayer be required to add to its net profit that was apportioned to Grove City any amount other than the amount upon which the employee would be required to pay tax were the amount related to the stock option not exempted from taxation under subsections (c)(12)L. and (c)(35) of Section 194.02 of this chapter.
This subsection applies solely for the purpose of making an adjustment to the amount of a taxpayer’s net profit that was apportioned to Grove City under this section.
(g) When calculating the ratios described in subsection (a) of this section for the purposes of that subsection or subsection (b) of this section, the owner of a disregarded entity shall include in the owner’s ratios the property, payroll, and gross receipts of such disregarded entity.
(Ord. C10-18. Passed 2-23-18.)
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