(a) Imposition of Tax. Subject to all other provisions of this chapter, an annual tax is hereby levied at the rate of one and one-half percent (1 ½%) per annum upon the following:
(1) On all compensation and/or taxable income earned, received, accrued or otherwise set apart, (unless specifically exempted by this chapter) including all income received as gambling winnings on or after January 1, 2005, as reported on Internal Revenue Service Form W-2G, Form 5754 or any other form required by the Internal Revenue Service that reports winnings from gambling, prizes and lottery winnings, and where no regard is given to losses or to the location where the gambling, prizes and lottery winnings were received, to residents of the City. (Ord. 30-2004. Passed 4-19-04.)
(2) On all compensation and/or taxable income (unless specifically exempted by this chapter) earned, received, accrued or otherwise set apart to nonresidents of the City for work done or services performed or rendered within the City.
(3) A. On the net profits earned, received, accrued or in any other way set apart unto all resident unincorporated businesses, professions or other activities derived from sales made, work done or services performed or rendered and business or other activities conducted in the City.
B. On the portion of the distributive share of the net profits earned, received, accrued or in any other way set apart unto a resident partner, member or owner of a resident association or unincorporated business entity not attributable to the City and not levied against such association or unincorporated business entity.
C. On the portion attributable to the City of the net profits earned, received, accrued or in any other way set apart unto all nonresident unincorporated businesses, professions or other activities, derived from sales made, work done or services performed or rendered and business or other activities conducted in the City, whether or not such unincorporated business, profession or other entity has a place of business in the City.
D. On the portion of the distributive share, whether or not distributed, of the net profits earned, received, accrued or in any other way set apart unto a resident partner, member or owner of a nonresident association or unincorporated business entity not attributable to the City and not levied against such association or unincorporated business entity.
E. On the net profits of all corporations, estates and trusts, derived from sales made, work done, services rendered or performed and business or other activities conducted in the City, whether or not such corporations, estates, and trusts have their principal or any place of business located in the City.
F. On a resident’s entire share, whether distributed or not, of the net profits of a subchapter S corporation as defined in Section 1361 of the Internal Revenue Code, for which the tax imposed by this chapter has not already been levied against. The tax imposed by this paragraph is effective for all accounting periods commencing on or after January 1, 2002.
(b) Allocation of Net Profits.
(1) Where a taxpayer conducts a business both within and outside the City, the portion of the entire net profits of such business to be allocated as having been made within the City may be determined from the records of such business, if such business has bona fide records which disclose with reasonable accuracy what portion of its net profits is attributable to that part of its activities conducted within the City, or, may be determined by the following formula, which shall be used if the taxpayer has no bona fide records showing net profits from City business activities, subject, however, to the provisions of subsection (b)(4) hereof;
(Ord. 87-01. Passed 11-19-01.)
(2) Multiply the entire net profits of the business by a business allocation percentage to be determined by:
A. Ascertaining the percentage which the average original cost of the real and tangible personal property owned or used in the business and situated within the City, during the period covered by the return, is of the average original cost of all the real and tangible personal property owned or used in the business, whenever situated, during such period. (Ord. 98-2011. Passed 1-3-12.)
B. Ascertaining the percentage which the gross receipts of the business from sales made and services performed in the City, during the period covered by the return, is of the total gross receipts from all sales and services, wherever made or performed, during such period.
C. Ascertaining the percentage which the total wages, salaries, commissions and other compensation paid, during the period covered by the return, to employees for service performed in the City is of the total wages, salaries, commissions and other compensation paid, during such period, to all employees within and outside the City.
D. Adding together the percentage determined in accordance with paragraphs A. B. and C., above 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.
(3) A factor is applicable even though it may be allocated entirely in or outside the City.
(4) Provided, however that in the event a just and equitable result cannot be obtained under the formula provided for herein, the Board of Review, upon application of the taxpayer, or the Tax Commissioner, shall, under uniform regulations adopted by the Board, have the authority to substitute other factors or methods calculated to effect a fair and proper allocation.
(c) Operating Loss Carry Forward.
(1) Commencing with taxable years beginning subsequent to December 31, 2000, if a net operating loss has been sustained in any taxable year such losses may not be carried forward or backward to any other taxable year.
(2) The portion of a net operating loss sustained shall be allocated to the City in the same manner as provided herein for allocating net profits to the City.
(3) Affiliated corporations may not deduct a loss from any other corporation having a taxable profit. Operations of any affiliated corporations may not be taken into consideration in computing net profits or business allocation percentage formula.
(4) In the case of an Individual who runs two or more businesses as individual proprietorships, loss from once such business may be set off against the net profits of the other (but not against salaries, wages or other personal services compensation). The one and one half (1 ½%) tax shall be levied on the final net business income of the individual proprietor.
(d) Consolidated Returns.
(1) Filing of consolidated returns may be permitted or required in accordance with rules and regulations prescribed by the Tax Commissioner.
(2) In the case of a corporation that carried on transactions with its stockholders or with other corporations related by stock ownership, interlocking directorates or some other method, the Tax Commissioner shall require such information, in addition to the return hereinafter provided for, as he may deem necessary to ascertain whether net profits are properly allocated to the City. If the Tax Commissioner finds net profits are not properly allocated to the City by reason of transactions with stockholders or with other corporations related by stock ownership, interlocking directorates or some other method, he may require the filing of a consolidated return or adjust such transactions so as to produce a fair and proper allocation of net profits to the City.
(e) Deduction of Non-reimbursed Employee Business Expense.
(1) An employee who pays his business expenses from his wages, salaries, commissions or other compensation, without reimbursement from his employer, may deduct from his gross wages, salaries, commissions or other compensation business expenses reported on Federal Form 2106, but only to the extent that such expenses were directly incurred in earning the income subject to the tax imposed by this chapter. Deduction shall be allocated first to the municipality where the employment occurred, whether or not a refund from the employment municipality was requested or received. Substantiation of expenses reported is required.
(f) Rental Income from Real Property. Rental income from real property shall be taxed as follows.
(1) The rental, ownership, management or operation of rental property shall be considered a business, regardless of whether the property is residential, commercial or farm property and therefore subject to the requirements of this chapter, including the filing of tax returns on rentals that sustain a net operating loss.
(2) Rental income received by a taxpayer engaged in the business of buying and selling real estate shall be considered as part of business income.
(3) Real property, as the term is used in this chapter, shall include commercial, residential, farm property and any other types of real estate.
(4) In determining the taxable income from rentals, the deductible expenses shall be of the same nature, extent and amount as allowed by the Internal Revenue Service for federal tax purposes.
(5) Residents of the City are subject to taxation upon the net income from rental property regardless of where the property is located.
(6) Nonresidents of the City are subject to taxation only if the real property is situated within the City boundaries.
(7) To be considered nontaxable as ground rentals, the property must be under perpetual leasehold by the terms of which the lessor performs no services of any type, including the payment of taxes on the property.
(8) Corporations owning or managing real estate are taxed only on that portion of income derived from property located in the City.
(g) Patents and Copyrights.
(1) Income from a patent or a copyright is not taxable if the income is subject to the State intangible tax. Such items shall be clearly disclosed on an attachment to be filed with the City tax return.
(h) Exemptions. The tax provided for in subsection (a) hereof shall not be levied upon the following:
(1) Pay or allowance of active members of the Armed Forces of the United States by the person rendering such service or as a result of another person rendering such service. However spouses or other family members not on active duty will be subject to all provisions of the Tax Ordinance.
(2) Welfare payments, pension payments received as a result of retirement, State unemployment compensation, social security benefits, worker’s compensation.
(3) Proceeds of insurance paid by reason of death of the insured; retirement disability benefits, annuities, or gratuities not in the nature of compensation for services rendered from whatever source derived.
(4) Alimony received.
(5) Income dues, contributions and receipts from casual entertainment, amusements, sports events and health and welfare activities received by religious, fraternal, bona fide charitable, scientific, literary or educational institutions or organizations, labor unions, lodges and similar organizations.
(6) Any association, organization, corporation, club or trust which is exempt from Federal taxes on income by reason of its charitable, religious, educational, literary or scientific purpose; any such association or organization falling in this category shall be required to file declarations and final returns and remit the taxes levied under this chapter on all net profits from activities, the income from which is not specifically exempt from taxation under the Ohio Revised Code, Section 718.01.
(7) Gains from involuntary conversion, cancellations of indebtedness, interest on Federal obligations, dividend income subject to Ohio intangible property tax, interest income from institutions, which pay the Ohio intangible property tax thereon, and income of a decedent’s estate during the period of administration (except such income from the operation of a business).
(8) The income of individuals under sixteen (16) years of age whether a resident or nonresident. All provisions of this chapter apply on and after the individual’s sixteenth birthday.
(9) In the case of a minister of the gospel, gross income does not include the rental value of a home furnished to him as part of his compensation, or the rental allowance paid to him as part of his compensation, to the extent used by him to rent or provide a home.
(10) Salaries, wages, commissions, other compensation, other income and net profits, the taxation of which is prohibited by the United States Constitution or any act of congress limiting the power of the states or their political subdivisions to impose net income taxes on income derived from interstate commerce.
(11) Salaries, wages, commissions, other compensation, other income and net profits, including interest and dividends as provided in Ohio Revised Code, Section 718.01, the taxation of which is prohibited by the Constitution of the State or any act of the Ohio General Assembly limiting the power of the City to impose net income taxes.
(12) On or after January 1, 2001, compensation paid to a nonresident individual for personal services performed by the individual in the City on twelve (12) or fewer days in a calendar year unless one of the following applies:
A. The individual is the employee of another person; the principal place of business of the individuals employer is located in another municipal corporation in this State that imposes a tax applying to the 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.
B. The individual is a professional entertainer or professional athlete, the promoter of a professional entertainment or sports event and their employees.
For purposes of the 12-day calculation, any portion of a day worked in the City shall be calculated as one day worked in the City. This section is effective January 1, 2001. (Ord. 87-01. Passed 11-19-01.)
(13) On all winnings received from gambling, prizes and lottery that were won before January 1, 2005. (Ord. 30-2004. Passed 4-19-04.)