(1) On all salaries, wages, commissions, and other compensations earned on and after January 1, 1997 by residents of Hebron, and income from lottery winnings in excess of five thousand dollars ($5,000) won on or after January 1, 2005 by residents of Hebron.
(2) On all salaries, wages, commissions, and other compensations earned on and after July 1, 2009, by nonresidents for work done or services performed or rendered in Hebron.
(3) A. On the portion attributable to Hebron of the net profits earned on and after July 1, 2009, of all resident associations, unincorporated businesses, professions, or other activities conducted in Hebron.
B. On a resident partner’s or owner’s share of the net profits of a resident association or other unincorporated business entity not attributable to Hebron and not levied against such association or other unincorporated business entity.
(4) A. On the portion attributable to Hebron of the net profits earned on and after July 1, 2009, of all nonresident associations, unincorporated business, professions, or other activities, derived from sales made, work done, or services performed or rendered or business or other activities conducted in Hebron, whether or not such association or unincorporated business entity has an office or place of business in Hebron.
B. On a resident partner’s or owner’s share of the net profits of a nonresident association or other unincorporated business entity not attributable to Hebron and not levied against such association or other unincorporated business entity.
(5) On the portion attributable to Hebron of the net profits earned on and after July 1, 2009, of all corporations derived from sales made, work done, or services performed or rendered and business or other activities conducted in Hebron, whether or not such corporations have an office or place of business in Hebron.
(6) Payments made to current and former employees by an employer as accrued benefits and/or vacation wages are taxable. Payments made to any current or former employee by an employer under a wage continuation plan during periods of disability or sickness are taxable.
(b) Deductions for Business Expenses. An employee who pays his business expenses from his commissions or other compensation, without reimbursement from his employer, may deduct from his gross commissions or other compensation business expenses allowed by the Internal Revenue Service for Federal income tax purposes, but only to the extent such expenses are incurred in earning commissions or other compensation subject to the tax imposed by this chapter.
(c) Allocation of Net Profits. Where a person conducts a business both within and outside Hebron, the portion of the entire net profits of such business to be allocated as having been made within Hebron 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 Hebron, or at the option of the taxpayer may be determined by the following formula, which shall be used if the taxpayer does not have bona fide records, showing net profit from Hebron business activities subject, however, to the provisions of subsection (c)(2) hereof.
(1) Multiply the entire net profits of the business by a business allocation percentage to be determined by:
A. Ascertaining the percentage which the average net book value of the real and tangible personal property owned or used in the business and situated within Hebron during the period covered by the return, is of the average net book value of all the real and tangible personal property owned or used in the business, wherever situated, during such period. Real property includes property rented or leased by the taxpayer and the value of such property shall be determined by multiplying the annual rental thereon by eight.
B. Ascertaining the percentage which the gross receipts of the business from sales made and services performed in Hebron, during the period covered by the return, are of the total gross receipts from all sales and services, wherever made or performed, during such period.
1. Sales made within Hebron shall be deemed to include all sales of tangible personal property which is delivered within Hebron, regardless of where title passes, if shipped or delivered from a stock of goods within Hebron.
2. All sales of tangible personal property which is delivered within Hebron, regardless of where title passes, even though transported from a point outside Hebron, if the taxpayer is regularly engaged through its own employees in the solicitation or promotion of sales within Hebron and the sales result from such solicitation or promotion.
3. All sales of tangible personal property which is shipped from a place within Hebron to purchasers outside Hebron, regardless of where title passes.
C. Ascertaining the percentage which the total wages, salaries, and other compensation paid, during the period covered by the return, to employees for services performed in Hebron is of the total wages, salaries, commissions, and other compensation paid, during such period, to all employees within and outside Hebron.
D. Adding together the percentage determined in accordance with subsections A., B., and C. hereof 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 arriving at such total.
(2) However, 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 Administrator, 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.
(d) Operating Loss Carry Forward.
(1) The portion attributable to Hebron of a net operating loss sustained in any taxable year subsequent to January 1, 1997 allocated to Hebron may be applied against the portion of the profit of succeeding years allocated to Hebron, for a maximum period of three (3) years, but no portion of a net operating loss shall be carried back against net profits of any prior years.
(2) The portion of a net operating loss sustained shall be allocated to Hebron in the same manner as provided herein for allocating net profits to Hebron.
(3) In the event of a change in the rate of tax in a subsequent year, the tax benefit in such subsequent year may not exceed an amount equal to the percentage of tax in the year the net operating loss is sustained to the portion of such operating loss allocated to Hebron.
(4) Council shall provide by rules and regulations the manner in which such net operating loss carry forward shall be determined.
(e) Consolidated Returns.
(1) Filing of consolidated returns shall, in the discretion of the Administrator, be permitted in accordance with rules and regulations prescribed by Council.
(2) In the case of a corporation that carries on transactions with its stockholders or with other corporations related by stock ownership, interlocking directorates, or some other method, or in case any person operates a division, branch, factory, office laboratory, or activity within Hebron constituting a portion only of its total business, the Administrator shall require such additional information as may be necessary to ascertain whether net profits allocable to Hebron are being distorted by the shifting of income, apportionment of expenses or other devices available to common control. If the Administrator finds that a person’s net profits allocable to Hebron are distorted by reason of transactions with stockholders or with other corporations related by stock ownership, interlocking directorates or transactions with such division, branch, factory, office, laboratory or activity, or by some other method, he shall adjust such transactions so as to produce a fair and proper allocation of net profits to Hebron. If necessary, the Administrator may require the filing of a consolidated return.
(f) Rentals from Real Property.
(1) Rentals received by the taxpayer are to be included only if and to the extent that the rental, ownership, management or operation of the real estate from which such rentals are derived, whether so rented, managed, or operated by taxpayer individually or through agents or other representatives, constitutes a business activity of the taxpayer in whole or in part.
(2) In determining the amount of net monthly rental of any real property, periods during which, by reason of vacancy or any other cause, rentals are not received shall not be taken into consideration by the taxpayer.
(3) Rentals received by a taxpayer engaged in the business of buying and selling real estate shall be considered as part of business income.
(4) “Real property” includes commercial property, residential property, farm property, and any and all other types of real estate.
(5) In determining the taxable income from rentals, the deductible expenses shall be of the same nature, extent and amount as fare allowed by the Internal Revenue Service for Federal income tax purposes.
(6) Residents of Hebron are subject to taxation upon the net income from rentals, regardless of the location of the real property owned.
(7) Nonresidents of Hebron are subject to such taxation only if the real property is situated within Hebron.
(8) Corporations owning or managing real estate are taxable only on that portion of income derived from property located in Hebron.
(g) Patents and Copyrights. Income from patents or copyrights is not to be included in net profits subject to the tax if the income from such patents or copyrights is subject to the State Intangible Tax. Conversely, such a State Intangible Tax is not deductible in determining Hebron tax. Such items shall be clearly disclosed on an attachment to be filed with Hebron tax return.
(h) Exemptions. The tax provided for herein shall not be levied on the following:
(1) Funds received from local, State, or Federal governments because of service in the armed forces of the United States by the person rendering such service, or as a result of another person rendering such service.
(2) Poor relief, unemployment compensation or similar payments, including disability benefits received from private industry or local, State, or Federal governments or from charitable, religious or educational organizations, or social security.
(3) Alimony received and child support.
(4) Income, dues, contributions, receipts from casual entertainment, amusements, sports events, and health and welfare activities received by religious, fraternal, charitable, scientific, literary, educational institutions or organizations, labor unions, lodges and similar organizations.
(5) Any association, organization, corporation, club or trust, which is exempt from Federal taxes on income by reason of its charitable, religious, educational, literary, scientific, etc., purposes.
(6) Gains from involuntary conversion, cancellation of indebtedness, interest on Federal obligations, items of income already taxed by the State of Ohio, which Hebron is prohibited from taxing and income of a decedent’s estate during the period of administration (except such income from the operation of a business.)
(7) Compensation for personal services of all persons under sixteen years of age whether residents or nonresidents.
(8) Interest, dividends and capital gains not reported as ordinary income.
(9) Pension income, including lump sum distributions and annuities at the time of distribution.
(
Ord. 24-08. Passed 1-17-09.)