(A) For the purpose of this subchapter, the following definitions shall apply unless the context clearly indicates or requires a different meaning.
NONQUALIFIED DEFERRED COMPENSATION PLAN. A compensation plan described in § 3121(v)(2)(C) of the Internal Revenue Code.
QUALIFYING LOSS.
(a) Except as provided in division (b) of this definition, means the excess, if any, of the total amount of compensation the payment of which is deferred pursuant to a non-qualified deferred compensation plan over the total amount of income the taxpayer has recognized for federal income tax purposes for all taxable years on a cumulative basis as compensation with respect to the taxpayer’s receipt of money and property attributable to distributions in connection with the nonqualified deferred compensation plan.
(b) If, for one or more taxable years, the taxpayer has not paid to one or more municipal corporations income tax imposed on the entire amount of compensation the payment of which is deferred pursuant to a non-qualified deferred compensation plan, then the QUALIFYING LOSS is the product of the amount resulting from the calculation described in division (a) of this definition computed without regard to this division (b) of this definition and a fraction the numerator of which is the portion of such compensation on which the taxpayer has paid income tax to one or more municipal corporations and the denominator of which is the total amount of compensation the payment of which is deferred pursuant to a non-qualified deferred compensation plan.
(c) With respect to a non-qualified deferred compensation plan, the taxpayer sustains a QUALIFYING LOSS only in the taxable year in which the taxpayer receives the final distribution of money and property pursuant to that non-qualified deferred compensation plan.
QUALIFYING TAX RATE. The applicable tax rate for the taxable year for the which the taxpayer paid income tax to a municipal corporation with respect to any portion of the total amount of compensation the payment of which is deferred pursuant to a non-qualified deferred compensation plan. If different tax rates applied for different taxable years, then the QUALIFYING TAX RATE is a weighted average of those different tax rates. The weighted average shall be based upon the tax paid to the municipal corporation each year with respect to the non-qualified deferred compensation plan.
(B) (1) Except as provided in division (D) of this section, a refundable credit shall be allowed against the income tax imposed by the city for each qualifying loss sustained by a taxpayer during the taxable year. The amount of the credit shall be equal to the product of the qualifying loss and the qualifying tax rate.
(2) A taxpayer shall claim the credit allowed under this section from each municipal corporation to which the taxpayer paid municipal income tax with respect to the non-qualified deferred compensation plan in one or more taxable years.
(3) If a taxpayer has paid tax to more than one municipal corporation with respect to the non-qualified deferred compensation plan, the amount of the credit that a taxpayer may claim from each municipal corporation shall be calculated on the basis of each municipal corporation’s proportionate share of the total municipal corporation income tax paid by the taxpayer to all municipal corporations with respect to the non-qualified deferred compensation plan.
(4) In no case shall the amount of the credit allowed under this section exceed the cumulative income tax that a taxpayer has paid to the city for all taxable years with respect to the nonqualified deferred compensation plan.
(C) (1) For purposes of this section, city income tax that has been withheld with respect to a non-qualified deferred compensation plan shall be considered to have been paid by the taxpayer with respect to the non-qualified deferred compensation plan.
(2) Any municipal income tax that has been refunded or otherwise credited for the benefit of the taxpayer with respect to a non-qualified deferred compensation plan shall not be considered to have been paid to the city by the taxpayer.
(D) The credit allowed under this section is allowed only to the extent the taxpayer’s qualifying loss is attributable to:
(1) The insolvency or bankruptcy of the employer who had established the non-qualified deferred compensation plan; or
(2) The employee’s failure or inability to satisfy all of the employer’s terms and conditions necessary to receive the non-qualified deferred compensation.
(Ord. 2018-02, passed 2-12-2018)