(1) On all income, qualifying wages, commissions and other compensation earned and/or received on and after November 1, 1968, by residents of the City, including compensation made to employees by or for an employer for vacation pay, a wage continuation plan during periods of disability and/or sickness. For further clarification “income” includes, but is not limited to:
A. Spousal support received (i.e., alimony).
B. Lottery, gambling and sports winnings, games of chance, and prizes and/or awards.
1. If the taxpayer is not considered a professional gambler for federal income tax purposes, the tax shall apply to all income of six hundred dollars ($600.00) or more per event won by the taxpayer. An “event” shall mean a singular game or contest on which a wager is placed or entered.
2. If the taxpayer is considered a professional gambler for federal income tax purposes, related deductions as permitted by the Internal Revenue Code shall be allowed against gambling and sports winnings.
(2) On all income, qualifying wages, commissions and other compensation earned and/or received on and after November 1, 1968, by nonresidents for work done or services performed or rendered in the City, including compensation made to employees by or for an employer for vacation pay, a wage continuation plan during periods of disability and/or sickness. Separation pay, termination pay, reduction-in-force pay, and other compensation paid as a result of an employee leaving the service of an employer shall be allocable only to the City.
A. London shall not, however, tax the compensation of a nonresident individual who will be deemed to be an occasional entrant if all of the following apply:
1. The compensation is paid for personal services performed by the individual in the City on twelve or fewer days during the calendar year, in which case the individual shall be considered an occasional entrant for purposes of the City income tax. A day is a full day or any fractional part of a day.
2. In the case of an individual who is an employee, the principal place of business of the individual's employer is located outside the City and the individual pays tax on compensation described in Section 890.03(b) to the municipality, if any, in which the employer's principal place of business is located, and no portion of that tax is refunded to the individual.
3. The individual is not a professional entertainer or professional athlete, the promoter of a professional entertainment or sports event, or an employee of such a promoter, all as may be reasonably defined by the City.
B. Beginning with the thirteenth day an individual deemed to have been an occasional entrant to the City performs services within the City, the employer of said individual shall begin withholding the City income tax from remuneration paid by the employer to the individual, and shall remit the withheld income tax to the City in accordance with the requirements of this chapter. Since the individual can no longer be considered to have been an occasional entrant, the employer is further required to remit taxes on income earned in the City by the individual for the first twelve days.
C. If the individual is self-employed, it shall be the responsibility of the individual to remit the appropriate income tax to the City.
(3) A. On the portion attributable to the City of the net profits earned on and after November 1, 1968, of all resident unincorporated businesses, professions, associations, or other entities, derived from sales made, work done, 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 and/or received on and after November 1, 1968, of a resident partner or owner of a resident unincorporated business entity not attributable to the City and not levied against such unincorporated business entity.
(4) A. On the portion attributable to the City of the net profits earned on and after November 1, 1968, of all nonresident unincorporated businesses, professions, associations, or other entities, 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 entity has an office or place of business in the City.
B. On the portion of the distributive share of the net profits earned and/or received on and after November 1, 1968, of a resident partner or owner of a nonresident unincorporated business entity not attributable to the City and not levied against such unincorporated business entity.
(5) On the portion attributable to the City, of the net profits earned on and after November 1, 1968, of all corporations derived from sales made, work done, services performed or rendered and business or other activities conducted in the City, whether or not such corporations have an office or place of business in the City.
(6) Effective for tax years 2004 and later, the distributive share of income paid to an S corporation shareholder shall be taxable only to the extent of the portion, if any, that represents wages, or net earnings from self-employment.
(b) The portion of the net profits attributable to the City of a taxpayer conducting a business, profession or other activity both within and without the boundaries of the City shall be determined as provided in Ohio R.C. 718.02 and in accordance with the rules and regulations adopted by the Director of Taxation pursuant to this chapter.
(c) (1) Commencing with taxable years beginning subsequent to December 31, 1992, the portion of a net operating loss sustained in any taxable year allocable to the City may not be offset against salaries, wages, commissions and other compensation but may be applied against the portion of the profit of succeeding years allocable to the City until exhausted, but in no event for more than five taxable years. Commencing with taxable years beginning January 1, 2008, the portion of a net operating loss sustained in any taxable year allocable to the City may not be offset against salaries, wages, commissions and other compensation but may be applied against the portion of the profit for years 2008, 2009 and 2010 allocable to the City until exhausted. Effective January 1, 2010, no net operating loss may be applied toward any profit. No portion of a net operating loss shall be carried back against net profits of any prior 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) The Director shall provide by rules and regulations the manner in which such net operating loss carry-forward shall be determined.
(d) (1) Consolidated Returns. Any affiliated group which files a consolidated return for federal income tax purposes pursuant to Section 1501 of the Internal Revenue Code may file a consolidated return with the City.
(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, or in case any person operates a division, branch, factory, office, laboratory or activity within the City constituting a portion only of its total business, the Director shall require such additional information as he or she deems necessary to ascertain whether net profits are properly allocated to the City. If the Director 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 transactions with such division, branch, factory, office, laboratory or activity, or by some other method, he or she shall make such allocation as he or she deems appropriate to produce a fair and proper allocation of net profits to the City.
(e) (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 the taxpayer individually or through agents or other representatives, constitutes a business activity of the taxpayer in whole or in part.
(2) Where the gross monthly rental of any real properties, regardless of number and value, aggregate in excess of one hundred dollars ($100.00) per month, it shall be prima-facie evidence that the rental, ownership, management or operation of such properties is a business activity of such taxpayer, and the net income of such rental properties shall be subject to tax; provided, that in case of commercial property, the owner shall be considered engaged in a business activity when the rental is based on a fixed or fluctuating percentage of gross or net sales, receipts or profits of the lessee, whether or not such rental exceeds one hundred dollars ($100.00) per month; provided, further, that in the case of farm property, the owner shall be considered engaged in a business activity when he or she shares in the crops or when the rental is based on a percentage of the gross or net receipts derived from the farm, whether or not the gross income exceeds one hundred dollars ($100.00) per month; and provided, further, that the person who operates a rooming house of five or more rooms rented shall be considered in business whether or not the gross income exceeds one hundred dollars ($100.00) per month.
(3) In determining the amount of gross 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.
(4) Rentals received by a taxpayer engaged in the business of buying and selling real estate shall be considered as part of business income.
(5) Real property, as used in this section, includes commercial property, residential property, farm property and any and all other types of real estate.
(6) In determining the taxable income from rentals, the deductible expenses shall be of the same nature, extent and amount as are allowed by the Internal Revenue Service for Federal income tax purposes.
(7) Residents of the City are subject to taxation upon the net income from rentals, to the extent above specified in paragraphs (e)(1) through (6) hereof, regardless of the location of the real property owned.
(8) Nonresidents of the City are subject to such taxation only if the real property is situated within the City. Nonresidents, in determining whether gross monthly rentals exceed one hundred dollars ($100.00), shall take into consideration only real estate situated within the City.
(9) Corporations owning or managing real estate are taxable only on that portion of income derived from property located in the City.
(10) Where the gross monthly rental of any and all real properties, regardless of number and value, aggregates in one hundred dollars ($100.00) per month or less and therefore may not be considered a business activity, the income shall be taxed as ordinary income.
(f) Exemptions. The tax provided for herein shall not be levied upon:
(1) The military pay or allowances of members of the armed forces of the United States and of members of their reserve components, including the National Guard.
(2) The net profits of any civic, charitable, religious, fraternal or other organization specified in Ohio R.C. 718.01 to the extent that such net profits are exempted from municipal income taxes under such section.
(3) Poor relief, unemployment benefits, payments from retirement pensions, including permanent disability benefits, received from local, State or Federal governments or charitable, religious or educational organizations.
(4) Proceeds or insurance paid by reason of the death of the insured, pensions, permanent disability benefits, annuities or gratuities not in the nature of compensation for service rendered from whatever source derived.
(5) The income of religious, fraternal, charitable, scientific, literary or educational institutions to the extent that such income is derived from tax exempt real estate, tax exempt tangible or intangible property or has tax exempt activities. This exemption does not include unrelated income that is subject to federal tax.
(6) Receipts by bona fide charitable, religious and educational organizations and associations, when those receipts are from seasonal or casual entertainment, amusement, sports events and health and welfare activities when any such are conducted by bona fide charitable, religious or educational organizations and associations and only to the extent that the said income is exempt from Federal income tax.
(7) Compensation for personal injuries or for damages to property by way of insurance or otherwise, but this exclusion does not apply to compensation paid for lost salaries or wages or to compensation from punitive damages.
(8) Income of all individuals under 18 years of age, whether residents or nonresidents.
(9) Gains from involuntary conversion, cancellation of indebtedness, items of income already taxed by the State of Ohio from which the Municipality is specifically prohibited from taxing and interest on Federal obligations and income of a decedent's estate during the period of administration.
(10) Compensation paid to a precinct election official, to the extent that such compensation does not exceed one thousand dollars ($1,000) annually.
(11) Parsonage allowance, to the extent of the rental allowance or rental value of a house provided as a part of an ordained clergy's compensation. The clergy must be duly ordained, commissioned, or licensed by a religious body constituting a religious denomination, and must have authority to perform all sacraments of the religious body.
(12) Interest, dividends and other revenue from intangible property.
(13) Unreimbursed employee business expenses deductible on federal form 2106. The amount deducted for the City shall initially be the same as the federal deduction, but shall be subject to adjustment after review and audit by the City. The expenses must be allocated proportionate to the related income.
(14) Income, salaries, wages, commissions and other compensation 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, and/or is prohibited by the Constitution of the State of Ohio or any act of the Ohio General Assembly limiting the power of a municipality to impose net income taxes.
(Ord. 184-08. Passed 11-20-08; Ord. 138-15. Passed 6-18-15.)