(A) Credit for municipal income tax paid.
(1) Resident individual.
(a) An individual taxpayer who resides in the municipality, and earns qualifying wages for work done or services performed or rendered in any municipal corporation, shall be allowed a credit in the amount of municipal income tax paid by or on behalf of that individual if it is demonstrated that a municipal income tax has been so paid. Such credit shall be allowed only to the extent of the tax assessed by this chapter.
(b) A resident individual with income from an ownership interest in one or more pass-through entities, activities of a sole proprietor, or rental activities, after the deduction of distributable losses from other pass-through entities or business activities not utilized as a net operating loss carry-forward in any municipal taxing jurisdiction after January 1, 2018, shall be allowed a non-refundable credit for the amount so paid by him or in his behalf in such other municipal corporation only to the extent of the tax assessed by this chapter.
(c) The credit for tax paid by a resident individual for salaries or wages earned in a non-resident municipal corporation is limited to the tax that is paid after all allowable 2106 expenses have been deducted and shall not exceed the tax established by this chapter.
(d) No credit shall be given to a resident individual for any school district income tax.
(2) Non-resident individual.
(a) Every individual taxpayer who is a non-resident of the municipality who earned qualifying wages for work done or services performed or rendered in the municipality, shall be allowed a credit for the amount so paid if it is demonstrated that a municipal income tax has been paid by or on behalf of that individual. Such credit shall be applied only to the extent of the tax assessed by this chapter.
(b) A non-resident individual with ownership interest in one or more pass-through entities taxed at the entity level shall not report said income or losses on a non-resident individual annual return and shall not be allowed any credit for taxes paid on their behalf by the pass-through entity to any municipal corporation.
(c) No credit shall be given to a non-resident individual for any school district income tax.
(B) Refundable credit for qualifying loss.
(1) As used in this section:
(a) NONQUALIFIED DEFERRED COMPENSATION PLAN means a compensation plan described in section 3121(v)(2)(C) of the Internal Revenue Code.
(b) 1. Except as provided in division (B)(1)(b)2. of this section, QUALIFYING LOSS means the excess, if any, of the total amount of compensation the payment of which is deferred pursuant to a nonqualified 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.
2. 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 nonqualified deferred compensation plan, then the QUALIFYING LOSS is the product of the amount resulting from the calculation described in division (B)(1)(b)1. of this section computed without regard to division (B)(1)(b)2. of this section 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 nonqualified deferred compensation plan.
3. With respect to a nonqualified 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 nonqualified deferred compensation plan.
(c) QUALIFYING TAX RATE means the applicable tax rate for the taxable year for which the taxpayer paid income tax to the municipal corporation with respect to any portion of the total amount of compensation the payment of which is deferred pursuant to a nonqualified 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 nonqualified deferred compensation plan.
(2) (a) Except as provided in division (B)(4) of this section, a refundable credit shall be allowed against the income tax imposed by a municipal corporation 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.
(b) 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 nonqualified deferred compensation plan in one or more taxable years.
(c) If a taxpayer has paid tax to more than one municipal corporation with respect to the nonqualified 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 nonqualified deferred compensation plan.
(d) In no case shall the amount of the credit allowed under this section exceed the cumulative income tax that a taxpayer has paid to a municipal corporation for all taxable years with respect to the nonqualified deferred compensation plan.
(3) (a) For purposes of this section, municipal corporation income tax that has been withheld with respect to a nonqualified deferred compensation plan shall be considered to have been paid by the taxpayer with respect to the nonqualified deferred compensation plan.
(b) Any municipal income tax that has been refunded or otherwise credited for the benefit of the taxpayer with respect to a nonqualified deferred compensation plan shall not be considered to have been paid to the municipal corporation by the taxpayer.
(4) The credit allowed under this section is allowed only to the extent the taxpayer’s qualifying loss is attributable to:
(a) The insolvency or bankruptcy of the employer who had established the nonqualified deferred compensation plan; or
(b) The employee’s failure or inability to satisfy all of the employer’s terms and conditions necessary to receive the nonqualified deferred compensation.
(C) Credit for tax beyond statute for obtaining refund.
(1) Income tax that has been deposited or paid to the Municipality, but should have been deposited or paid to another municipal corporation, is allowable by the Municipality as a refund, but is subject to the three-year limitation on refunds as provided in § 36.09(F) of this chapter.
(2) Income tax that should have been deposited or paid to the Municipality, but was deposited or paid to another municipal corporation, shall be subject to collection and recovery by the Municipality. To the extent a refund of such tax or withholding is barred by the limitation on refunds as provided in § 36.09(F), the Municipality will allow a non-refundable credit equal to the tax or withholding paid to the other municipality against the income tax the Municipality claims is due. If the Municipality’s tax rate is higher, the tax representing the net difference of the tax rates is also subject to collection by the Municipality, along with any penalty and interest accruing during the period of nonpayment.
(3) No carryforward of credit will be permitted when the overpayment is beyond the three-year limitation for refunding of same as provided in § 36.09(F) of this chapter.
(Ord. O-2475-15, passed 12-14-15)