(a) Basis of imposition. Subject to the provisions of § 181.16 of this chapter and for the purposes specified in § 181.01 hereof, an annual tax, as provided in Ordinance 2004-154, passed December 13, 2004 and as subsequently amended from time to time, shall be imposed on and after January 1, 2005, at the rate of 1% per annum and on and after January 1, 2013, at the rate of 1.12% per annum upon the following:
(1) On all income, qualifying wages, including sick and vacation pay, commissions, bonuses, grievance pay, incentive payment, settlements, stock options, severance pay, any pay as part of an employee buyout or wage continuation plan, and other compensation earned or received during the effective period of this chapter by residents;
(2) On all income, qualifying wages, including sick and vacation pay, commissions, bonuses, grievance pay, incentive payment, settlements, stock options, severance pay, any pay as part of an employee buyout or wage continuation plan, and other compensation earned or received during the effective period of this chapter, by non-residents for work done or service performed in the municipality.
A. Effective January 1, 2005, Mason shall not tax the compensation paid to a non-resident individual for personal services or work performed by the individual in the municipality on 12 or fewer days in a calendar year (which hereby classifies the individual as an “occasional entrant”) unless one of the following applies:
1. The individual is the employee of another person, the principal place of business in which the employee normally works is located in another municipal corporation in this state that imposes a tax applying to 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 the services; or
2. The individual is a professional athlete, the promoter of a professional entertainment or sports event, or an employee of the promoter, all as may be reasonably defined by the municipality.
B. For purposes of the 12-day calculation, any portion of a day worked in the city shall be counted as one day worked in the city.
C. Beginning with the thirteenth day, the employer of the 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 § 181.06 of the income tax 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 12 days. If the individual is self-employed or an independent contractor, it shall be the responsibility of the individual to remit the appropriate income tax to the municipality.
(3) A. On the portion attributable to the municipality of the net profits earned or received during the effective period of this chapter of all resident associations, unincorporated businesses, professions, or other entities, derived from sales made, work done or services performed or rendered, or business or other activities conducted in the municipality; and
B. On a resident partner’s or owner’s share of the net profits earned or received during the effective period of this chapter of a resident association or other unincorporated entity not attributable to the municipality and not levied against the association or other unincorporated entity.
(4) A. On the portion attributable to the municipality of the net profits, earned or received during the effective period of this chapter, of all non-resident associations, unincorporated businesses, professions, or other entities, derived from sales made, work done, or services performed or rendered or business or other activities conducted in the municipality, whether or not the association or other unincorporated entity has an office or place of business in the municipality; and
B. On a resident partner’s or owner’s share of the net profits earned or received during the effective period of this chapter of a non-resident association or other unincorporated entity not attributable to the municipality, and not levied against the association or other unincorporated entity.
(5) On the net profits earned or received during the effective period of this chapter of all corporations derived from sales made, work done, or services performed or rendered, and business or other activities conducted in the municipality whether or not the corporations have an office or place of business in the municipality;
(6) Effective for tax years 2004 and later, the distributive share of income paid to an S corporation shareholder shall be taxable in the following manner:
A. If no portion of the net profits of the S corporation are allocated or apportioned to the state, the distributive share is taxable only to the extent that it represents wages or net earnings from self-employment; and
B. If any portion of the net profits of the S corporation are allocated or apportioned to the state, the full amount of the distributive share is taxable.
(7) On all income from sports winnings by a resident of the municipality. No regard is given to losses or to the location where the sports winnings were received.
(b) Allocation of net profits. Net profit from a business or profession conducted both within and without the boundaries of the municipality shall be considered as having a taxable situs in the city for purposes of income taxation in the same proportion as the average ratio of:
(1) Multiply the entire net profits of the business by a business allocation percentage to be determined by:
A. Ascertaining the percentage with the average original cost of the real and tangible personal property owned or used in the business and situated within the municipality, 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, wherever situated, during the period;
B. Ascertaining the percentage which the gross receipts of the business from sales made and services performed in the municipality, during the period covered by the return, are of the total gross receipts from all sales and services, wherever made or performed, during the period. Wages, salaries and other compensation shall be included to the extent that they represent qualifying wages;
C. Ascertaining the percentage which the total wages, salaries, commissions and other compensation paid, during the period covered by the return, to employees for services performed in the municipality is of the total wages, salaries, commissions and other compensation paid during the period to all employees within and outside the municipality; and
D. Adding together the percentages determined in accordance with divisions (b)(1)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 the total. A factor is applicable even though it may be allocable entirely in or outside the municipality.
(2) In the event a just and equitable result cannot be obtained under the formulas provided for herein, the Tax Commissioner shall, under uniform regulations, have the authority to substitute other factors or methods calculated to effect a fair and proper allocation.
(c) Operating loss carry-forward.
(1) The portion of a net operating loss sustained in any taxable year, beginning with January 1, 1971, allocable to the municipality, may be applied against the portion of the profit of succeeding tax years, allocable to the municipality, until exhausted, but in no event for more than the five taxable years immediately following the year in which the loss occurred. No portion of a net operating loss shall be carried back against net profits of any prior year.
(2) The portion of a net operation loss sustained shall be allocated to the municipality in the same manner as provided herein for allocating net profits to the municipality.
(3) The Tax Commissioner shall provide by rules and regulations the manner in which the net operating loss carry-forward shall be determined.
(d) Consolidated returns.
(1) Any affiliated group which files a consolidated return for federal income tax purposes pursuant to § 1501 of the Internal Revenue Code may file a consolidated return with the municipality. However, once the affiliated group has elected to file a consolidated return or a separate return with the municipality, the affiliated group may not change their method of filing in any subsequent tax year without written approval from the municipality.
(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 the information, in addition to the return hereinafter provided for, as he or she may deem necessary to ascertain whether net profits are properly allocated to the municipality. If the Tax Commissioner finds net profits are not properly allocated to the municipality by reason of transactions with stockholders or with other corporations related by stock ownership, interlocking directorates, or some other method, he or she may require the filing of a consolidated return or adjust the transactions so as to produce a fair and proper allocation of net profits to the municipality.
(e) Exemptions. The tax provided for herein shall not be levied on:
(1) 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 and the Peace Corps;
(2) Pensions paid as a result of retirement, Social Security, unemployment compensation and disability benefits received from private industry or local, state or federal governments, or from charitable, religious or educational organizations;
(3) Receipts by bona fide charitable, religious and educational organizations and associations, when those receipts are from casual entertainment, amusements, sports events and health and welfare activities conducted by bona fide charitable, religious and educational organizations and associations;
(4) The gross income and gross receipts of religious, fraternal, charitable, scientific, literary or educational institutions to the extent that the income is derived from tax exempt real estate, tax exempt tangible or intangible property, or tax exempt activities;
(5) Unemployment insurance benefits, welfare benefits and workers’ compensation;
(6) 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;
(7) Parsonage allowance, to the extent of the rental allowance or rental value of a house provided as a part of an ordained minister’s compensation;
(8) Gains from involuntary conversions, cancellation of indebtedness, interest on federal obligations, items of income already taxed by the state and income of a decedent’s estate during the period of administration (except the income from the operation of a business);
(9) Expenses reported for Federal Form 2106, subject to audit and approval by the municipality income tax office;
(10) Compensation paid under R.C. § 3501.28 or § 3501.36 to a person serving as a precinct election official, to the extent that the compensation does not exceed $1,000 annually;
(11) 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
(12) Salaries, wages, commissions, other compensation, other income and net profits, including interest and dividends as provided in R.C. § 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 municipality to impose net income taxes.
(Ord. 2004-154, passed 12-13-2004; Ord. 2012-81, passed 11-26-2012)