(a) It is the duty of each employer (as hereinbefore defined) who employs one or more persons on a salary, wage, commission or other compensation basis, to deduct from compensation paid to any employee subject to this chapter, the tax of one percent (1%) of such salary, wage, bonus, incentive payment, commission or other compensation due by the employer to the employee. The tax shall be deducted by the employer from:
(1) All compensation paid to employees who are nonresidents of the Village for services rendered, work performed or other activities engaged in to earn such compensation within the Village, and
(2) From the gross amount of all salaries, wages, bonuses, incentive payments, commissions or other forms of compensation paid to employees who are residents of the Village, regardless of the place where the services are rendered.
(b) All employers who or which maintain an office in Middleport are required to make the collections and deductions specified in this section, regardless of the fact that the services on account of which any particular deduction is required as to residents of the Village were performed at the place of business of any such employer situated outside the Village.
(c) The mere fact that the tax is not withheld will not relieve the employee of the responsibility of filing a return and paying the tax on the compensation received.
(d) Commissions and fees paid to professional men, brokers and others who are independent contractors and not employees of the payor, are not subject to withholding or collection of the tax at the source. Such taxpayers must, in all instances, file returns and pay the tax pursuant to the provisions of Sections 183.03 or 181.03. (See Sections 183.05 and 183.06).
(e) In the case of employees who are nonresidents of Middleport the amount to be deducted is one percent (1%) of the compensation paid with respect to personal services rendered in Middleport.
Where a nonresident receives compensation for personal services rendered or performed partly within and partly outside Middleport, the withholding employer shall deduct, withhold and remit that portion of the compensation which is earned within Middleport in accordance with the following rules of apportionment.
(1) If the nonresident is a salesman, agent or other employee whose compensation on the basis of commission depends directly on the volume of business transacted by him, the deducting and withholding shall attach to the portion of the entire compensation which the volume or business transacted by the employee within the Village bears to the volume of business transacted by him within and outside the Village.
(2) The deducting and withholding of personal service compensation of all other employees (including officers of corporations) shall attach to the portion of the personal service compensation of such employee which the total number of working days employed within the Village bears to the total number of working days employed within and outside the Village.
(3) If it is impossible to apportion the earnings as provided above, because of the peculiar nature of the service of the employee, or the unusual basis of compensation, apportionment shall be made in accordance with the facts and the tax deducted and withheld accordingly.
(4) The occasional entry into the Village of a nonresident employee who performs the duties for which he is employed entirely outside the Village, but enters the Village for the purpose of reporting, receiving instructions, accounting, etc., incidental to his duties outside the Village, shall not be deemed to take such employees out of the class of those rendering their services entirely outside the Village.
(f) An employer shall withhold the tax on the full amount of any advances made to an employee on account of commissions (whether by way of drawing account or otherwise - but see subsection (g) hereof) where such advances are in excess of commissions earned.
(g) An employer required to withhold the tax in compensation paid to an employee shall in determining the amount on which the tax is to be withheld, ignore any amount allowed and paid by the employer to the employee for expenses necessary and actually incurred by the employee in the actual performance of his services. Provided, that such expenses must be of the kind and in the amount recognized and allowed as deductible expenses for Federal income tax purposes.
(Ord. 1195-88. Passed 4-11-88.)