(A) Basis of imposition. An annual tax, for the purposes specified in § 44.01 is levied at the rate of 1% per annum upon the following:
(1) On all qualifying wages, commissions, other compensation, and other taxable income earned or received by residents of the municipality.
(2) On all qualifying wages, commissions, other compensation, and other taxable income earned or received by non-residents for work done or services performed or rendered in the municipality.
(3) On the portion attributable to the municipality of the net profits earned by all resident unincorporated businesses, professions, or other activities derived from sales made, work done or services performed or rendered, and business or other activities conducted in the municipality.
(4) On the portion of the distributive share of the net profits earned during the effective period of this chapter by a resident partner or owner of a resident unincorporated business entity not attributable to the municipality and not levied against such unincorporated business entity.
(5) On the portion attributable to the municipality of the net profits by all nonresident unincorporated businesses, professions, or other activities, derived from work done or services performed or rendered, and business or other activities conducted in the municipality, whether or not such person, other unincorporated entity, profession or other entity has an office or place of business in the municipality. On the portion of the distributive share of the net profits earned by a resident owner of a nonresident unincorporated business entity not attributable to the city, and not levied against such unincorporated business entity.
(6) On the portion attributable to the municipality of the net profits earned by 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 such corporations have an office or place of business in the municipality.
(7) On all income received as gambling winnings as reported on the Internal Revenue Service Forms W-2G, Form 5754 and/or any other form required by the Internal Revenue Service that reports winnings from gambling, prizes and lottery winnings.
(B) Business both in and outside the municipal boundaries. This section does not apply to taxpayers that are subject to and required to file reports under R.C. Chapter 5745. Except as otherwise provided in division (D) of this section, net profit from a business or profession conducted both within and without the boundaries of a municipal corporation shall be considered as having a taxable situs in such municipal corporation for purposes of municipal income taxation in the same proportion as the average ratio of the following:
(1) Multiply the entire net profits of the business by a business apportionment percentage formula to be determined by:
(a) The average original cost of the real and tangible personal property owned or used by the taxpayer in the business or profession in the municipality during the taxable period to the average original cost of all of the real and tangible personal property owned or used by the taxpayer in the business or profession during the same period, wherever situated.
As used in the preceding paragraph, real property shall include property rented or leased by the taxpayer and the value of such property shall be determined by multiplying the annual rental thereon by eight;
(b) Wages, salaries, and other compensation paid during the taxable period to persons employed in the business or profession for services performed in such municipal corporation to wages, salaries, and other compensation paid during the same period to persons employed in the business or profession, wherever their services are performed, excluding compensation that is not taxable by the municipal corporation under R.C. § 718.011;
(c) Gross receipts of the business or profession from sales made in such municipal corporation during the taxable period to gross receipts of the business or profession during the same period from sales and services, wherever made or performed. (d) Adding together the percentages determined in accordance with divisions (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 said total.
1. A factor is applicable even though it may be apportioned entirely in or outside the municipality.
2. Provided that in the event a just and equitable result cannot be obtained under the business apportionment percentage formula provided for herein, the Board of Review, upon application of the taxpayer or the Tax Commissioner, shall, under uniform regulation adopted by the Board, have the authority to substitute other factors or methods calculated to effect a fair and proper apportionment.
(C) As used in division (B) of this section, "sales made in such municipal corporation" means:
(1) All sales of tangible personal property delivered within such municipal corporation regardless of where title passes if shipped or delivered from a stock of goods within such municipal corporation;
(2) All sales of tangible personal property delivered within such municipal corporation regardless of where title passes even though transported from a point outside such municipal corporation if the taxpayer is regularly engaged through its own employees and/or agents in the solicitation or promotion of sales within such municipal corporation and the sales result from such solicitation or promotion;
(3) All sales of tangible personal property shipped from a place within such municipal corporation to purchasers outside such municipal corporation regardless of where title passes if the taxpayer is not, through its own employees and/or agents, regularly engaged in the solicitation or promotion of sales at the place where delivery is made.
(D) Net operating loss (NOL) carry-forward.
(1) The portion of a net operating loss sustained in any taxable year apportioned to the municipality, may be applied against the portion of the profit of succeeding tax years apportioned 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 operating loss sustained shall be apportioned to the municipality in the same manner as provided herein for apportioning net profits to the municipality.
(3) The Tax Commissioner shall provide by rules and regulations the manner in which such net operating loss carry-forward shall be determined.
(4) The net operating loss of a taxpayer that loses its legal identity, by any means such as merger or consolidation, shall not be allowed as a carry forward loss deduction to the surviving or new taxpayer.
(5) The net operating loss sustained by a business or profession is not deductible from employee earnings, but may be carried forward as provided in division (1) above. However, if a taxpayer is engaged in two or more taxable business activities to be included in the same return, the net loss of one unincorporated business activity (except any portion of a loss reportable for municipal income tax purposes to another municipality) may be used to offset the profits of another for purposes of arriving at overall net profits.
(E) Consolidated returns.
(1) Filing of consolidated returns may be permitted or required in accordance with rules and regulations prescribed by the Tax Commissioner.
(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 such information, in addition to the return hereinafter provided for, as he 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 may require the filing of a consolidated return or adjust such transactions so as to produce a fair and proper allocation of net profits to the municipality.
(F) Exceptions. The provisions of the chapter shall not be construed as levying a tax upon the following:
(1) Proceeds from welfare benefits, unemployment insurance benefits, pensions, social security benefits, and qualified retirement plans as defined by the Internal Revenue Service.
(2) Proceeds of insurance, annuities, Workers' Compensation insurance, permanent disability benefits, compensation for damages for personal injury and like reimbursements, not including damages for loss of profits and wages.
(3) Dues, contributions and similar payments received by charitable, religious, educational organizations, or labor unions, trade or professional associations, lodges and similar organizations.
(4) Gains from involuntary conversion, cancellation of indebtedness, interest on federal obligations and income of a decedent's estate during the period of administration (except such income from the operation of a business).
(5) Spousal support.
(6) Compensation for damage to property by way of insurance or otherwise.
(7) Interest and dividends from intangible property.
(8) Military pay or allowances of members of the Armed Forces of the United States and of members of their reserve components, including the Ohio National Guard (R.C. § 718.01).
(9) Income of any charitable, educational, fraternal or other type of nonprofit association or organization enumerated in R.C. § 718.01 to the extent that such income is derived from tax-exempt real estate, tax-exempt tangible or intangible property, or tax-exempt activities.
(10) Any association or organization falling in the category listed in the preceding paragraph receiving income from non-exempt real estate, tangible or intangible personal property, or business activities of a type ordinarily conducted for profit by taxpayers operating for profit shall not be excluded hereunder.
(11) In the event any association or organization receives taxable income as provided in the preceding paragraph from real or personal property ownership or income producing business located both within and without the corporate limits of the municipality, it shall calculate its income apportioned to the municipality under the method or methods provided above.
(12) If exempt for federal income tax purposes, fellowship and scholarship grants are excluded from municipal income tax.
(13) The rental value of a home furnished to a minister of the gospel as part of his compensation, or the rental allowance paid to a minister of the gospel as part of his compensation, to the extent used by him to rent or provide a home pursuant to Section 107 of the Internal Revenue Code.
(14) Compensation paid under Section R.C. § 3501.28 to a person serving as a precinct official, to the extent that such compensation does not exceed $1,000 annually. Such compensation in excess of $1,000 may be subjected to taxation. The payer of such compensation is not required to withhold municipal tax from that compensation.
(15) Compensation paid to an employee of a transit authority, regional transit authority, or a regional transit commission created under R.C. Chapter 306 for operating a transit bus or other motor vehicle for the authority or commission in or through the municipality, unless the bus or vehicle is operated on a regularly scheduled route, the operator is subject to such tax by reason of residence or domicile in the municipality, or the headquarter of the authority or commission is located within the municipality.
(16) The municipality shall not tax the compensation paid to a nonresident individual for personal services performed by the individual in the municipality on 12 or fewer days in a calendar year unless one of the following applies:
(a) The individual is an employee of another person, the principal place of business of the individual's employer is located in another municipality in Ohio that imposes a tax applying to compensation paid to the individual for services paid on those days; and the individual is not liable to that other municipality for tax on the compensation paid for such services.
(b) The individual is a professional entertainer or professional athlete, the promoter of a professional entertainment or sports event, or an employee of such promoter, all as may be reasonably defined by the municipality.
(17) The income of a public utility, when that public utility is subject to the tax levied under R.C. § 5727.24 or § 5727.30, except a municipal corporation may tax the following, subject to R.C. Chapter 5745:
(a) The income of an electric company or combined company;
(b) The income of a telephone company.
As used in division (F)(17) of this section, "combined company", "electric company", and "telephone company" have the same meanings as in R.C. § 5727.01.
(18) Generally the above noted items in this section are the only forms of income not subject to the tax. Any other income, benefits, or other forms of compensation shall be taxable.
(Ord. 1-1972, passed 1-5-72; Am. Ord. 1-2001, passed 1-24-01; Am. Ord. 1-2005, passed 1-5-05)