(A) Resident employee.
(1) The following are items which are subject to the tax imposed by this subchapter: on all salaries, wages, commissions, gambling and lottery winnings of $1,000 or more, 401K, deferred compensation, tips, severance packages, rental income and other compensation earned by residents of the city:
(a) Amounts received from an employer for expenses and uses as such by the individual receiving them are not deemed to be compensation if the employer deducts such expenses or advances as such from his or her gross income for the purpose of determining his or her net profits taxable under federal law, and the employee is not required to include such receipts as income on his or her federal income tax return;
(b) Fees, unless such fees are properly includable as part of the net profits of a trade, business, profession or enterprise regularly carried on by an unincorporated entity owned or partly owned by an individual;
(c) Other compensation, including bonuses, and including compensation paid to domestic servants, casual employees and other types of employees; and
(d) Payments made to employees by an employer as vacation wages are taxable. Payments made to an employee by an employer under a way continuation plan during periods of disability, third-party sick pay or sickness, are taxable.
(2) On the portion attributable to the city of the net profits earned by all resident unincorporated business, pass through entities, professions or other activities derived from work done or services performed or rendered, and business or other activities conducted in the city. On the portion of the distributive share of the net profits 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. On the portion of the distributive share of the net profits earned by a resident owner of a resident unincorporated business entity not attributable to the city and not levied against such unincorporated business entity or pass-through entity.
(3) On the portion attributable to the city on 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 city. On the portion of the distributive share of the net profits earned by a nonresident unincorporated business entity not attributable to the city and not levied against such unincorporated business entity or pass-through entity.
(4) On the portion attributable to the city of the net profits earned by all corporations that are not pass-through entities from work done or 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.
(5) (a) However, the net amount upon which the tax due is to be calculated may not be less than zero.
(b) One example would be the case of combining employee wages earned with rental or business income loss. In this example, the rental or business loss could not be an amount less than zero for tax computation purposes.
(B) Nonresident employee. In the case of individuals who are not residents of the city there is imposed tax of 1.75% on all salaries, wages, commissions, 401K, deferred compensation, tips, severance packages or rental income derived from within the city, and other compensation earned by nonresidents for work done, or services performed or rendered, in the city. The location of the place from which payment is made is immaterial.
(C) Businesses both in and outside the city boundaries. Where a person conducts a business both within and outside the city the portion of the entire net profits of such business to be allocated as having been made within the city may be determined from the records of such business, if such business has bona fide records which disclose with reasonable accuracy what portion of its net profits is attributable to that part of its activities conducted within the city or at the option of the taxpayer has no bona fide records showing net profits from business activities within the city:
(1) Multiply the entire net profits of the business by a business allocation percentage to be determined by:
(a) Ascertaining the percentage which the average value net book value of the real and tangible personal property owned or used in the business and situated within the city, during the period covered by the return is of the average net book value of all the real and tangible personal property owned or used in the business, wherever situated during such period;
(b) Ascertaining the percentage which gross receipts of the business from sales made and services performed in the city during the period covered by the return, are of the total gross receipts from all sales and services, wherever made or performed, during such period;
(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 city is of the total wages, salaries, commissions and other compensation paid during such period to all employees within and outside the city; and
(d) Adding together the percentages determined in accordance with divisions (C)(1)(a) and (C)(1)(c) above, or such of the aforesaid percentages as are applicable to the particular taxpayer and dividing the totals obtained by the number of percentages uses in deriving such total.
1. A factor is applicable even though it may be allocable entirely in or outside the city.
2. Provided, however, that in the event a just and equitable result cannot be obtained under the formula provided for herein, the City Auditor, upon application of the taxpayer, shall have the authority to substitute other factors or methods calculated to effect proper allocation. Should the taxpayer object to or disagree with the City Auditor’s decision, an appeal may be filed with the Board of Review, which shall have the power to adjust, notify or overrule such decision, by the City Auditor.
(D) Net operating loss. There shall be no net carry forwards or backwards allowed.
(E) Exemptions. The provisions of this subchapter shall be construed as levying a tax upon the following:
(1) Funds received from local, state or federal governments because of service in the Armed Forces of the United States by the person rendering such service, or as a result of another person rendering such service;
(2) Poor relief, pensions, unemployment compensation or similar payments, including disability benefits received from private industry or local, state or federal governments, or from charitable, religious or educational;
(3) 401K and deferred compensation at time of receipt;
(4) Jury duty compensation;
(5) Alimony received;
(6) Dues, contributions and similar payments received by charitable, religious, educational or literary organizations or labor unions, lodges and similar organizations;
(7) Receipts from casual entertainment, amusements, sports events and health and welfare activities conducted by a bona fide charitable, religious and educational organizations and associations;
(8) Any association, organization, corporation, club or trust, which is exempt from federal taxes on income by reason of its charitable, religious, educational, literary, scientific and the like purposes;
(9) Gains from involuntary conversions, cancellation of indebtedness, interest on federal obligations, items of income taxed by the intangible personal property laws of the state or specifically exempt from taxation under said law, and income of a decedent’s estate during the period of administration (except such income from the operation of a business);
(10) Earnings and income of all persons under 18 years of age whether residents or nonresidents; and
(11) Interest and dividends earned.
(Prior Code, § 15.01.03) Penalty, see § 10.99