(A) Tax imposed. Subject to the provisions of Section 15 of this ordinance, an annual tax for the purpose specified in Section 1 hereof, shall be levied on and after January 1, 1996, at the rate of one and one-half percent (1.5%) per annum upon the following:
(1) On the salaries, wages, commissions, rentals, and other compensation earned on and after January 1, 1996, by residents of the village.
(2) On all salaries, wages, commissions, rentals, and other compensation earned on and after January 1, 1996, by nonresidents for work done or services performed or rendered in the village. Any nonresident employed in the village shall pay tax on his entire earnings if more than 50% of his work time is spent in the village.
(3) (a) On the portion attributable to the village of the net profits earned on and after January 1, 1996, of all resident associations, unincorporated businesses, professions, or other activities conducted in the village.
(b) On a resident partner's or owner's share of the net profits of a resident association or other business entity not attributable to the village and not levied against such association or other business entity.
(c) Distributions received by an owner domiciled in the village from any pass-through entity, or from a nonresident pass-through entity such as a partnership, limited partnership, limited liability company or Subchapter S corporation shall be considered as income from an association as defined in § 40.02. A credit shall be given for any Ohio municipal income tax paid by the nonresident entity at the entity level, (i.e. in the hands of the entity), where such nonresident entity is domiciled. This division codifies the interpretation of this section as of January 1, 2003.
(4) (a) On the portion attributable to the village of the net profits earned on and after January 1, 1996, of all nonresident associations, unincorporated business, professions, or other activities, derived from sales made, work done, or services performed or rendered or business or other activities conducted in the village, whether or not such association or unincorporated business entity has an office or place of business in the village.
(b) On a resident partner's or owner's share of the net profits of a nonresident association or other unincorporated business entity not attributable to the village and not levied against such association or other unincorporated business entity.
(5) (a) On the portion attributable to the village of the net profits earned on and after January 1, 1996, of all corporations derived from sales made, work done, or services rendered or performed, and business or other activities conducted in the village, whether or not such corporations have an office or place of business in the village.
(b) The tax imposed by this chapter on corporations shall apply at the entity level to resident corporations which have elected to be taxed as a Subchapter S corporation under the Internal Revenue Code. This division (A)(4)(b) codifies the interpretation of this section as of January 1, 2003.
(6) On all income received as gambling winnings as reported on IRS Form 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) Deductions. An employee who pays his business expenses from his commissions or other compensation, without reimbursement from his employer, may deduct from his gross commissions or other compensation business expenses allowed by the Internal Revenue Service for federal income tax purposes, but only to the extent said expenses are incurred in earning commissions or other compensation subject to the tax imposed by this chapter.
(C) Allocation of net profits. Where a person conducts a business both within and outside the village, the portion of the entire net profits of such business to be allocated as having been made within the village 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 village or, at the option of the taxpayer, may be determined by the following formula, which shall be used if taxpayer has no bona fide records showing net profit from village business activities, subject, however, to the provisions of division (C)(2) of this section:
(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 net book value of the real and tangible personal property owned or used in the business and situated within the village, 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. 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) Ascertaining the percentage which the gross receipts of the business from sales made and services performed in the village during the period covered by the return, or of the total gross receipts from all sales and services, wherever made or performed during such period.
1. Sales made within the village shall be deemed to include all sales of tangible personal property which is delivered within the village regardless of where title passes, if shipped or delivered from a stock of goods within the village.
2. All sales of tangible personal property which is delivered within the village, regardless of where title passes, even though transported from a point outside the village, if the taxpayer is regularly engaged through its own employees in the solicitation or promotion.
3. All sales of tangible personal property which is shipped from a place within the village to purchasers outside the village, regardless of where title passes, if the taxpayer is not, through its own employees, regularly engaged in the solicitation or promotion of sales at the place where delivery is made.
(c) Ascertaining the percentage which the total wages, salaries, and other compensation paid during the period covered by the return, to employees for services performed in the village, is of the total wages, salaries, commissions, and other compensation paid during such period, to all employees within and outside the village.
(d) Adding together the percentage determined in accordance with subdivisions (a), (b), and (c) of this division (C)(1) 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. A factor is applicable even though it may be allocable entirely in or outside the village.
(2) Division (C)(1) of this section applies, provided, however, that in the event a just and equitable result cannot be obtained under the formula provided for herein, the Board of Review, upon application of the taxpayer or the Tax Commissioner, shall under uniform regulations adopted by the Board, have the authority to substitute other factors or methods calculated to effect a fair and proper allocation.
(D) Exemptions. The tax provided for herein shall not be levied on the following:
(1) The 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.
(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 organizations.
(3) Alimony received.
(4) Income, dues, contributions, receipts from casual entertainment, amusements, sports events, and health and welfare activities received by religious, fraternal, charitable, scientific, literacy, educational institutions, or organizations.
(5) Any association, organization, corporation, club, or trust which is exempt from federal taxes or income tax by reason of its charitable, religious, educational, literacy, or scientific purposes, and the like.
(6) Gains from involuntary conversion, cancellation of indebtedness, interest on federal obligations, items of income already taxed by state, and income of a decedent's estate during the period of administration (except such income from the operation of a business).
(7) Earnings and income of all persons under 18 years of age, whether residents or nonresidents.
(8) Compensation paid under R.C. §§ 3501.28 or 3501.36 to a person serving as a precinct election official, to the extent that such compensation does not exceed $1,000 annually.
(9) Parsonage allowance pursuant to Section 107 of the Internal Revenue Code.
(10) Compensation paid to an employee of a transit authority for operating a transit bus in or through the municipal corporation, unless the bus is operated on a regularly scheduled route, the operator is a resident or domiciled in the municipal corporation, or the headquarters of the authority or commission is located within the municipal corporation.
(11) Intangible income.
(Ord. 1973-7-14, passed 9-11-73; Am. Ord. 1994-6-15, passed - - ; Am. Ord. 1995-5-16, passed 6-27-95; Am. Ord. 2000-11-28, passed 12-12-00; Am. Ord. 2004-2-10, passed 4-27-04; Am. Ord. 2005-10-36, passed 11-22-05)
Statutory reference:
See Income of or from pass-through entities, R.C. § 718.14