A. Duty of withholding.
1. Except as otherwise provided herein, it is the duty of each employer within or doing business within the village, who employs one or more persons whether as an employee, officer, director of otherwise, to deduct each time any compensation is paid the tax of 1.5%; from:
a. The gross amount of all salaries, wages, bonuses, incentive payments, fees, commissions, or other forms of compensation paid to residents of the village regardless of the place where the services are rendered; and
b. All compensation paid nonresidents for services rendered, work performed, or other activities engaged in within the village.
2. All employers within or doing business within the village are required to make the collections and deductions specified in this article, regardless of the fact that the services on account of which any particular deduction is required, as to residents of village, were performed outside the village.
3. Employers who do not maintain a permanent office or place of business in the village, but who are subject to tax on net profits attributable to the village, under the method of allocation provided for in the ordinance, are considered to be employers within the village and subject to the requirement of withholding.
4. 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 paid. If the employer has withheld the tax and failed to pay the tax withheld to the Commissioner, the employee is not liable for the tax so withheld.
5. 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 a declaration and return and pay the tax pursuant to the provisions of the ordinance and Articles V and VII of these regulations.
6. Where a nonresident receives compensation for personal services rendered or performed partly within and partly without the village, the withholding employer shall deduct, withhold, and remit the tax on that portion of the compensation which is earned within village in accordance with the following rules of apportionment:
a. If the nonresident is a salesman, agent, or other employee whose compensation depends directly on the volume of business transacted or chiefly effected by him, the deducting and withholding shall attach to the portion of the entire compensation which the volume of business transacted or chiefly effected by the employee within the village bears to the total volume of business transacted by him within and outside the village.
b. The deducting and withholding of personal service compensation of other non resident employees, including officers of corporations shall attach to the proportion of the personal service compensation of such employee which the total number of his working hours within village is of the total number of working hours.
c. The fact that nonresident employees are subject to call at any time does not permit the allocation of pay for time worked in village on a seven day per week basis. The percentage of time worked in village will be computed on the basis of a 40 hour week, unless the employer notifies the Commissioner that a greater or lesser number of hours per week is worked.
d. The occasional entry into village of a nonresident employee who performs the duties for which he is employed primarily outside the village shall not be deemed to take such employee out of the class of those rendering their services entirely outside village.
7. An employer shall withhold the tax on the full amount of any advances made to an employee on account of commissions.
8. An employer required to withhold the tax on compensation paid to an employee shall, in determining the amount on which the tax is to be withheld, ignore any amount allowed and paid to the employee for expenses necessarily and actually incurred by the employee in the actual performance of his services, provided that such expenses are incurred in earning compensation, including commissions, and are not deducted as a business expense by the employee under Article III of these regulations.
9. An employer whose records show that an employee is a nonresident of village and has no knowledge to the contrary, shall be relieved of the responsibility of withholding the tax on personal service compensation paid to such employee for services rendered or work done outside village by such employee, provided, however, that such employer must withhold the tax on all personal service compensation paid such employee after the Commissioner notifies said employer in writing that such employee is a resident of village. All employees are required to notify the employer of any change of residence and the date thereof.
10. A village employer required to withhold the tax from a village resident for work done or services performed in another municipality, and who does so withhold and remit to such other municipality, shall be relieved from the requirement of withholding the village tax from such village resident, except that where the rate of tax for such other municipality is less than the rate of tax imposed by this ordinance, in such case the employer shall withhold and remit the difference to the village.
11. No person shall be required to withhold the tax on the wages or other compensation paid domestic servants employed exclusively in or about such person's residence, but such employee shall be subject to all of the requirements of the ordinance.
B. Return and payment of tax withheld and status of employers.
1. The deductions from salaries, wages, and other compensation required to be made by employers are to begin with the compensation paid on and after the effective date of the ordinance.
The employer (in addition to any return required to be filed with respect to his own earnings or net profits) shall on or before the last day of the month next following each quarterly period, make a return and pay to the Commissioner the full amount of the tax so deducted or withheld with respect to compensation paid all of his employees subject to the tax under the ordinance, provided, however, that where he deems such precaution necessary, the Commissioner may require an employer to remit withholding taxes at more frequent intervals.
The return required to be filed under this article shall be made on a form furnished by or obtainable on request from the Commissioner.
2. If more than the amount of tax required to be deducted by the ordinance is withheld from an employees pay, such excess may be refunded by the employer or the Commissioner, depending upon the circumstances and the time when the overwithholding is determined as follows:
a. Current employees.
.1 If the overwithholding is discovered in the same quarterly period, the employer shall make the necessary adjustment directly with the employee, and the amount to be reported on the quarterly return as withheld shall be the corrected amount;
.2 If the overwithholding is discovered in a subsequent quarter of the same calendar year, the employer may make proper adjustment with the employee. In such case the return for the quarter in which the adjustment is made shall indicate the total amount actually withheld, the amount of the adjustment deducted therefrom, and the corrected amount reported on the return; or
.3 If the overwithholding is discovered in the following year, the employer should notify the Commissioner of such overwithholding and the circumstances thereof. Upon proper verification, the Commissioner shall refund to the employee the amount of such excess withholding.
b. Former employees.
.1 In case too much has been withheld from an employee who is no longer employed by the employer, the employer shall notify the Commissioner of the amount and circumstances of such overwithholding, and the Commissioner shall then refund to the employee the amount of such excess withholding; or
.2 If the error is discovered by the employee, such employee shall file a claim with the Commissioner and, upon verification thereof by the employer, the Commissioner shall refund to the employee the amount of such excess withholding;
c. Nonresidents employed outside the village.
.1 Where an employer has withheld the tax from all wages of a nonresident of the village and such nonresident has been employed outside of the village for all or a part of the time, such employee shall file a claim with the Commissioner covering such erroneous withholding, and the Commissioner shall, upon verification thereof by the employer, refund to the employee the amount of such excess withholding.
d. Insufficient withholding.
.1 If less than the amount of tax required to be deducted is withheld from an employee, such deficiency shall be withheld from subsequent wages. However, if the employee/employer relationship has terminated, the employer shall notify the Commissioner of such deficiency and the reason therefor.
.2 [Reserved]
.3 Every employer is deemed to be a trustee for the village in collecting and holding the tax required under the ordinance to be withheld, and the funds so collected by such withholding are deemed to be trust funds.
.4 Every such employer required to deduct and withhold the tax at the source is liable directly to the village for payment of such tax, whether actually collected from such employee or not.
.5 On or before the January 31, following any calendar year in which such deductions have been made by an employer, such employer shall file with the Commissioner, in the form prescribed by the Commissioner, an information return for each employee from whom village income tax has been withheld, showing the name, address and social security number of the employee, the total amount of compensation paid during the year and the amount of village income tax withheld from such employee.
.6 For the convenience of employers, the information return may be made in one of three ways at the election of each employer, as follows:
.01 Those employers using form W-2 furnished commercially may submit a copy of such commercial form W-2, provided that the copy furnished the village clearly shows the information required in paragraph 5 immediately preceding.
.02 Those employers not using form W-2 furnished commercially may obtain forms upon request from the Commissioner.
.03 Where the furnishing of this information as above indicated will create a distinct hardship, the employer upon written request to the Commissioner may be permitted to furnish a list of all employees subject to the tax, which list shall show the employees' full name, last known address, social security number, gross amount of compensation paid during the year, and the amount of village income tax withheld. Such list may be compiled on any mechanical equipment presently used by the employer, but provisions must be made for spacing equal to at least three lines between each name. The employer's name must be indicated on each sheet, each sheet must be numbered, and the total number of sheets comprising the complete report indicated on the first page.
.04 The gross compensation to be reported for each employee shall be for the full 12 calendar months of the year or such portion thereof as the employee reported on was employed.
.7 In addition to such information returns, and at the time the same are filed, such employer shall file with the Commissioner Form R-3 to enable the Commissioner to reconcile the sum total of compensation paid and taxes withheld as disclosed by information return W-2, or list of employees, and prior returns and remittances made pursuant to the ordinance.
C. Fractional parts of cent.
In deducting and withholding the tax at the source and in payment of any tax due under the ordinance, a fractional part of a cent shall be disregarded unless it amounts to one-half cent or more, in which case it shall be increased to one cent.