A. General Requirements
An annual tax of one and one-half percent (1.5%) is imposed on all qualifying wages, commissions and other compensation, whether based upon hourly, daily, weekly, semi monthly, annual unit of production or piece work rates, received on or after July 1, 2015 and during the effective period of the Ordinance.
See ORC 718.031 for withholding requirements for casinos and lottery sales agents.
(1) Residents: For the purpose of determining the tax on the earnings of resident taxpayers taxed under Ordinance Section 881.03, the source of the earnings and the place or places in or at which the services were rendered, are immaterial. All such earnings wherever earned or paid are taxable.
(2) Non residents: Any compensation earned in or from the City is taxable as specified in Ordinance Section 881.04.
B. Duty of Withholding
(1) Except as otherwise provided herein, it is the duty of each employer within or doing business within or for the City, who employs one or more persons whether as an employee, officer, director or otherwise, to deduct each time any qualifying wages are paid on or after July 1, 2015 the tax of one and one-half percent (1.5%) in accordance with Ordinance Section 881.03. Every employer required to deduct and withhold the tax at the source is liable directly to this City for payment of such tax whether or not actually collected from such employee.
(2) Each employer, agent of an employer, or other payer required to withhold taxes is liable for the payment of that amount required to be withheld, whether or not such taxes have been withheld, and such amount shall be deemed to be held in trust for the City until such time as the withheld amount is remitted to the City.
(3) The officer or the employee of the employer, agent of an employer, or other payer with control or direct supervision of or charged with the responsibility for withholding the tax or filing the reports and making payments as required shall be personally liable for a failure to file a report or pay the tax due. The dissolution of an employer, agent of an employer, or other payer does not discharge the officer's or employee's liability for a failure of the employer, agent of an employer, or other payer to file returns or pay any tax due.
(4) Employers and payroll services should review ORC 718.011 and ORC 718.03 for more detailed information on withholding rules including the 20-day rule, definition of principal place of work and small employer withholding provisions. To determine whether an employer qualifies as a small employer for a taxable year, the employer must provide the Tax Administrator with their federal income tax return for the preceding tax year. Employers must be certified as small employers annually.
(5) Any business having employees who work within the City but does not withhold the full one and one-half percent (1.5%) from their employee's city taxable income must maintain detailed payroll records that include all work locations since the City maintains the right to review or Audit any withholding account.
(6) See ORC 718.031 for withholding requirements for casinos and lottery sales agents.
C. Identification of withholding businesses
(1) Except as otherwise provided herein, it is the duty of each employer doing business within or doing business with the City, who employs one (1) or more persons whether as an employee, officer, director or otherwise, to identify their business with the City's Income Tax Division within fifteen (15) days of establishing their business within or for the City, through completion of a Withholding Tax Registration.
(2) Upon receipt of a Withholding Tax Registration from the City, the form must be completed and returned within fifteen (15) days, to the City's Income Tax Division.
D. Filing and payment requirements/deadlines for withholding businesses
(1) The deductions from qualifying wages required to be made by employers are to begin with the compensation earned on and after the effective date of the Ordinance.
(2) Quarterly filing/payments are required unless the employer meets the criteria for monthly payments. Monthly payments are required if either one of the following are applicable:
• The total City taxes deducted and withheld or required to be deducted and withheld in the preceding calendar year exceeds two thousand three hundred ninety-nine dollars ($2,399.00).
• The total City taxes deducted and withheld or required to be deducted and withheld exceeds two hundred dollars ($200.00) in any month of the preceding calendar quarter.
(3) If the employer is required to make monthly payments under the criteria in this section, the employer (in addition to any return required to be filed with respect to his/her own earnings or net profits) shall, on or before the fifteenth (15th) day of the month following the end of each withholding period, make a return and pay to the New Carlisle Income Tax Division, the full amount of tax so deducted or withheld with respect to qualifying wages paid to all of his/her employees subject to the tax under the Ordinance.
(4) If the employer is permitted to make quarterly payments under the criteria in this section, the employer (in addition to any return required to be filed with respect to his/her own earnings or net profits) shall, on or before the last day of the month following the end of each withholding period, make a return and pay to the New Carlisle Income Tax Division, the full amount of tax so deducted or withheld with respect to qualifying wages paid to all of his/her employees subject to the tax under the Ordinance.
(5) The withholding return required to be filed shall be made on the Form W-1 available from the New Carlisle Tax Division or website or on a generic form that contains all the required information.
Note: Section D was amended to comply with modified ORC 718 (SB 172) pertaining to a change in the due date for quarterly withholdings from the 15th day to the last day of the month following the end of withholding period effective September 14, 2016.
E. Interest and penalties for late filing and payment of withholding tax liability, in accordance with Ordinance Section 881.08:
(1) This section does not apply to returns required to be filed or payments to be made through tax year 2015, regardless of the filing or payment date. Returns required to be filed or payments to be made through tax year 2015 but filed or paid after that date shall be subject to the ordinances and/or rules, as adopted prior to January 1, 2016.
(2) Interest: Except as provided in paragraph (4) below all withholding taxes collected (or should be collected) under the provisions of the Ordinance and remaining unpaid after they have become due shall bear interest at the rate of the Federal short-term rate plus five percent (5%), in addition to the amount of the unpaid taxes and penalties. Interest shall be imposed at the rate of the Federal short-term rate (rounded to the nearest whole number percent) for July of the current year plus five percent (5%), for each month (or part thereof) there is a tax balance due. This rate shall apply for the calendar year following July of the year in which the federal short-term rate is determined. Interest is imposed on only the unpaid tax portion of any balances due and is imposed at the time of filing and each month after filing at the beginning of the month.
(3) Penalties: In addition to interest as provided in paragraph (2) of this section, penalties based on the unfiled returns and/or unpaid withholding taxes are hereby imposed as follows:
(a) Non-Filing Penalty: For failure to file a complete City withholding tax return, when due: twenty- five dollars ($25.00) per month (or part thereof), not to exceed one hundred fifty dollars ($150.00) for each failure to file.
(b) Non-Payment Penalty: For failure to remit the withholding taxes on or before the fifteenth (15th) day of the month following each withholding period:
.1 Effective through September 28, 2017: fifty percent (50%) of the tax not timely paid.
.2 Effective as of September 29, 2017: penalty not to exceed fifty percent (50%) of the tax not timely paid.
(4) Minimum Charges: Penalty and interest charges shall not be levied when the total of such charges amounts to less than ten dollars ($10.00).
F. Annual reconciliation required:
(1) On or before the last day of February, following any calendar year in which such deductions have been made by any employer, such employer shall file with the Income Tax Division, an informational return (a W-2 or facsimile or electronic file meeting City specifications) for each employee from whom this City's 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 this City's income tax withheld from such employee.
(2) The gross compensation to be reported for each employee shall be for the full twelve (12) calendar months of the year or such portion thereof as the employee reported on was employed.
(3) In addition to these annual information returns, and at the time the same are filed, such employer shall file with the Income Tax Division, an annual reconciliation of returns (Form W 3) to enable the Income Tax Division to reconcile the sum total of compensation paid and the taxes withheld as disclosed by information return W 2, or list of employees, and prior returns and remittances made pursuant to the Ordinance and these Regulations.
G. Refunds and adjustments for withholding accounts:
(1) If more than the amount of tax required to be deducted by the Ordinance is withheld from an employee's pay, such excess may be refunded by the employer or the Income Tax Division, depending upon the circumstances and the time when the over-withholding is determined as follows:
(a) Resident current employees:
.1 If the over-withholding is discovered in the same period, the employer shall make the necessary adjustment directly with the employee and the amount to be reported on the withholding return as withheld shall be the correct amount.
.2 If the over-withholding is discovered in a subsequent period of the calendar year, the employer may make proper adjustment with the employee. In such case, the W-1 return for the period in which the adjustment is made shall indicate the total amount actually withheld and the amount of the adjustment along with an explanation.
.3 If the over-withholding is discovered in the following year, the employee shall complete the Refund Request form that is available on the City's website or at the Income Tax Division. This form must be completed by the employee and their employer and a W-2 showing the total New Carlisle tax withheld must be attached. The completed Refund Request form must be attached to a signed New Carlisle tax return for the refund to be processed.
(b) Resident former employees:
.1 If the over-withholding is discovered in the current year and employee who is no longer employed by the employer, the employer shall notify the Income Tax Division of the amount and circumstances of such over-withholding in writing, and the Administrator shall then refund to the employer the amount of such excess withholding and it is the responsibility of the employer to refund these funds to their prior employee. The completed Refund Request form must be attached to a signed New Carlisle tax return for the refund to be processed.
.2 If the over-withholding is discovered in the following year, the employee shall complete the Refund Request form that is available on the City's website or at the Income Tax Division. This form must be completed by the employee and their employer and a W-2 showing the total New Carlisle tax withheld must be attached.
(c) Non residents employed outside the City: Where an employer has withheld the New Carlisle tax from the qualified wages of a non resident of this City, and such non resident has not worked within the City for all or part of the time, the non-resident shall complete the Refund Request form that is available at the City's website or at the Income Tax Division. This form must be completed by the employee and their employer and a W-2 showing the total New Carlisle tax withheld must be attached. The completed Refund Request form must be attached to a signed City of New Carlisle tax return for the refund to be processed.
(2) Limitations: Where the total amount due or refund claimed for a tax year is less than ten dollars ($10.00), such amount shall not be collected or refunded.
(3) Insufficient Withholding: If less than the amount of tax required to be deducted is withheld from an employee, such deficiency shall be withheld from subsequent qualifying wages.
(4) Exceptions:
(a) An employer whose records show that an employee is a non resident of the City 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 the City by such employee; provided, however, that such employer must withhold the tax on all personal service compensation paid such employee after the Administrator, or any duly authorized employee notifies said employer in writing that such employee is a resident of the City. All employees are required to notify the employer of any change of residence and the date thereof.
(b) No person shall be required to withhold the tax on the qualifying wages or other compensation paid domestic servants employed exclusively in or about such person's residence, but such employees shall be subject to all the requirements of the Ordinance.
H. Delinquent Process for Withholding Accounts
(1) Non-Filing:
(a) If a withholding return has not been filed by the due date, Withholding Non-Filing Notices will be mailed to the taxpayer's address on file at the Income Tax Division.
(b) If the taxpayer does not provide acceptable documentation stating why a withholding return is not required for that period or does not file a withholding return after repeated attempts, a Withholding Final Non-Filing Notice will be mailed to the taxpayer's address on file at the Income Tax Division.
(c) Failure to respond to the Withholding Final Non-Filing Notice within 30 days of the date of this notice may result in a summons to Clark County Municipal Court for a criminal misdemeanor. This summons can be issued to the officer or the employee of the employer, agent of an employer, or other payer with control or direct supervision of or charged with the responsibility for withholding the tax or filing the reports and making payments as required since this person is personally liable for a failure to file a report or pay the tax due.
(2) Non-Payment:
(a) If a withholding account has an unpaid tax or penalty/interest balance, the taxpayer will be mailed Withholding Monthly Statements from the Income Tax Division. The taxpayer may contact the Income Tax Division to discuss the balance due and/or request in writing within 30 days of the date of the Withholding Monthly Statement an appealable Assessment of any balances due. The appealable Assessment will be sent to the taxpayer (or their authorized agent) via certified mail or secure email if the taxpayer has given permission to receive correspondence from the Tax Division electronically.
(b) If there remains an unpaid balance after repeated mailings of the Withholding Monthly Statements, the taxpayer will be mailed a Withholding Monthly Statement-Final Notice. The taxpayer may request in writing within 30 days of the date of the Withholding Monthly Statement-Final Notice an appealable Assessment of any balances due. The appealable Assessment will be sent to the taxpayer via certified mail or secure email if the taxpayer has given permission to receive correspondence from the Tax Division electronically. If the taxpayer does not request an appealable Assessment in writing within the 30-day period, the Tax Division will consider any balances final and the account will be subject to collection via a Clark County Municipal Court Summons for a criminal misdemeanor, submission to a collection agency and/or a civil judgement.
(c) If the taxpayer requests an appealable Assessment within 30 days of the date of the Withholding Monthly Statement-Final Notice, the Tax Administrator will generate an Assessment and attempt delivery via the means described previously under Service of Assessment. Within 60 days of the service of the Assessment, the taxpayer may contact the Tax Administrator in writing to request a compromise on this Assessment or the taxpayer may submit an appeal to the Local Board of Tax Review. On the 61st day after the Assessment has been served, the Assessment is final and subject to collection.
(d) When any taxpayer subject to the provisions of the Ordinance has filed a withholding return indicating the amount of withholding tax due and has failed to pay said tax to the Income Tax Division as required by the Ordinance, the Administrator need not issue an Assessment but may proceed under the provisions of Sections 881.09 and 881.10 of the Ordinance.
(e) If a balance remains unpaid and the Assessment has become final and collectible the taxpayer is subject to additional legal actions to attempt collection including civil actions, submission to a collection agency and/or a summons to New Carlisle Municipal Court for a criminal misdemeanor. This summons can be issued to the officer or the employee of the employer, agent of an employer, or other payer with control or direct supervision of or charged with the responsibility for withholding the tax or filing the reports and making payments as required since this person is personally liable for a failure to file a report or pay the tax due.