For the purpose of this subchapter, the following definitions shall apply unless the context clearly indicates or requires a different meaning.
BUSINESS.
(1) The carrying on or exercise for gain or economic benefit, either directly or indirectly, of any business, trade, profession, occupation, vocation, calling or commercial activity whatsoever, including the rental of commercial real estate and personal property, and the rendering of any type of service in any commerce whatsoever in the City. The term BUSINESS shall not include employees of businesses or persons licensed under §§ 37.045 et seq., as same now exists or may hereafter be amended. If 2 or more businesses subject to the same license fee shall be owned by the same person, he or she shall pay 1 license fee on the combined gross receipts.
(2) BUSINESS shall not include the usual activities of boards of trade, chambers of commerce, trade associations or unions (or other associations performing the services usually performed by trade associations or unions), community chest funds or foundations, corporations organized and operated exclusively for religious, charitable, scientific, literary, educational or civic purposes or for the prevention of cruelty to children or animals; or clubs or fraternal organizations operated exclusively for social, literary, educational or fraternal purposes, where no part of the earnings or income or receipts from the units, groups or associations inures to any private shareholder or individual; provided, however, that, the units, groups or associations must provide the Finance and Administration Department with a letter from the Internal Revenue Service and the Kentucky Secretary of state as to their non-profit status; provided, further, that, if the units, groups or associations shall engage in activities other than the activities in which the units, groups or associations usually engage, such other activities shall be considered as operating a business; provided, further, that, activities conducted for gain or profit by any educational institution, hospital or any other institution mentioned in this definition are included in the term BUSINESS.
(3) The term BUSINESS shall also not include businesses or occupations exempted from provisions of this subchapter by Kentucky Statutes or case law.
(1995 Code, § 3.20.030)
BUSINESS ENTITY. Each separate corporation, limited liability company, business development corporation, partnership, limited partnership, registered limited liability partnership, sole proprietorship, association, joint stock company, receivership, trust, professional service organization, or other legal entity through which business is conducted.
CHIEF FINANCIAL OFFICER. Chief Financial Officer of the City of Newport or his or her duly designated representative.
FISCAL YEAR. As defined in § 7701(a)(24) of the Internal Revenue Code.
FARMER/FLEA MARKET. The renting of booth space by 1 person to another for the sale of retail items.
GROSS RECEIPTS.
(1) (a) The gross receipts from any business, trade, occupation, profession, vocation, calling, commerce, personal service or business activity of any kind in the form of cash, credits or other value proceeding from or accruing from the sale of tangible property (real or personal), or the rendering of any service, or both, including and without any deductions therefrom for interest, rentals, royalties, the cost of material used, the cost of goods sold or any other costs or any other expenses whatsoever.
(b) Provided, however, that, there may be deducted from gross receipts the amount of any sales, use or excise tax of Kentucky, or a federal excise tax, computed on a basis of the sales prices or commodities sold by a business entity, but the total gross receipts including the taxes and the amount of the taxes taken as a deduction shall be shown on the application and return required by this subchapter.
(c) Provided, further, that, there may be deducted from gross receipts the amount of gross receipts from the sale of alcoholic beverages licensed under other ordinances of the City and laws of Kentucky and the deductions shall be shown on the application and return required by this subchapter. However, any receipts accruing from any amounts charged to cover the cost of providing live entertainment shall not be included as a deduction as provided in this section.
(d) Provided, further, that, the term GROSS RECEIPTS, when used in connection with, or in respect to, financial transactions involving the sale of notes, stocks, bonds or other securities or the loan, collection or advance of money, or the discounting of notes, bills or other evidence of debt, or the assignment of, or purchase of, municipal, county or state tax bills, shall be deemed to mean the gross interest, gross discount, gross commission or other gross receipts earned by means of or resulting from the financial transactions, but the term GROSS RECEIPTS shall not include amounts received as repayment of the principal of debts.
(e) For persons which have a place of business located within the City, GROSS RECEIPTS shall include the revenue or proceeds from all sales or service generated by the Newport place of business to both persons within the City and to persons outside the City. For persons which have a place of business located outside the City, GROSS RECEIPTS shall include the revenue or proceeds from all sales or service to persons within the City.
(f) For persons which have a place of business located within the City, “outside revenue sales” shall be apportioned to the City based upon a fraction, the numerator of which is the time spent in performing such income-producing activity within the City and the denominator of which is the total time spent performing that income-producing activity.
(g) Pursuant to the provisions of KRS 67.750 to 67.790 et seq., all business entities located within the City who derive gross receipts from both inside and outside the City shall apportion the percentage of gross receipts derived from within the City as against the total gross receipts of that business derived from both within and outside the City.
1. In order to ascertain the percentage of gross receipts derived within the City, the following formula shall be utilized:
a. If applicable, ascertaining the percentage which the gross receipts of the licensee from sales or service rendered within the City bears to the total gross receipts from sales or service rendered wherever made;
b. If applicable, ascertaining the percentage which the wages, salaries and other personal service compensation for the period covered by the report for services performed or rendered within the City bears to the total wages, salaries and personal service compensation for the period of all the licensee’s employees within and outside the City;
c. For the formula mentioned above, all business entities which utilize third party employees shall ascertain the percentage by utilizing the amount of gross wages earned by the third party employees, both inside and outside the City, as if the compensation paid to the third party employees was paid by the business entities. All third party employers shall provide this information as to compensation earned outside the City by the third party employees by January 31 of each year; and
d. Adding together the percentages determined in accordance with divisions (1)(g)1.a. and b. above and dividing the total by the number of factors used.
e. The formula for determining the gross receipts that are subject to the licensee fee shall begin with all receipts collected after January 1, 2006 with an initial filing date of April 15, 2007.
2. a. The Chief Financial Officer may require an applicant to furnish corroborating business and financial data under oath or may require the return to be verified under oath.
b. Every business entity shall submit a copy of its federal income tax return and all supporting statements and schedules at the time of filing its occupational license fee return with the City. Whenever, in the opinion of the City, it is necessary to examine the federal income tax return of any business entity in order to audit the return, the City may compel the business entity to produce for inspection a copy of any statements and schedules in support thereof that have not been previously filed. The City may also require copies of reports of adjustments made by the federal government.
c. It shall be the responsibility of persons who make Federal Form 1099 "non-employee compensation" payments to natural persons other than employees for services performed within the City to maintain records of such payments and to report such payments to the City. Said payments must be reported on by remitting Federal Form 1099 by February 28 of the year following the close of the calendar year in which the non-employee compensation was paid. If a business entity or person is not required to remit Federal Form 1099 to the IRS, including but not limited to payments less than $600, they are still liable to remit the equivalent information to the City. The information required to be reported by said licensee shall include:
i. Payer's name, address, social security and /or Federal identification number.
ii. Recipient's name and address.
iii. Recipient's social security and/or Federal identification number.
iv. Amount of non-employee compensation paid in the calendar year.
v. Amount of non-employee compensation earned in the City for the calendar year.
(h) The term GROSS RECEIPTS of a business falling into the category of a business defined in § 37.071 means:
1. Where the business is formed by 1 or more individuals, each individual shall compute his or her share of the gross receipts of the former business that the individual was previously engaged in. The sum total of each individual’s share, thus computed, shall be the gross receipts for the business, as defined in § 37.080.
2. Example: Individual “A” of ABC partnership terminates his or her association with ABC and forms a partnership with “Y,” who has terminated his or her association with XYZ partnership. Both A and Y had 1/3 interest in their prior partnerships. The gross receipts of the present “AY” partnership, for purposes of applying for the initial license under this division, shall be the amount of gross receipts of the last appropriate accounting period of ABC partnership that were attributable to A’s 1/3 interest added to the amount of gross receipts of the last appropriate accounting period of XYZ partnership that were attributable to Y’s 1/3 interest. In the case where A or Y had been a sole proprietorship prior to the AY partnership, the respective share to be computed into the gross receipts of the “AY” partnership would be the total gross receipts of the sole proprietorship in the appropriate accounting period immediately preceding the formation of “AY” partnership.
(i) Any business which manufactures a product in the City and sells this product at retail both within a location inside the City and a location outside the City shall calculate gross receipts subject to the City’s fee in the following manner:
1. Gross receipts from a product manufactured in the City and sold by the manufacturer at a retail location within the City shall be assessed at 100% without deduction.
2. Gross receipts from a product manufactured in the City and sold by the manufacturer at a retail location outside the City shall be calculated utilizing the formula established in division (1)(g) above.
3. Total gross receipts for this business shall be the sum of the 2 amounts in divisions (1)(i)1. and 2. above.
(1995 Code, § 3.20.040)
(2) (a) If the sale was made for a consideration wholly in cash, the total cash received constitutes the receipts.
(b) If the sale was executed on a deferred payment basis, the portion paid in cash, to include any deposits, down payments, escrow or security monies and the deferred balance, to be paid within a period subsequent to the time of the initial sale, shall constitute the total receipts; provided, however, that, the receipt of the deferred payment in the appropriate accounting period subsequent to the appropriate accounting period in which the gross receipts of the total sale were reported shall not constitute a receipt under this division.
(c) If the sale was executed on a deferred payment basis and the deferred payment was secured by a note or other evidence of indebtedness, the amount of cash received, plus the face value of the note or indebtedness constitutes the receipt; provided, however, that, the receipt of any payment on the note or evidence of indebtedness in the appropriate accounting period subsequent to the year of the deferred sale shall not constitute a receipt within the meaning of this division.
(d) If the sale is an installment sale, the total amount of the installments paid, or to be paid, constitutes the receipts, including any interest or carrying charges. A person who sells or otherwise disposes of personal property in trade or business on the installment plan must report as receipts the total amount of consideration to be received from the installment contract so long as the installment contract was executed during the period covered by the return. Insofar as this division is concerned, it shall be irrelevant as to whether or not title remains in the vendor until the property is fully paid for and all of the conditions prescribed in the installment sale are fully performed. It is provided, further, that, any receipt of installments in the appropriate accounting period subsequent to the appropriate accounting period in which the original installment sale was reported shall not constitute a receipt within the meaning of this subchapter.
(e) If the sale is made by exchange of property of any kind, pursuant to a barter transaction, the fair market value of the property received in exchange constitutes the receipts. However, where a used article is accepted in part payment of the purchase price, such as automobiles, furniture, washing machines, radios, mechanical refrigerators, televisions and the like, the seller of the new article shall report the sales price of the new article less any allowance made for the used article; provided, however, that, when the used article is sold, the sales price of the used article shall constitute receipts within the meaning of this subchapter.
(f) All partnerships, S corporations, and all other entities where income is "passed through" to the owners are subject to this ordinance. The occupational license fee impose in this ordinance is assessed against income before it is "passed through" these entities to the owners.
(g) It shall be allowed as a deduction to the amount reported as gross receipts the amount which the business entity has declared to be uncollectible as a bad debt and has so evidenced by an entry within the accounting books of that business. The determination as to what can validly be deducted as a bad debt, insofar as this division is concerned, will be made pursuant to of the Internal Revenue Code of the United states. Where the person has established a “bad debt reserve,” the amount of bad debt deductible under this division will be only that amount which the business entity has added to the bad debt reserve for the taxable year of the return being filed. Any subsequent collection of a previously deducted bad debt will be included as gross receipts in this year of collection.
(h) It shall be further allowed as a deduction to the amount reportable as gross receipts, the amount of returns and/or allowances which the business entity has made during the appropriate accounting period and has so evidenced by an entry within the accounting books of that business.
(1995 Code, § 3.20.050)
(i) “Gross receipts” means all revenues or proceeds derived from the sale, lease or rental of goods, services or property by a business entity.
(j)
“Sales revenue” means receipts from the sale, lease, or rental of goods, services, or commercial property;
HOME OCCUPATION.
(1) An accessory use consisting of office space within a dwelling used by only the residents thereof; which is clearly secondary to the use of the dwelling for living purposes, and does not change the character thereof; of which there is no exterior evidence and which does not involve the outside storage of stock-in-trade or materials in connection therewith.
(2) Issuance of any license for a home occupation shall be solely for the purpose of establishing a mailing address and office facilities which are not open to the public. The license cannot be used for the purpose of offering retail sales or services of any kind.
INDEPENDENT CONTRACTOR. Any person who meets the following criteria:
(1) Accepts assignments from the general public;
(2) Is not limited to working for 1 employer;
(3) Provides his or her own equipment and tools;
(4) Hires any assistants; and
(5) Works without employer training or direction, except as to the end result.
INTERNAL REVENUE CODE. The Internal Revenue Code in effect on December 31 of the year in which the fee is due, exclusive of any amendments made subsequent to that date, other than amendments that extend provisions in effect on December 31, 2002, that would otherwise terminate.
JOINT RECEIPTS. When 2 or more persons, not copartners, and not being in the relation of employer and employee 1 with another, shall perform joint service or sell joint property, or receive money or assets to which they are jointly entitled, and 1 of such persons shall first receive the total sum due for the service or due on account of the sale, or the money or assets to which the persons are jointly entitled, and shall account to and pay to the other persons their proportionate part of the total gross receipts, the person first receiving the joint sums or assets shall be required to account only for that portion which he or she shall retain, and the other person shall report the sums or assets received by them respectively, upon which the tax shall be computed.
(1995 Code, § 3.20.060)
NUMBER AND GENDER. The singular shall include the plural and vice versa, and the masculine shall include the feminine and neuter.
THIRD PARTY EMPLOYEE. Any person employed and paid wages, benefits or other compensation by a third party employer.
THIRD PARTY EMPLOYER. Any business entity that provides employees through either a lease or contractual arrangement to another business entity operating within the City and provides wages, benefits, or other compensation to such employees.
(Am. Ord. O-2008-008, passed 4-7-2008)