CHAPTER 185
Income Tax
185.01   Purpose.
185.02   Definitions.
185.03   Rate and income taxable.
185.04   Effective period.
185.05   Determination of allocation of tax.
185.06   Exemptions.
185.07   Returns.
185.08   Payment of tax.
185.09   Interest and penalties.
185.10   Violations.
185.11   Collection of unpaid taxes and refunds of overpayment.
185.12   Taxpayer relief.
185.13   Authority to contract for central collection facilities.
185.14   Board of Review.
185.15   Declaration of legislative intent.
 
   CROSS REFERENCES
      Payroll deductions - see Ohio R.C. 9.42
      Municipal income tax - see Ohio R.C. Ch. 718
 
 
185.01 PURPOSE.
   To provide funds for the purposes of general municipal functions of the, there shall be and is hereby levied a tax on all salaries, wages, commissions and other compensations, and on net profits as hereinafter provided.
(Ord. 11-95. Passed 1-23-95.)
185.02 DEFINITIONS.
   For the purposes of this chapter, the terms, phrases, words and their derivatives shall have the meanings given in the next succeeding sections. The singular shall include the plural, and the masculine shall include the feminine and the neuter.
   (1)   "Administrator" means the individual designated by the Mayor to administer and enforce the provisions of the municipal income tax along with the Administrator of the Regional Income Tax Agency.
   (2)   “Association” means any partnership, limited partnership or any other form of unincorporated enterprise, owned by two or more persons.
   (3)   "Board of Review" means the Board created by and constituted as provided in this chapter.
   (4)   "Business" means any enterprise, activity, profession or undertaking of any nature conducted for profit or ordinarily conducted for profit; whether by an individual, partnership, association, corporation or any other entity; excluding, however, all nonprofit corporations which are exempt from the payment of federal income tax.
   (5)   "Corporation" means a corporation or joint stock association organized under the laws of the United States, the State of Ohio or any other state, territory or foreign country or dependency.
   (6)   "Employee" means one who works for wages, salary, commission or other type of compensation in the service of an employer.
   (7)   "Employer" means an individual, partnership, association, corporation, government body, unit or agency, or any other entity, whether or not organized for profit, who or that employs one or more persons on a salary, wage, commission or other basis of compensation.
   (8)   "Fiscal Year" means an account period of twelve months or less ending on any day other than December 31st.
   (9)   "Gross Receipts" means the total income from any source whatsoever.
   (10)   "Net Profits" means a net gain from the operation of a business, profession, enterprise or other activity after provision for all ordinary and necessary expenses either paid or accrued in accordance with the accounting system used by the taxpayer for federal income tax purposes without deduction of taxes imposed by this chapter; federal, state, and other taxes based on income; and in the case of an association, without deduction of salaries paid to partners and other owners.
   (11)   "Nonresident" means an individual domiciled outside the Municipality.
   (12)   "Nonresident Unincorporated Business Entity" means an unincorporated business entity not having an office or place of business within the Municipality.
   (13)   "Person" means every natural person, partnership, fiduciary, association or corporation. Whenever used in any clause prescribing and imposing a penalty, the term "person", as applied to any unincorporated entity, means the partners of members thereof, and as applied to corporations, the officers thereof.
   (14)   "Place of Business" means any bonafide office (other than a mere statutory office), factory, warehouse or other space which is occupied and used by the taxpayer in carrying on any business activity individually or through one or more of his regular employees regularly in attendance.
   (15)   "Resident" means an individual domiciled in the Municipality.
   (16)   "Resident Unincorporated Business Entity" means an unincorporated business entity having an office or place of business within the Municipality.
   (17)   "Taxable Income" means wages, salaries and other compensation paid by an employer or employers before any deductions; and/or the net profits from the operation of a business, profession or other enterprise or activity adjusted in accordance with the provisions of this chapter.
   (18)   "Taxable Year" means the calendar year, or the fiscal year upon the basis of which the net profits are to be computed under this chapter, and in the case of a return for a fractional part of a year, the period for which such return is required to be made.
   (19)   "Taxpayer" means a person, whether an individual, partnership, association or any corporation or other entity, required hereunder to file a return or pay a tax.
      (Ord. 11-95. Passed 1-23-95.)
185.03 RATE AND INCOME TAXABLE.
   An annual tax for the purposes specified in this chapter shall be imposed on and after March 1, 1995, at the rate of one percent (1%) per annum upon the following:
   (a)    On all salaries, wages, commissions and other compensation earned on and after, by residents of the Village of Richwood;
   (b)    On all salaries, wages, commissions and other compensation earned on and after March 1, 1995, by nonresidents of the Village of Richwood for work done or services performed or rendered within the Village of Richwood;
   (c)    (1)    On the portion attributable to the Village of Richwood on the net profits earned on and after March 1, 1995, of all resident unincorporated business entities or professions or other activities, derived from sales made, work done, services performed or rendered and business or other activities conducted in the Village of Richwood;
      (2)    On the portion of the distributive share of the net profits earned on and after March 1, 1995, of a resident, partner or owner of a resident unincorporated business entity not attributable to the Village of Richwood and not levied against such unincorporated business entity by the Village of Richwood;
   (d)    (1)    On the portion attributable to the Village of Richwood of the net profits earned on or after March 1, 1995, of all nonresident unincorporated business entities, professions or other activities, derived from sales made, work done, services performed or rendered and business and other activities conducted in the Village of Richwood, whether or not such unincorporated business entity has an office or place of business in the Village of Richwood;
      (2)    On the portion of the distributive share of the net profits earned on or after March 1, 1995, of a resident, partner or owner of a nonresident unincorporated business entity not attributable to the Village of Richwood and not levied against such unincorporated business entity by the Village of Richwood.
   (e)    On the portion attributable to the Village of Richwood, of the net profits earned on and after March 1, 1995, of all corporations derived from sales made, work done, services performed or rendered and business or other activities conducted in the Village of Richwood, whether or not such corporations have an office or place of business in the Village of Richwood.
      (Ord. 11-95. Passed 1-23-95.)
185.04 EFFECTIVE PERIOD.
   Such tax shall be levied, collected and paid with respect to the salaries, wages, commissions and other compensation, and with respect to the net profits of businesses, professions or other activities earned on and after March 1, 1995.
(Ord. 11-95. Passed 1-23-95.)
185.05 DETERMINATION OF ALLOCATION OF TAX.
   (a)   Method of Determination. In the taxation of income which is subject to municipal income taxes, if the books and records of a taxpayer conducting a business or profession both within and without the boundaries of the Municipality shall disclose with reasonable accuracy what portion of its net profit is attributable to that part of the business or profession conducted within the boundaries of the Municipality, then only such portion shall be considered as having taxable situs in the Municipality for the purposes of municipal income taxation. The portion of the entire net profits of a taxpayer to be allocated as having been derived from within the Municipality in the absence of actual records thereof, shall be determined as follows:
   Multiply the entire net profits by a business allocation percentage to be determined by a three-factor formula of property, payroll and sales, each of which shall be given equal weight, as follows:
      (1)   The average net book value of the real and tangible personal property owned or used by the taxpayer in the business or profession in the Municipality during the taxable period to the average net book value of all the real and tangible personal property owned or used by the taxpayer in the business or profession during the same period, wherever situated.
   As used in the preceding paragraph, "real property" includes property rented or leased by the taxpayer and the value of such property shall be determined by multiplying the annual rental thereon by eight.
      (2)   Wages, salaries and other compensation paid during the taxable period to persons employed in the business or profession for services performed in the Municipality to wages, salaries and other compensation paid during the same period to persons employed in the business or profession, wherever their services are performed.
      (3)   Gross receipts of the business or profession from sales made and services performed during the taxable period in the Municipality to gross receipts of the business or profession during the same period from sales and services, wherever made or performed.
   In the event that the foregoing allocation formula does not produce an equitable result, another basis may, under uniform regulations, be substituted so as to produce such result.
   (b)   Sales Made in Municipality. As used in subsection (a)(3) hereof, "sales made in the Municipality" means:
      (1)   All sales of tangible personal property which is delivered within the Village of Richwood regardless of where title passes if shipped or delivered from a stock of goods within the Village of Richwood;
      (2)   All sales of tangible personal property which is delivered within the Village of Richwood, regardless of where title passes even though transported from a point outside the Village of Richwood, if the taxpayer is regularly engaged through its own employees in the solicitation or promotion of sales within the Village of Richwood and the sales result from such solicitation or promotion;
      (3)   All sales of tangible personal property which is shipped from a place within the Village of Richwood to purchasers outside of the Village of Richwood, 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)   Total Allocation. Add together the percentages determined in accordance with subsections (b)(1), (2) and (3) hereof or such of the aforesaid percentages as are applicable to the particular taxpayer and divide the total so obtained by the number of percentages used in deriving such total in order to obtain the business allocation percentage referred to above.
   A factor is applicable even though it may be allocable entirely in or outside the municipality.
   (d)   Rentals. Rental income received by a taxpayer shall be included in the computation of net profits from business activities under Subparagraphs (c), (d) and (e) of the section pertaining to "Rate and Income Taxable", only if and to the extent that the rental, ownership, management or operation of the real estate from which such rentals are derived (whether so rented, managed or operated by a taxpayer individually or through agents or other representatives) constitutes a business activity of the taxpayer in whole or in part.
   Where the gross monthly rental of any and all real properties, regardless of number and value, aggregate in excess of two hundred fifty dollars ($250.00) per month, it shall be prima facie evidence that the rental, ownership, management or operation of such properties is a business activity of such taxpayer, and the net income of such rental property shall be subject to tax; provided that in the case of commercial property, the owner shall be considered engaged in a business activity when the rental is based on a fixed or fluctuating percentage of gross or net sales, receipts or profits of the lessee, whether or not such rental exceeds two hundred fifty dollars ($250.00) per month; provided further that in the case of farm property, the owner shall be considered engaged in a business activity when he shares in crops or when the rental is based on a percentage of the gross or net receipts derived from the farm, whether or not the gross income exceeds said $250.00 per month; and provided further that the person who operates a licensed rooming house shall be considered in business whether or not the gross income exceeds $250.00 per month.
   (e)   Operating Loss Carry-forward.
      (1)   The portion of a net operating loss sustained in any taxable year subsequent to March 1, 1995, allocable to the Municipality may not be applied against the portion of the profit of succeeding tax years allocable to the Municipality.
      (2)   The portion of net operating loss sustained shall be allocated to the Municipality in the same manner as provided herein for allocating net profits to the Municipality.
         (Ord. 11-95. Passed 1-23-95.)
185.06 EXEMPTIONS.
   The tax provided for herein shall not be levied on the following:
   (a)    Pay or allowances of active members of the Armed Forces of the United States or the income of religious, fraternal, charitable, scientific, literary or educational institutions to the extent that such income is derived from tax-exempt real estate, tax-exempt tangible or intangible property or tax-exempt activities.
   (b)    Poor relief, unemployment insurance benefits, old age pensions or similar payments including disability benefits.
   (c)    Proceeds of insurance paid by reason of the death of the insured, pensions, disability benefits, annuities or gratuities not in the nature of compensation for services rendered from whatever source derived.
   (d)    Receipts from seasonal or casual entertainment, amusements, sport events and health and welfare activities when any such are conducted by bonafide charitable, religious or educational organizations and associations.
   (e)    Alimony received.
   (f)    Personal earnings of any natural person under eighteen years of age.
   (g)    Compensation for personal injuries or for damages to property by way of insurance or otherwise.
   (h)    Interest, dividends and other revenue from intangible property.
   (i)    Gains from involuntary conversion, cancellation of indebtedness, interest on federal obligations, items of income already taxed by the State of Ohio from which the Municipality is specifically prohibited from taxing, and income of a decedent's estate during the period of administration (except such income from the operation of a business).
   (j)    Salaries, wages, commissions and other compensation and net profits, the taxation of which is prohibited by the United States Constitution or any act of Congress limiting the power of the states or their political subdivisions to impose net income taxes on income derived from interstate commerce.
   (k)    Salaries, wages, commissions and other compensation and net profits, the taxation of which is prohibited by the Constitution for the State of Ohio or any act of the Ohio General Assembly limiting the power of the Municipality to impose net income taxes. (Ord. 11-95. Passed 1-23-95.)
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