(a) Should it appear that any taxpayer has paid more than the amount of the tax to which the City is entitled under the provisions of this chapter, a refund or credit of the amount so overpaid shall be made, provided a proper claim for refund of such overpayment of tax has been filed by the taxpayer within three years of the due date or filing date of the tax return, whichever is later. However, the following shall apply regarding refunds of tax withheld from non-qualified deferred compensation plans (NDCP):
(1) A taxpayer may be eligible for a refund if the taxpayer has suffered a loss from a NDCP. The loss will be considered sustained only in the taxable year in which the taxpayer receives the final distribution of money and property pursuant to the NDCP. Full loss is sustained if no distribution of money and property will be made by the NDCP.
(2) A taxpayer who receives income as a result of payments from a NDCP, and that income is less than the amount of income deferred to the NDCP and upon which municipal tax was withheld, then a refund will be issued on the amount representing the difference between the deferred income that was taxed and the income received from the NDCP. If different tax rates applied to the tax years in which deferrals, a weighted average of the different tax rates will be used to compute the refund amount.
(3) Refunds shall be allowed only if the loss is attributable to the bankruptcy of the employer who had established the NDCP, or the employee’s failure or inability to satisfy all of the employer’s terms and conditions necessary to receive the nonqualified compensation.
(b) Income tax that has been deposited with the City of Salem, but should have been deposited with another municipality, is allowable by the City of Salem as a refund but is subject to the three-year limitation on refunds. Income tax that should have been deposited with the City of Salem, but was deposited with another municipality, shall be subject to recovery by the City of Salem. The City of Salem will allow a non-refundable credit for any amount owed the City of Salem that is in excess of the amount to be refunded by the other municipality, as long as the tax rate of the other municipality is the same or higher than the City of Salem’s tax rate. If the City of Salem’s tax rate is higher, the tax representing the net difference of the rates is also subject to collection by the City of Salem.
(c) Overpayments of withheld tax that have resulted due to incorrect withholding of an employee by an employer, and are not due as a result of excess withholding requested by the employee, shall be refunded to the employer. It shall be the responsibility of the employer, and not the Municipality, to refund such overpayment to the employee. However, nothing in this subparagraph shall affect the right of a nonresident employee to apply directly to the Municipality for refund of income tax withheld for days worked out of Salem.
(Ord. 051206-85. Passed 12-20-05.)