(a) Dates and requirements for filing.
(1) Each person residing in the city, 18 years of age or older, who engages in business or whose income, wages, salaries, commissions and other compensation are subject to the tax imposed by this chapter, shall, whether or not a tax be due thereon, file a return on or before April 15 of each year with the Finance Director on a form furnished by or obtainable from the Finance Director, or on other forms deemed acceptable by the Finance Director, setting forth the aggregate amount of income, wages, salaries, commissions and other compensation earned and/or received and/or net profits earned and/or gross income from the business, less allowable expenses, or the net profits earned and/or gross income from the business less allowable expenses in the acquisition of the gross income earned during the preceding year and subject to the tax, together with such other pertinent information as the Finance Director may require, including but not limited to copies of all W-2 forms, 1099 Miscellaneous Income forms and all applicable federal schedules. Retired persons whose income is derived solely from pensions, Social Security, interest or dividends need not file the annual tax return, provided a completed exemption form is on file with the Finance Director. When the return is made for a fiscal year or other period different from the calendar year, the return shall be made on or before the fifteenth day of the fourth month after the close of the fiscal year or other period.
(2) The taxpayer making the return shall, at the time of filing thereof, pay to the Finance Director the amount of tax shown to be due and unpaid by the return. No payment will be required for tax due less than $5. If, pursuant to the provisions of division (h) of this section, the taxpayer has at the time of making the final return overpaid his or her tax, the taxpayer shall show the amount of overpayment and may in the return either:
A. Request a refund thereof; or
B. Request that the amount thereof be credited against the amount which will be required to be paid by taxpayer on the next succeeding installment of tax which may become due.
(3) Where any portion of the tax otherwise due shall have been paid by the taxpayer pursuant to the provisions of divisions (c) and (g) of this section, or where an income tax has been paid to another municipality, pursuant to § 880.10, credit for the amount so paid shall be deducted from the amount shown to be due and only the balance, if any, shall be due and payable at the time of filing the final return.
(4) Upon written request of the taxpayer, the Finance Director may extend the time for filing the annual return for a period of not more than six months or not more than 30 days beyond any extension requested of and granted by the Federal Internal Revenue Department for the filing of the federal income tax return. For taxable years subsequent to 2004, the extended due date shall be the last day of the month to which the due date of the federal income tax return has been extended, the extension request may be made by filing a copy of the taxpayer's request for a federal filing extension, or by filing a written request. The Finance Director may deny the extension if the taxpayer's income tax account with the city is delinquent in any way.
(5) Items included on federal Form 2106 are eligible as deductions, subject to review and approval by the City Income Tax Office. To qualify for the deductions, eligible expenses shown on the Form 2106 must exceed 2% of the gross income taxable to the city. Only those expenses exceeding the 2% amount will be eligible for deduction. If submitting a Form 2106, the taxpayer must also submit a copy of the corresponding Schedule A. Deductions shall be allocated to the city and other municipalities in the same proportion that income has been allocated.
(6) When necessary, an amended return must be filed in order to report additional income and pay any additional tax due, or claim a refund of tax overpaid, subject to the requirements and/or limitations contained in §§ 880.08 and 880.10. Such amended returns shall be on a form obtainable on request from the Finance Director. A taxpayer may not change the methods of accounting (i.e., cash or accrual) or apportionment of net profits after the due date for the filing the original return.
(b) Reconciliation with federal return. In a form satisfactory to the Finance Director, there shall be submitted with each return filed by a taxpayer subject to the federal income tax, a reconciliation between the amount shown in the return filed with the Finance Director and the business income reported to the Federal Internal Revenue Department. If, as a result of a change made in business income by the Federal Internal Revenue Service, or by a judicial decision, an additional amount will result as owing to the city, a report of the change shall be filed by the taxpayer within 30 days after receipt of the final notice of the change from the federal authorities or after final decision of a court adjudicating any such federal income tax liability.
(c) Withholding collection at source.
(1) It is the duty of each employer (as hereinbefore defined) who employs one or more persons on a wage, salary, commission or other compensation or other income basis, to deduct, from compensation paid to any employee subject to this chapter, the tax of 1.25% of the income, wage, salary, commission or other compensation due by the employer to the employee.
A. The tax shall be deducted by the employer from:
1. All compensation paid to employees or deferred on behalf of employees who are nonresidents of the city for services rendered, work performed, or other activities engaged in to earn the compensation, within the city; and
2. From the gross amount of all income, wages, salaries, commissions or other compensation paid to employees or deferred on behalf of employees who are residents of the city, regardless of the place where the services are rendered.
B. If the taxes withheld by an employer for the city during the previous tax year averaged $400 per month or more, payments of tax withheld for the current tax year must be made on a monthly basis and shall be made on or before the last day of the month following the end of the month for which taxes were withheld.
C. If the taxes withheld by an employer for the city during the previous tax year averaged less than $400 per month, payments of tax withheld may be made quarterly on or before the last day of the month following the end of the quarter, subject to the approval of the Finance Director. The Finance Director may revoke the approval of quarterly filing and payments whenever he or she has reason to believe that the conditions for granting the authorization have changed, were judged incorrectly, were not met, or when it is in the best interest of the city to do so. Notice of withdrawal shall be made in writing, and in that case, the employer must begin to file in accordance with this section.
(2) All employers who or which maintain an office or other place of business in the city are required to make the collections and deductions specified in this section. Employers who do not maintain a permanent office or place of business in the city, but who are subject to tax on net profits under this chapter, are considered to be employers within the city subject to the requirement of withholding.
(3) 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 income received.
(4) All individuals, businesses, employers, brokers or others doing business who engage persons, either on a commission basis, or as independent contractors, subcontractors, or contract employees who are not subject to withholding, shall indicate the total amount of earnings, payments, commissions and bonuses to such as are residents of the city, or who do business in the city, on copies of federal Form 1099, or shall attach a list which shall indicate Social Security numbers, names, addresses and amounts paid.
(5) In the case of employees who are nonresidents of the city, the amount to be deducted is 1.25% of the compensation paid with respect to personal services rendered in the city. Where a nonresident receives compensation for personal services rendered or performed partly within and partly outside the city, the withholding employer shall deduct, withhold and remit that portion of the compensation which is earned within the city in accordance with the following rules of apportionment:
A. Employees compensated on an hourly, daily, weekly or monthly basis shall be subject to the tax imposed by this chapter as follows:
1. Deduction and withholding. The deduction and withholding shall attach to the personal service compensation for the exact amount of pay received for services performed in the city, when the exact amount of pay can be established. When the exact determination of amounts earned or derived in the city is possible, the income of employees who are compensated on an hourly, daily, weekly or monthly basis must be apportioned to the city by multiplying the gross income, wherever earned, from the employment, which includes employment carried on in the city, by a fraction, the numerator of which is the number of days spent working in the city and the denominator of which is the total working days, including holidays, vacation days, sick days and paid or unpaid leave, unless for travel outside the United States, not to exceed 260 days. In those cases, the taxpayer must add to both the numerator and the denominator those weekend days in which the taxpayer was required to work while outside of the United States. The result is the amount of the nonresident's income allocable to the city.
2. Apportionment where employee performs services in more than one municipality each day. In the case of an employee compensated hourly, daily, weekly or monthly, who regularly performs services in more than one municipality each day, income is apportioned to the particular municipality when multiplying the gross income, wherever earned, from the employment which includes employment carried on in the particular municipality, by a fraction, the numerator of which is the number of hours spent working in the particular municipality and the denominator of which is the total number of working hours.
B. If the nonresident is a salesperson, agent or other employee whose compensation on the basis of commissions depends directly on the volume of business transacted by him or her, the deducting and withholding shall attach to the portion of the entire compensation which the volume of business transacted by the employee within the city bears to the volume of business transacted by him or her within and outside the city.
C. The deducting and withholding of personal service compensation of all other employees, including officers of corporations, shall attach to the portion of the personal service compensation of the employee which the total number of working days employed within the city bears to the total number of working days employed within and outside the city.
D. If it is impossible to apportion the earnings as provided above because of the peculiar nature of the service of the employee, or the unusual basis of compensation, apportionment shall be made in accordance with the facts and the tax deducted and withheld accordingly.
(d) Returns of tax withheld.
(1) Each employer, on or before February 28, unless written request for 30-day extension is made to and granted by the Finance Director, following any calendar year in which the deductions have been made, or should have been made, by an employer, shall file with the Finance Director an information return (Shelby Withholding Statement of Wages Paid and Shelby Income Tax Withheld) for each employee from whom income tax has been or should have been withheld, showing the name and address of the employee, the total amount of income, wages, salaries, commissions and other compensation paid to the employee during the year and the amount of city income tax withheld from each employee.
(2) For corporations, a copy of the federal income tax return must accompany the city income tax return upon filing.
(3) For adjustment of errors in returns of tax withheld by employers see division (h) hereof.
(e) Limitation on credit for tax paid at source. The failure of any employer, residing either within or outside the city, to collect the tax and to make any return prescribed herein shall not relieve the employee from the payment of the tax in compliance with these regulations with respect to the making of returns and the payment of taxes.
(f) Status and liability of employers. The officers and/or the employees having control or supervision of or charged with the responsibility of filing the report and making payment are personally liable for failure to file the report or pay the tax due as required by this section. The dissolution, bankruptcy or reorganization of a corporation, association or other entity does not discharge an officer's or employee's liability for a prior failure of the corporation to file returns or pay tax due.
(g) Declarations of estimated tax.
(1) A declaration of estimated tax shall be filed by every taxpayer who will have taxable income during the year, the tax on which is not or will not be withheld in full or in part by an employer or employers. The declaration must be filed only if the estimate of tax that will not be withheld exceeds $100.
(2) All other taxpayers, as defined in this chapter and in these regulations, subject to the taxes imposed in § 880.03, and every taxpayer who anticipates any income or net profits not subject to withholding in whole or in part, shall file with the Finance Director a declaration of his or her estimated tax as provided in this division (g).
(3) Effective January 1, 2003, the declaration of estimated tax to be paid the city by taxpayers who are individuals shall be accompanied by a payment on of at least one-fourth of the declaration amount and at least a similar amount shall be paid on or before July 31 and October 31 of the taxable year, and January 31 of the following year.
(4) Effective January 1, 2003, the declaration of estimated tax to be paid to the city by corporations and associations shall be accompanied by a payment of at least one-fourth of the declaration amount and at least a similar amount shall be paid on or before June 15, September 15 and December 15. In the case of a fiscal year taxpayer, the second, third and fourth quarterly estimated payments shall be due on the fifteenth day of the sixth, ninth and twelfth months of the taxable year, respectively.
(5) Those taxpayers reporting on a fiscal year basis shall file a declaration within 105 days after the beginning of each fiscal year or period.
(6) The declarations so required shall be filed upon a form furnished by or obtainable from the Finance Director, or on a generic form approved by the Finance Director. Any taxpayer who has filed an estimate for federal income tax purposes may, in making the declaration required hereunder, simply state therein that the figures therein contained are the same figures used by the taxpayer in making the declaration of his or her estimate for the federal income tax. However, in addition to that statement, any such taxpayer may, in the declaration, modify and adjust the declared income so as to exclude therefrom income which is not subject to tax under this chapter.
(7) Any estimate filed hereunder may be amended by the filing of an amendment at the time prescribed for the payment of any installment of tax paid in accordance with divisions (g)(8) and (g)(9) of this section.
(8) No penalties or interest shall be assessed for not filing a declaration or not making payments or making late payments, on any resident taxpayer who was not domiciled in the city on the first day of January in the year in which they became subject to estimated payments.
(9) No penalties or interest shall be assessed on estimated payments if the taxpayer has remitted an amount equal to 100% of the previous year's tax liability, provided that the previous year reflected a 12-month period, or if 90% of the actual liability has been received.
(h) Collection of deficiencies and allowance of credit for overpayments.
(1) If, as a result of investigation conducted by the Finance Director, a return is found to be incorrect, the Finance Director is authorized to assess and collect any underpayment of tax withheld at the source or any underpayment of tax owing by any taxpayer with respect to earnings or net profits, or both. If no return has been filed and a tax is found to be owing, the tax actually owing may be assessed and collected with or without the formality of obtaining a delinquent return from the employer or taxpayer.
(2) Should it be disclosed, either as a result of an investigation by the Finance Director or through the medium of the filing of a claim or petition for refund or credit, that an overpayment has been made, the Finance Director will refund the overpayment.
(3) The employer will in every instance be required to pay the full tax which should have been withheld, even though he or she may fail to withhold from the employee. If too much has been withheld, the excess shall be refunded by the employer to the employee. While the withholding agent (the employer) will be expected to maintain complete records of such adjustments with the employees, any such adjustment made during any month will not need to be reflected in the withholding return or disclosed by schedules or statements thereto attached.
(4) In those cases in which too much has been withheld by an employer from an employee and remitted to the Finance Director and there has been a termination of the employee-employer relationship, the taxpayer (the employee) may obtain an adjustment by application to the Finance Director.
(Ord. 43-2004, passed 12-20-2004; Ord. 47-2005, passed 12-5-2005; Ord. 6-2007, passed 5-7-2007)