(A) Income received from real estate. The income received from the operation of real estate by persons, trust companies, or real estate agents, for or on behalf of persons (or estates) is subject to the license fee imposed by this chapter as follows:
(1) The operation of warehouses, apartments, hotels, motels, tourist homes, and similar structures, constitutes a subject activity, and the income therefrom is subject to the fee imposed by the chapter.
(2) The income derived from apartment houses, single dwellings, and other rental property is considered subject to the fee imposed by the chapter. When the operation thereof constitutes an activity within the meaning of this chapter and if the activity requires at least twenty percent (20%) of a person's activity time, or amounts to twenty percent (20%) of a person's gross income, then he will be presumed to be engaged in the real estate business. To the extent that a person is engaged in managing real estate for at least twenty percent (20%) of his activity time, or income therefrom amounts to twenty percent (20%) of a person's gross income, he is engaged in the real estate business. This does not preclude an inquiry into each particular case if it is considered necessary.
(3) All corporations engaged in the rental of real estate or partnerships organized for that purpose shall be considered to be engaged in a subject activity.
(4) When any property falls within the classification above given, the manner of its acquisition, such as by purchase, gift, inheritance, fiduciary, or as fiduciary mortgage in possession, and so on, does not affect the subjectability of the income derived therefrom.
(5) When the property is located within the city limits, the residence of the beneficiary is immaterial.
(B) Trusts. Whenever a trust estate is engaged in enterprise, activity, or business, which is productive of income, the activity or business shall be considered subject to the license fee.
(C) Trading and securities. Where a person engages in buying and selling of stocks, bonds, or other types of securities and those transactions are not isolated and few, but are extended so as to constitute an activity, the net profits therefrom are subject to the license fee.
(D) Fiduciary. Money received by a fiduciary is subject income, where a fiduciary is regularly engaged in a business or profession as a fiduciary or is engaged in a business or profession commonly regarded as being incidental or collateral thereto, for example, an attorney-at-law, real estate agent, and the like; or if commissions or fees represent a substantial portion of the earnings or income of the fiduciary, or when the administration of the trust requires a substantial portion of the fiduciary's available working time.
(E) Independent contractor. An independent contractor is a person who, while performing services for another, is under the direction and control of the other person only as to the result to be accomplished by the work and not as to the details and means by which that result is accomplished, including but not limited to, authors, professionals, seamstresses, laundresses, tailors, or registered nurses. Withholding does not apply to independent contractors, but the income received by such persons is subject to the business net profits tax.
(F) Insurance agents.
(1) Individuals engaged in the sale of insurance may be either employees or independent contractors.
(a) Where the individual is subject to the direct control of another as to the manner of his conduct and is paid a fixed fee, he is considered an employee and the amount of the license shall be withheld at the source.
(b) Where the individual is not under the direct control of another and may conduct the sale as he sees fit, receiving his payment in the form of commission from the sale, he is considered an independent contractor and shall file his own return and make payment as an independent contractor.
(2) Commissions subject to license fee.
(a) In determining whether the commission payable by reasons of the selling of any policy by an agent resulted from work done or services performed or rendered in the city, the test shall be the residence of the insured at the time of issuance of the policy, rather than the actual place of solicitation, except where the solicitation is in the city and agent's established place of business is within the city, the commission is subject to the license fee regardless of the residence of the insured.
(b) If an agent has an office outside the city as well as an office of his own within the city, the commission on policies sold to nonresidents, if handled through the outside office, are not subject to a license fee, since, under those circumstances, they are not earnings or profits of an independent city business.
(3) Group insurance commissions. Commissions paid on the sale of contracts of group insurance are subject if the group is located within the city as a unit without regard to the residence of the writing agent.
(4) Bonuses and incentive payments subject to license fees. That proportionate part of all bonuses and incentive payments received by an agent, which bears the same ratio to the total amount of bonuses and incentive payments received by him, as the amount of commissions received by him, on policies sold to residents, bears to the total amount of commissions received by him on all policies sold, to both resident and non residents is subject to the license fee.
(5) Advance the drawing accounts.
(a) There are two (2) main types of advances an drawing account payments:
1. Those which impose upon the agent a written obligation to repay if they are not in fact earned.
2. Those which (though offset by commissions as earned) cannot be recovered at law even though the agent fails to produce enough business to justify them.
(b) The first of these two (2) types of advance and drawing account payments is in the nature of a loan and accordingly is never subject to license fee. All commissions or bonuses applied toward the repayment of these types of advances and drawing accounts are subject in accordance with the rules set forth above.
(c) The second type of advance and drawing account payment is subject compensation when received to the extent that it exceeds compensation earned after July 1.
(6) Collection of license fee at source. It is the duty of all companies doing business in the city (or general agents in the cases of agents whose contracts are with a general agent alone and to whom payment is made by general agent out of funds of the general agent) to deduct or withhold monthly or more often the amounts of license fee due on all compensation paid to agents who are considered employees.
(G) Partnerships, associations, or other unincorporated business. In the cases of partnership, association, or other incorporated business owned by one (1) or more persons, the license fee, generally shall be upon that partnership, association, or business enterprise as an entity and not ordinarily upon the partners or members thereof.
(H) Federal, state, and municipal employees.
(1) Compensation received from the federal government for services performed within any federal reservation situated within the geographical limits of the city, title to which is in the federal government, is subject to income, even though exclusive jurisdiction thereof was granted to the federal government by the Commonwealth of Kentucky and the city.
(2) Compensation received from state, county, and municipal governmental agencies is subject to the provisions of this chapter.
(3) Refund of tax withheld and paid covering activities outside the city will be made to employee upon application on a form provided by City Clerk/Treasurer.
(I) Real estate salesman or brokers.
(1) Real estate salesmen or brokers who are engaged in the business as employees rather than an independent contractor are not required to file a return for the commissions earned by them. The employer is required to deduct the fee from the commissions earned and remit the same to the City Clerk/Treasurer.
(2) Real estate salesmen or brokers acting as independent contractors are subject to a license fee on their net profits in accordance with the rules and regulations herein pertinent.
(Ord. 2010-04-15, passed 4-15-10)