112.01 Definitions
112.02 Occupational license application required
112.03 Occupational license tax payment required
112.04 Apportionment
112.05 Employers to withhold
112.06 Returns required
112.07 Extensions
112.08 Refunds
112.09 Federal audit provisions
112.10 Administrative provisions
112.11 Information to remain confidential
112.12 Use of occupational license tax
112.99 Penalty
As used in this chapter, the following terms and their derivatives shall have the following meanings unless the context clearly indicates that a different meaning is intended:
“BUSINESS.” Any enterprise, activity, trade, occupation, profession or undertaking of any nature conducted for gain or profit. “BUSINESS” shall not include the usual activities of board of trade, chambers of commerce, trade associations, unions or other associations performing services usually perform by trade associations or unions. “BUSINESS” shall not include funds, foundations, corporations or associations organized and operated exclusively and solely for religious, charitable, scientific, literary, educational, civic or fraternal purposes, where no part of the earnings, incomes or receipts of such unit, group or association inures to the benefit of any private shareholder or other person.
“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.
“CITY.” The City of Shively, Kentucky.
“COMPENSATION.” Wages, salaries, commissions, or any other form of remuneration paid or payable by an employer for services performed by any employee, which are required to be reported for federal income tax purposes and adjusted as follows:
(1) Include any amounts contributed by an employee to any retirement, profit sharing, or deferred compensation plan, which are deferred for federal income tax purposes under a salary reduction agreement or similar arrangement, including, but not limited to, salary reduction arrangements under Section 401(a), 401(k), 402(e), 403(a), 403(b), 408, 414(h), or 457 of the Internal Revenue Code; and
(2) Include any amounts contributed by any welfare benefit, fringe benefit, or other benefit plan made by salary reduction or other payment method which permits employees to elect to reduce federal taxable compensation under the Internal Revenue Code, including but not limited to, Sections 125 and 132 of the Internal Revenue Code.
“CONCLUSION OF THE FEDERAL AUDIT.” The date that the adjustments made by the Internal Revenue Service to net income as reported on the business entity’s federal income tax return become final and unappealable.
“FINAL DETERMINATION OF THE FEDERAL AUDIT.” The revenue agent’s report or other documents reflecting the final and appealable adjustments made by the Internal Revenue Service.
“FISCAL YEAR.” An accounting period of twelve (12) months ending on the last day of any month other than December.
“EMPLOYEE.” Any person who renders services to another person or any business entity for compensation, including an officer of a corporation and any officer, employee, or elected official of the United States, a state, or political subdivision of a state, or any agency of instrumentality of any one (1) or more of the above. A person classified as an independent contractor under the Internal Revenue Code shall not be considered an “EMPLOYEE.”
“EMPLOYER.” The person for whom an individual performs or performed any service, of whatever nature, as the employee of such person, except that:
(1) If the person for whom the individual performs or performed the services does not have control of the payment of the wages for such services, the term “EMPLOYER” means the person having control of the payments of such wages; and
(2) In the case of a person paying wages on behalf of a nonresident alien individual, foreign partnership, or foreign corporation, not engaged in trade or business within the United States, the term “EMPLOYER” means such person.
“INTERNAL REVENUE CODE.” The Internal Revenue Code in effect on December 31, 2003, exclusive of any amendments made subsequent to that date, other than amendments that extend provisions in effect on December 31, 2003, that would otherwise terminate.
“NET PROFIT.” Gross income as defined in Section 61 of the Internal Revenue Code, minus all deductions from gross income allowed by Chapter 1 of the Internal Revenue Code, and adjusted as follows:
(1) Include any amount claimed as a deduction for state tax or local tax which is computed, in whole or in part, by reference to gross or net income and which is paid or accrued to any state of the United Sates, local taxing authority in a state, the District of Columbia, the Commonwealth of Puerto Rico, any territory or possession of the United States, or any foreign country or political subdivision thereof;
(2) Include any amount claimed as a deduction that directly or indirectly is allocable to income which is either exempt from taxation or otherwise not taxed;
(3) Include any amount claimed as a net operating loss carryback or carryforward allowed under Section 172 of the Internal Revenue Code;
(4) Include any amount of income and expenses passed through separately as required by the Internal Revenue Code to an owner of a business entity that is a pass-through entity for federal tax purposes; and
(5) Exclude any amount of income that is exempt from state taxation by the Kentucky Constitution, or the Constitution and statutory laws of the United States.
“PERSON.” Every natural person, whether a resident or non-resident of the city. Whenever the word “PERSON” is used in a clause prescribing and imposing a penalty in the nature of a fine or imprisonment, the word, as applied to a partnership or other form of unincorporated enterprise, shall mean the partners or members thereof, and as applied to corporations, shall mean the officers and directors thereof.
“RETURN” or “REPORT.” Any properly completed and, if required, signed form, statement, certification, declaration, or any other documents permitted or required to be submitted or filed with the city.
“SALES REVENUE.” Receipts from the sale, lease, or rental of goods, services, or property.
“TAX DISTRICT.” Any city of the first to fifth class with the authority to levy net profits or occupational license taxes.
“TAXABLE NET PROFIT.” In case of business entity having payroll or sales revenue only within the city, means net profit defined in this section.
“TAXABLE NET PROFIT.” In case of a business entity having payroll or sales revenue both within and without the city, means net profit as defined in this section, and as apportioned under § 112.04 of this chapter.
“TAXABLE YEAR.” The calendar year or fiscal year ending during the calendar year, upon the basis of which net profit is computed.
(Ord. 10-2008, passed 11-3-08; Am. Ord. 5-2021, passed 4-5-21)
Every person and business entity engaged in any business in the city shall be required to complete and execute the questionnaire prescribed by the occupational tax office. Each person or business shall become a licensee and shall be required to complete a separate questionnaire for each separate business before the commencement of business or in the event of a status change other than change of address. Licensees are required to notify the occupational tax office of any changes in address, the cessation of business activity, and other changes that render inaccurate the information supplied in the completed questionnaire.
(Ord. 10-2008, passed 11-3-08; Am. Ord. 5-2021, passed 4-5-21)
(A) Except as provided in division (B), every person or business entity engaged in any business for profit and any person or business entity that is required to make a filing with the Internal Revenue Service or the Kentucky Revenue Cabinet shall be required to file and pay to the city an occupational license tax for the privilege of engaging in such activities within the city. The occupational license tax shall be measured by:
(1) Two percent (2%) of all wages and compensation paid or payable in the city for work done or services performed or rendered in the city by every resident and nonresident who is an employee; and
(2) Two point twenty-five percent (2.25%) of the net profit from business conducted in the city by a resident or nonresident business entity, or one hundred dollars ($100), whichever is greater, provided however, the aforesaid sum of one hundred dollars ($100) shall be paid as a minimum tax, whether or not the licensee's business experienced a net profit for the year in question.
(B) The occupational license tax imposes in this section shall not apply to the following persons or business entities:
(1) Any bank, trust company, combined bank and trust company, or trust, banking and title insurance company organized and doing business in this state, any savings and loan association, whether state or federally chartered;
(2) Any compensation received by members of the Kentucky National Guard for active duty training, unit training assemblies and annual field training;
(3) Any compensation received by precinct workers for election training or work at election booths in state, county, and local primary, regular, or special elections;
(4) Public service corporations that pay an ad valorem tax on property valued and assessed by the Kentucky Department of Revenue pursuant to the provisions of KRS 136.120. Licensees whose businesses are predominately non-public service who are also engaged in public service activity are required to pay a license fee on their net profit derived from the non-public service activities apportioned to the city;
(5) Persons or business entities that have been issued a license under KRS Chapter 243 to engage in manufacturing or trafficking in alcoholic beverages. Persons engaged in the business of manufacturing or trafficking in alcoholic beverages are required to file a return, but may exclude the portion of their net profits derived from the manufacturing and trafficking of alcoholic beverages.
(6) Life insurance companies incorporated under the laws of and doing business in the Commonwealth of Kentucky.
(Ord. 10-2008, passed 11-3-08; Am. Ord. 5-2021, passed 4-5-21)
(A) Except as provided in division (D) of this section, net profit shall be apportioned as follows:
(1) For business entities with both payroll and sales revenue in more than one (1) tax district, by multiplying the net profit by a fraction, the numerator of which is the payroll factor, described in division (B) of this section, plus the sales factor, described in division (C) of this section, and the denominator of which is two (2); and
(2) For business entities with sales revenue in more than one (1) tax district, by multiplying the net profit by the sales factor as set forth in division (C) of this section.
(B) The payroll factor is a fraction, the numerator of which is the total amount paid or payable in the city during the tax period by the business entity for compensation, and the denominator of which is the total compensation paid or payable by the business entity everywhere during the tax period. Compensation is paid or payable in the city based on the time the individual’s service is performed within the city.
(C) The sales factor is a fraction, the numerator of which is the total sales revenue of the business entity in the city during the tax period, and the denominator of which is the total sales revenue of the business entity everywhere during the tax period.
(1) The sale, lease, or rental of tangible personal property is in the city if:
(a) The property is delivered or shipped to a purchaser, other than the United States government, or to the designee of the purchaser within the city regardless of the f.o.b. point or other conditions of the sale; or
(b) The property is shipped from an office, store, warehouse, factory, or other place of storage in the city and the purchaser is in the United Sates government.
(2) Sales revenues, other than revenues from the sale, lease, or rental of tangible personal property or the lease or rental of real property, are 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.
(3) Sales revenue from the sale, lease, or rental of real property is allocated to the tax district where the property is located.
(D) If the apportionment provisions of this section do not fairly represent the extent of the business entity’s activity in the city, the business entity may petition the city or the city may require, in respect to all or any part of the entity’s business activity, if reasonable:
(1) Separate accounting;
(2) The exclusion of any one (1) or more of the factors;
(3) The inclusion of one (1) or more additional factors which will fairly represent the business entity’s business activity in the city; or
(4) The employment of any other method to effectuate an equitable allocation and apportionment of net profit.
(E) When compensation is paid or payable for work done or services performed or rendered by an employee, both within and without the city, the license tax shall be measured by that part of the compensation paid or payable as a result of work done or service performed or rendered within the city. The license tax shall be computed by obtaining the percentage which the compensation for work performed or services rendered within the city bears to the total wages and compensation paid or payable. In order for the city to verify the accuracy of a taxpayer’s reported percentages under this division, the taxpayer shall maintain adequate records.
(F) All partnerships, S corporations, and all other entities where income is “passed through” to the owners are subject to this chapter. The occupational license tax imposed in this chapter is assessed against income before it is “passed through” these entities to the owners.
(G) If any business entity dissolves, ceases to operate, or withdraws from the city during any taxable year, or if any business entity in any manner surrenders or loses its charter during any taxable year, the dissolution, cessation of business, withdrawal, or loss or surrender of charter shall not defeat the filing of returns and the assessment and collection of any occupational license tax for the period of that taxable year during which the business entity had business activity in the city.
(H) If a business entity makes, or is required to make, a federal income tax return, the occupational license tax shall be computed for the purposes of this chapter on the basis of the same calendar of fiscal year required by the federal government, and shall employ the same methods of accounting required for federal income tax purposes.
(Ord. 10-2008, passed 11-3-08; Am. Ord. 5-2021, passed 4-5-21)
(A) Every employer making payment of compensation to an employee shall deduct and withhold from the compensation an occupational license tax calculated under § 112.03.
(B) Every employer required to deduct and withhold tax under this section shall, for the quarter ending after January 1 and for each quarter ending thereafter, on or before the end of the month following the close of each quarter, make a return and report to the city, and pay to the city, the tax required to be withheld under this section, unless the employer is permitted or required to report within a reasonable time after some other period as determined by the city.
(C) Every employer who fails to withhold or pay to the city any sums required by this chapter to be withheld and paid shall be personally and individually liable to the city for any sum or sums withheld or required to be withheld in accordance with the provisions of this section.
(D) The city shall have a lien upon all the property of any employer who fails to withhold or pay over to the city sums required to be withheld under this section. If the employer withholds, but fails to pay the amounts withheld to the city, the lien shall commence as of the date the amounts withheld were required to be paid to the city. If the employer fails to withhold, the lien shall commence at the time the liability of the employer is assessed by the city.
(E) Every employer required to deduct and withhold tax under this section shall annually, on or before February 28 or each year, complete and file, on a form furnished or approved by the city, a reconciliation of the occupational license tax withheld where compensation is paid or payable to employees. Either copies of federal forms W-2 and W-3, transmittal of wage and tax statements, or a detailed employee listing with the required equivalent information, as determined by the city, shall be submitted.
(F) Every employer shall furnish each employee a statement, on or before January 31 of each year, showing the amount of compensation and occupational license tax deducted by the employer from the compensation paid to the employee for payment to the city during the preceding calendar year.
(G) An employer shall be liable for payment of the tax required to be deducted and withheld under this section.
(H) The president, vice president, secretary, treasurer or any other person holding an equivalent corporate office of any business entity subject to this section shall be personally and individually liable, both jointly and severally, for any tax required to be withheld from compensation paid or payable to one (1) or more employees of the business entity, and neither the corporate dissolution or withdrawal of the business entity from the city, nor the cessation of holding any corporate office, shall discharge that liability; provided that the personal and individual liability shall apply to each and every person holding the corporate office at the time the tax become or became obligated. No person shall be personally and individually liable under this division unless that person had the authority to collect, truthfully account for, or pay over the tax imposed by this chapter at the time that the taxes imposed by this chapter becomes or became due.
(I) Notwithstanding divisions (G) and (H) of this section, every employee receiving compensation in the city subject to the tax imposed under § 112.03 shall be personally liable for any amount due. In all case where the employer does not withhold the tax levied under this chapter from an employee, that employee or those employees shall be responsible for filing with the city each quarter in the same manner as if they were the employer.
(J) Employers not required to deduct and withhold tax under this section shall, annually during the month of January of each year, make a return to the Occupational Tax Administrator, in which is set forth the name and Social Security number of each employee of the employer during the preceding calendar year, giving the amount of salaries, wages, commissions or other compensation earned within the city during the preceding year by each employee. This list shall include all current full-time employees, part-time employees, temporary employees and terminated employees, whether terminated voluntarily or involuntarily.
(Ord. 10-2008, passed 11-3-08; Am. Ord. 5-2021, passed 4-5-21)
(A) All business entity returns for the preceding taxable year shall be made by April 15 of each year, except returns made on the basis of a fiscal year, which shall be made by the fifteenth day of the fourth month following the close of the fiscal year. Blank forms for returns shall be supplied by the city.
(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 tax 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) Every business entity subject to an occupational license tax governed by the provisions of this chapter shall keep records, render under oath statements, make returns, and comply with the rules as the city from time to time may prescribe. Whenever the city deems it necessary, the city may require a business entity, by notice served to the business entity, to make a return, render statements under oath, or keep records, as the city deems sufficient to determine the tax liability of the business entity.
(D) The city may require, for the purpose of ascertaining the correctness of any return or for the purpose of making an estimate of the taxable income of any business entity, the attendance of a representative of the business entity or of any other person having knowledge in the premises.
(E) The full amount of the unpaid tax payable by any business entity, as appears from the face of the return, shall be paid to the city at the time prescribed for filing the occupational license tax return, determined without regard to any extension for filing the return.
(F) It shall be the responsibility of business entities and 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. If a business entity or person is not required to remit Federal Form 1099 to the IRS, including, but not limited to, payments of less than six hundred dollars ($600), they are still liable to remit the equivalent information to the city.
(1) The information required to be reported shall include:
(a) Payer's name, address, Social Security and/or Federal identification number;
(b) Recipient's name and address;
(c) Recipient's Social Security and/or Federal identification number;
(d) Amount of non-employee compensation paid in the calendar year;
(e) Amount of non-employee compensation paid in the calendar year for services performed in the city.
(2) Payments must be reported by January 31 of the following the close of calendar year in which "non-employee compensation" was paid.
(G) Every person or business entity that paid an occupational license tax under previous ordinances of the city, and who is likewise subject to tax under this chapter, shall receive credit against any tax owing under this chapter for any proportionate part of the license fee under Chapter 21 that occurred during the applicable time period of this chapter.
(Ord. 10-2008, passed 11-3-08; Am. Ord. 5-2021, passed 4-5-21)
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