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(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)
(A) The city may grant any business entity an extension of not more than six (6) months, unless a longer extension has been granted by the Internal Revenue Service or is agreed to by the city and the business entity, for filing its return, if the business entity, on or before the date prescribed for payment of the occupational license tax, requests the extension and pays the amount properly estimated as its tax.
(B) If the time for filing a return is extended, the business shall pay, as part of the tax, an amount equal to twelve percent (12%) per annum simple interest on the tax shown due on the return, but not previously paid, from the time the time was due until the return is actually filed and the tax paid to the city. A fraction of a month is counted as an entire month.
(Ord. 10-2008, passed 11-3-08; Am. Ord. 5-2021, passed 4-5-21)
(A) Where there has been an overpayment of tax under § 112.05, a refund or credit shall be made to the employer to the extent of overpayment if a written application for refund or credit is received by the city from the employer within two (2) years from the date the overpayment was made.
(B) An employee who has compensation attributable to activities performed outside the city, based on time spent outside the city, whose employer has withheld and remitted to this city, the occupational license tax on the compensation attributable to activities performed outside the city, may file for a refund within two (2) years of the date prescribed by law for the filing of a return. The employee shall provide a schedule and computation sufficient to verify the refund claim and the city may confirm with the employer the percentage of time spent outside the city and the amount of compensation attributable to activities performed outside the city prior to approval of the refund.
(Ord. 10-2008, passed 11-3-08; Am. Ord. 5-2021, passed 4-5-21)
(A) As soon as practicable after each return is received, the city may examine and audit the return. If the amount of tax computed by the city is greater than the amount returned by the business entity, the additional tax shall be assessed and a notice of assessment mailed to the business entity by the city within five (5) years from the date the return was filed, except as otherwise provided in this division.
(1) In the case of a failure to file a return or of a fraudulent return, the additional tax may be assessed at any time.
(2) In the case of a return where a business entity understates net profit, or omits an amount properly includable in net profits, or both, which understatement or omission, or both, is in excess of twenty-five percent (25%) of the amount of net profit started in the return, the additional tax may be assessed at any time within six (6) years after the return was filed.
(3) In the case of an assessment of additional tax relating directly to adjustments resulting from a final determination of a federal audit, the additional tax may be assessed before the expiration of the times provided in this division, or six (6) months from the date the city receives the final determination of the federal audit from the business entity, whichever is later.
(4) The times provided in this division may be extended by agreement between the business entity and the city. For the purposes of this division, a return filed before the last day prescribed by law for filing the return shall be considered as filed on the last day. Any extension granted for filing the return shall also be considered as extending the last day prescribed by law for filing the return.
(B) Every business entity shall submit a copy of the final determination of the federal audit within thirty (30) days of the conclusion of the federal audit.
(C) The city may initiate a civil action for the collection of any additional tax within the times prescribed in division (A).
(Ord. 10-2008, passed 11-3-08; Am. Ord. 5-2021, passed 4-5-21)
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