Section
36.01 Purpose
36.02 Definitions
36.03 Imposition of tax
36.04 Return and payment of tax
36.05 Collection of tax at source
36.06 Declarations of estimated tax
36.07 Credit for tax paid to another municipality
36.08 Tax Administrator; appointment and duties
36.09 Investigative powers of the Tax Administrator; penalty for divulging confidential information
36.10 Interest and penalties
36.11 Collection of unpaid taxes; refunds
36.12 Authorization to use debt-collection services
36.13 Board of Review
36.14 Landlord reporting
36.15 Allocation of collected funds
36.16 Collection of city income tax after termination of ordinance
36.17 Savings clause
36.18 Rules and regulations
36.19 Effective period
36.99 Penalty
The purpose of this chapter is to provide funds for general municipal operations, maintenance, new equipment, extension and enlargement of municipal services and facilities and capital improvements of the city. In accordance with Ordinance No. 2384, passed December 15, 1977 and effective January 1, 1978, there is levied a tax on income, qualifying wages, commissions, and other compensation, and on net profits as hereinafter provided.
(Ord. 09-3301, passed 8-20-09)
For the purpose of this chapter the following definitions shall apply unless the context clearly indicates or requires a different meaning. The singular shall include the plural and the masculine shall include the feminine and the neuter.
ADJUSTED FEDERAL TAXABLE INCOME. A "C" corporation's federal taxable income before net operating losses and special deductions as determined under the Internal Revenue Code, but including subsequent adjustments from required additions and deductions. Pass-through entities must compute ADJUSTED FEDERAL TAXABLE INCOME as if the pass-through entity was a "C" corporation. This definition does not apply to any taxpayer required to file a return under R.C. Chapter 5745.03 or to the net profit from a sole proprietorship. This definition is effective for tax years beginning on or after January 1, 2004.
ASSOCIATION. A partnership, limited partnership, limited liability company, or any other form of unincorporated enterprise, including S Corporations as defined in the federal tax code, 26 U.S.C. § 1361.
BUSINESS. An enterprise, activity, profession, or undertaking of any nature conducted for profit or ordinarily conducted for profit, whether by an individual, partnership, association, corporation, or any other entity, including but not limited to the renting or leasing of property, real, personal, or mixed.
CITY. The City of Silverton, Ohio.
CORPORATION. A corporation (but including S Corporations as defined in the federal tax code, 26 U.S.C. § 1361), or joint stock association organized under the laws of the United States, the State of Ohio, or any other state, territory, or foreign country or dependency.
DOMICILE. The permanent legal residence of a taxpayer. A taxpayer may have more than one residence but not more than one domicile.
EMPLOYEE. One who works for wages, salary, commission, or other type of compensation in the service of and under the control of an employer.
EMPLOYER. An individual, partnership, association, corporation, governmental body, unit or agency, or any other entity, whether or not organized for profit, who or that employs one or more persons on an income, qualifying wage, commission, or other compensation basis.
FISCAL YEAR. An accounting period of 12 months or less ending on any day other than December 31.
GENERIC FORM. An electronic or paper form designed for reporting estimated municipal income taxes, and/or annual municipal income tax liability, and/or separate requests for refunds that contain all the information required on the city's regular tax return and estimated payment forms, and are in a similar format that will allow processing of the generic forms without altering the city's procedures for processing forms.
GROSS RECEIPTS. The total revenue derived from sales, work done, or service rendered.
INCOME. All monies and compensation in any form, subject to limitations imposed by R.C. Chapter 718 and exemptions provided for in this chapter, derived from any source whatsoever, including but not limited to:
(1) All income, qualifying wages, commissions, other compensation and other income from whatever source received by residents of the city.
(2) All salaries, wages, commissions, other compensation and other income from whatsoever source received by nonresidents for work done or services performed or rendered or activities conducted in the city.
(3) The portion attributable to the city of the net profits of all businesses, associations, professions, corporations, or other entities, from sales made, work done, services performed or rendered, and business or other activities conducted in the city.
INTANGIBLE INCOME. Income yield, interest, capital gains, dividends, or other income arising from the ownership, sale, exchange, or other disposition of intangible property, including but not limited to, investments, deposits, money, or credits as those terms are defined in R.C. Chapter 5701, and patents, copyrights, trademarks, trade names, investments in real estate investment trusts, investments in regulated investment companies, and appreciation on deferred compensation, INTANGIBLE INCOME does not include prizes, awards, or other income associated with lottery winnings or other similar games of chance.
NET PROFITS. A net gain from the operation of a business, profession, enterprise, or other activity after provision for all ordinary, reasonable, and necessary expenses either paid or accrued in accordance with the accounting system (i.e., cash or accrual) used by the taxpayer for federal income tax purposes, without deduction of taxes imposed by this chapter, federal, state, or other taxes based on income exclusive of the amount of the state franchise tax computed on the net worth basis; and in the case of an association, without deduction of salaries paid to partners, and other owners; and otherwise adjusted to the requirements of this chapter. For taxable years 2004 and later, NET PROFITS means adjusted federal taxable income.
NONRESIDENT. An individual who is not a resident as herein defined.
NONRESIDENT UNINCORPORATED BUSINESS ENTITY. An unincorporated business entity not having an office or place of business within the city.
PASS-THROUGH ENTITY. A partnership, S Corporation, limited liability company, or any other class of entity the income or profits from which are given pass-through treatment under the Internal Revenue Code. Unless otherwise specified herein, for purposes of this chapter the tax treatment for pass-throughs is the same as ASSOCIATION.
PERSON. Every natural person, partnership, fiduciary, association, or corporation. Whenever used in any clause prescribing and imposing a penalty, the term PERSON as applied to any unincorporated entity, shall mean the partners or members thereof, and as applied to corporations, the officers thereof.
PLACE OF BUSINESS. Any bona fide office (other than a mere statutory office), factory, warehouse, or other space that is occupied and used by the taxpayer in carrying on any business activity individually, or through one or more of the taxpayer's regular employees regularly in attendance.
QUALIFYING WAGES. W ages, as defined in § 3121 (a) of the Internal Revenue Code, without regard to any wage limitations, and adjusted in accordance with R.C. § 718.03(A).
RESIDENT. For purposes of this and all other titles, chapters, and sections of this code, a resident of the city shall be defined as follows:
(1) An individual domiciled in the city.
(2) An individual who during a taxable year has been domiciled in the city at least 183 days, which need not be consecutive, is presumed to be domiciled in the city for the entire taxable year. An individual can rebut this presumption for any portion of the taxable year only with clear and convincing evidence to the contrary. An individual who rebuts this presumption under this section for any portion of the taxable year is presumed to be domiciled in the city for the remainder of the taxable year for which the individual does not provide clear and convincing evidence to the contrary.
(3) It shall be prima facie evidence that an individual's domicile or place of abode is within the city if two or more of the following apply (additional factors may also be considered as evidence by the city):
(a) An individual's mailing address is within the city;
(b) A residency address listed on an individual's state, federal, or government identification or documentation is within the city;
(c) Documentation of any real or registered property lists an individual's domicile as being within the city;
(d) A statement to any court, government, law enforcement, or social service official or documentation thereof that an individual's address or domicile is within the city;
(e) An individual has executed a domicile rental, lease, or purchase agreement on property located within the city.
RESIDENT UNINCORPORATED BUSINESS ENTITY. An unincorporated business entity having an office or place of business within the city.
TAX ADMINISTRATOR. The individual designated by this chapter to administer and enforce the provisions of this chapter as provided in § 36.08. May also be referred to as Tax Commissioner.
TAXABLE YEAR. The calendar year, or the fiscal year based upon which net profits are to be computed under this chapter and, in the case of a return for a fractional part of a year, the period for which the return is required to be made.
TAXPAYER. A person, whether an individual, partnership, association, corporation, or any other entity, required hereunder to file a return and/or pay a tax.
(Ord. 09-3301, passed 8-20-09)
(A) Subject to the provisions of this chapter, an annual tax for the purposes specified in § 36.01 shall be imposed at the rate of 1.25% per annum upon the following:
(1) On all income, qualifying wages, commissions, and other compensation earned and/or received during the effective period of this chapter by residents of the city.
(2) On all income, qualifying wages, commissions, and other compensation earned during the effective period of this chapter by nonresidents for work done or services performed or rendered in the city. Separation pay, termination pay, reduction-in-force pay, and other compensation paid as a result of an employee leaving the service of an employer shall be allocable only to the city.
(a) The city shall not, however, tax the compensation of a non-resident individual who will be deemed to be an occasional entrant if all of the following apply:
1. The compensation is paid for personal services performed by the individual in the city on 12 or fewer days during the calendar year, in which case the individual shall be considered an occasional entrant for purposes of the city income tax. A day is a full day or any fractional part of a day.
2. In the case of an individual who is an employee, the principal place of business of the individual's employer is located outside the city and the individual pays tax on compensation described in division (A)(2) of this section, to the municipality, if any, in which the employer's principal place of business is located, and no portion of that tax is refunded to the individual.
3. The individual is not a professional entertainer or professional athlete, the promoter of a professional entertainment or sports event, or an employee of such a promoter, all as may be reasonably-defined by the city.
(b) Beginning with the thirteenth day an individual deemed to have been an occasional entrant to the city performs services within the city, the employer of said individual shall begin withholding the city income tax from remuneration paid by the employer to the individual, and shall remit the withheld income tax to the city in accordance with the requirements of this chapter. Since the individual can no longer be considered to have been an occasional entrant, the employer is further required to remit taxes on income earned in the city by the individual for the first 12 days.
(c) If the individual is self-employed, it shall be the responsibility of the individual to remit the appropriate income tax to the city.
(3) On the portion attributable to the city of the net profits earned during the effective period of this chapter of all resident unincorporated businesses, professions, associations, or other entities, derived from sales made, work done, services performed or rendered, and business or other activities conducted in the city.
(4) On the portion of the distributive share of the net profits earned and/or received during the effective period of this chapter of a resident partner or owner of a resident unincorporated business entity not attributable to the city and not levied against an unincorporated business entity by the city.
(5) (a) On the portion attributable to the city of the net profits earned during the effective period of this chapter of all nonresident unincorporated businesses, professions, associations, or other entities, derived from sales made, work done, or services performed or rendered, and business or other activities conducted in the city, whether or not an unincorporated business entity has an office or place of business in the city.
(b) On the portion of the distributive share of the net profits earned and/or received during the effective period of this chapter of a resident partner or owner of a nonresident unincorporated business entity not attributable to the city and not levied against an unincorporated business entity by the city.
(6) On the portion attributable to the city of the net profits earned during the effective period of this chapter of all corporations derived from sales made, work done, services performed or rendered, and business or other activities conducted in the city, whether or not those corporations have an office or place of business in the city.
(7) Lottery, games of chance, gambling and sports winnings are taxable, and in no circumstances shall deductions be allowed against these winnings. However, deductions shall be allowed against gambling and sports winnings if the taxpayer is considered a professional gambler for federal income tax purposes.
(B) Allocation and apportionment of net profits. Net profits from a business or profession conducted both within and without the boundaries of the city shall be considered as having a taxable status in the same proportion as the average ratio of:
(1) The average original cost of the real and tangible personal property owned or used by the taxpayer in the business or profession in the city during the taxable period to the average original cost of all of the real and tangible personal property owned or used by the taxpayer in the business or profession during the same period, wherever situated. Real property shall include property rented or leased by the taxpayer, and the value of that property shall be determined by multiplying the annual rental thereon by eight.
(2) Wages, salaries, and other compensation paid during the taxable period to persons employed in the business or profession for services performed in the city to wages, salaries, and other compensation paid during the same period to persons employed in the business or profession, wherever their services are performed. Persons employed shall not be construed to mean any subcontractor or independent contractor. For tax year 2004 and subsequent tax years, wages, salaries, and other compensation shall be included to the extent that they represent qualifying wages.
(3) Gross receipts of the business or profession from sales made and services performed during the taxable period in the city to gross receipts of the business or profession during the same period from sales and services, wherever made or performed.
(4) In the event the foregoing allocation formula in division (B)(1) of this section does not produce an equitable result, the Board of Review, upon application of the taxpayer, or the Tax Commissioner, shall, under uniform regulations adopted by the Board of Review, have the authority to substitute other factors (including the books and records method) or methods calculated to effect a fair and proper allocation.
(C) Operating loss carry-forward. Effective with tax year 2009, a net operating loss shall not be carried forward or backward to any other taxable year.
(D) Exemptions. The tax provided for herein shall not be levied upon:
(1) The military pay or allowances of members of the armed forces of the United States and of members of their reserve components, including the National Guard.
(2) The net profits of any civic, charitable, religious, fraternal or other organization specified in R.C. § 718.01 to the extent that such net profits are exempted from municipal income taxes under such section.
(3) Poor relief, unemployment benefits, payments from retirement pensions, including permanent disability benefits, received from local, state or federal governments or charitable, religious or educational organizations.
(4) Proceeds or insurance paid by reason of the death of the insured, pensions, permanent disability benefits, annuities or gratuities not in the nature of compensation for service rendered from whatever source derived.
(5) The income of religious, fraternal, charitable, scientific, literary or educational institutions to the extent that such income is derived from tax exempt real estate, tax exempt tangible or intangible property or has tax-exempt activities. This exemption does not include unrelated income that is subject to federal tax.
(6) Receipts by bona fide charitable, religious and educational organizations and associations, when those receipts are from seasonal or casual entertainment, amusement, sports events and health and welfare activities when any such are conducted by bona fide charitable, religious or educational organizations and associations and only to the extent that the said income is exempt from federal income tax.
(7) Compensation for personal injuries or for damages to property by way of insurance or otherwise, but this exclusion does not apply to compensation paid for lost salaries or wages or to compensation from punitive damages.
(8) Gains from involuntary conversion, cancellation of indebtedness, items of income already taxed by the state from which the city is specifically prohibited from taxing and interest on federal obligations and income of a decedent's estate during the period of administration.
(9) Compensation paid to a precinct election official, to the extent that such compensation does not exceed $1,000 annually.
(10) Parsonage allowance, to the extent of the rental allowance or rental value of a house provided as a part of an ordained clergy's compensation. The clergy must be duly ordained, commissioned, or licensed by a religious body constituting a religious denomination, and must have authority to perform all sacraments of the religious body.
(11) Interest, dividends and other revenue from intangible property.
(12) Unreimbursed employee business expenses deductible on federal form 2106. The amount deducted for the city shall initially be the same as the federal deduction, but shall be subject to adjustment after review and audit by the city. The expenses must be allocated proportionate to the related income.
(13) Income, salaries, wages, commissions and other compensation and net profits, the taxation of which is prohibited by the United States Constitution or any act of Congress limiting the power of the states or their political subdivisions to impose net income taxes on income derived from interstate commerce, and/or is prohibited by the Constitution of the State of Ohio or any act of the Ohio General Assembly limiting the power of a municipality to impose net income taxes.
(Ord. 09-3301, passed 8-20-09)
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