(A) It is the duty of each employer (as hereinbefore defined) who employs one or more persons on a salary, wage, commission, or other compensation basis, to deduct from compensation paid to any employee subject hereto, the tax of 1.5% of such salary, wage, bonus, incentive payment, commission or other compensation due by said employer to said employee. The tax shall be deducted by the employer from:
(1) All compensation paid to employees who are non-residents of the Village of Smithville for services rendered, work performed, or other activities engaged in to earn such compensation, within the Village of Smithville; and
(2) From the gross amount of all salaries, wages, bonuses, incentive payments, commissions or other form of compensation paid to employees who are residents of the Village of Smithville, regardless of the place where the services are rendered.
(B) All employers who or which maintain an office or other place of business in Smithville are required to make the collections and deductions in this article specified, regardless of the fact that the services on account of which any particular deduction is required as to residents of the Village of Smithville, where performed at a place of business of any such employer situated outside of the Village of Smithville.
(C) The 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 compensation received.
(D) Commissions and fees paid to professional men, brokers, and others who are independent contractors and not employees of the payor, are not subject to withholding or collection of the tax at the source. Such tax-payers must in all instances file returns and pay the tax pursuant to the provisions hereof.
(E) In the case of employees who are non-residents of Smithville, the amount to be deducted is 1.5% of the compensation paid with respect to personal services rendered in Smithville. Where a non-resident receives compensation for personal services rendered or performed partly within and partly outside Smithville, the with-holding employer shall deduct, withhold and remit that portion of the compensation which is earned within Smithville in accordance with the following rules of apportionment:
(1) If the non-resident is a salesman, agent, or other employee whose compensation on the basis of commissions depends directly on the volume of business transacted by him, the deducting and with-holding shall attach to the portion of the entire compensation which the volume of business transacted by the employee within the Village of Smithville bears to the volume of business transacted by him within and outside the Village of Smithville.
(2) 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 such employee which the total number of working days employed within the Village of Smithville bears to the total number of working days employed within and outside the Village of Smithville.
(3) If it is impossible to apportion the earnings as provided above. because of (1) the peculiar nature of the service of the employee, or (2) the unusual basis of compensation, apportionment shall be made in accordance with the facts and the tax deducted and withheld accordingly.
(4) The occasional entry into the Village of Smithville of a non-resident employee who performs the duties for which he is employed entirely outside the Village, but enters the Village for the purpose of reporting, receiving instructions, accounting, etc., incidental to his duties outside the Village, shall not be deemed to take such employee out of the class of those rendering their services entirely outside the Village.
(F) An employer shall withhold the tax on the full amount of any advance made to an employee on account of commissions (whether by way of drawing account or otherwise - but see division (G) below) where such advances are in excess of commissions earned.
(G) An employer required to withhold the tax on compensation paid to an employee shall, in determining the amount on which the tax is to be withheld, ignore any amount allowed and paid by the employer to the employee for expense necessarily and actually incurred by the employee in the actual performance of his services; provided, that such expense must be of the kind and in the amount recognized and allowed as deductible expense for Federal Income Tax purposes.
(Res. 1976-55, passed 12-13-1976)