An annual tax for the purposes specified in § 890.01 shall be imposed on and after July 1, 1995, at the rate of 2% per annum, upon the following:
(a) On all income, qualifying wages, commissions and other compensation earned on and after July 1, 1995, by residents of the city;
(b) On all income, qualifying wages, commissions and other compensation earned on and after July 1, 1995, by nonresidents of the city for work done or services performed or rendered within 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 municipality.
(1) The city shall not, however, tax the compensation of a nonresident individual who will be deemed to be an occasional entrant if all of the following apply:
A. 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;
B. 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 (b)(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; and
C. 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.
(2) 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.
(3) If the individual is self-employed, it shall be the responsibility of the individual to remit the appropriate income tax to the city.
(c) On the portion attributable to the city on the net profits earned on and after July 1, 1995, of all resident unincorporated business entities or professions or other activities, derived from sales made, work done and/or services performed or rendered in business or other activities conducted in the city. Tax that is due on net profits distributed to partners or owners of unincorporated businesses and pass-through entities shall be collected and remitted to Solon by the entities on behalf of its partners and owners;
(d) On the portion of the distributive share of the net profits earned on and after July 1, 1995, of a resident partner or owner of a resident unincorporated business entity not attributable to the city and not levied against such unincorporated business entity by the city;
(e) On the portion attributable to the city of the net profits earned on or after July 1, 1995, of all nonresident unincorporated business entities, professions or other activities derived from sales made, work done and/or services performed or rendered in business and other activities conducted in the city, whether or not such unincorporated business entity has an office or place of business in the city;
(f) On the portion of the distributive share of the net profits earned on or after July 1, 1995, of a resident partner or owner of a nonresident unincorporated business entity not attributable to the city and not levied against such unincorporated business entity by the city;
(g) On the portion attributable to the city of the net profits earned on and after July 1, 1995, 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 such corporations have an office or place of business in the city;
(h) Effective for tax years 2004 and later, the distributive share of income paid to an S corporation shareholder shall be taxable in the following manner:
(1) If no portion of the net profits of the S Corporation are allocated or apportioned to the state, the distributive share is taxable only to the extent that it represents wages or net earnings from self-employment; and
(2) If any portion of the net profits of the S Corporation are allocated or apportioned to the state, the full amount of the distributive share is taxable.
(i) On all taxable income from lotteries, gaming, wagering or schemes of chance received by residents of the city or received by nonresidents of the city within the city or on the basis of activity conducted within the city. Taxable income shall not include proceeds from casinos, lotteries, gaming, wagering or schemes of chance sponsored by legitimate nonprofit organizations in an aggregate amount of less than $250,000 per year; and
(j) Exemptions. The tax provided for herein shall not be levied on the following:
(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 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 tax exempt activities, and only to the extent that the said income is exempt from federal income tax;
(3) 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;
(4) Social Security benefits, unemployment compensation (excluding supplemental unemployment compensation), payments from pension plans or similar payments, including disability payments received from private industry, or local, state or federal governments, or from charitable, religious or educational organizations, and the proceeds of sick, accident or liability insurance policies. The disability benefits excludable must be of a permanent nature as determined by a physician or government entity;
(5) Proceeds of insurance paid by reason of the death of the insured; pensions, annuities or gratuities not in the nature of compensation for services rendered, from whatever sources derived;
(6) 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;
(7) Gains from involuntary conversions, cancellation of indebtedness, items of income already taxed by the state from which the city is specifically prohibited from taxing and income of a decedent’s estate during the period of administration (except such income from the operation of a business);
(8) Compensation paid to a precinct election official, to the extent that such compensation does not exceed $1,000 annually;
(9) Income of all individuals under 18 years of age, whether residents or nonresidents;
(10) Alimony received;
(11) Expenses deductible on Federal Form 2106 in accordance with federal guidelines, and subject to audit and approval by the Administrator;
(12) 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 that religious body; and
(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 or any act of the Ohio General Assembly limiting the power of a municipality to impose net income taxes.
(Ord. 2007-217, passed 10-15-2007; Ord. 2012-202, passed 8-20-2012)