(A) In the case of an individual, partnership, association, corporation, fiduciary, or other entity engaged in the conduct, operation, prosecution of any business, profession, or other enterprise, there is imposed an annual license fee of 0.65% of the net profits of such business, profession, or other enterprise, if and to the extent conducted in or derived from activity in the city.
(B) (1) A business entity within the meaning of this section which has a branch office and/or store, warehouse, or other place in which the entity’s business is transacted, located in the city, shall be considered to be conducting, operating, prosecuting, or carrying on a trade, business, profession, enterprise, undertaking, or other activity to the full extent of the sum total of all transactions, originating or consummated in by or through the city branch, office, store, warehouse, or other place of business including:
(a) Billings made on such transactions;
(b) Services rendered;
(c) Shipments made;
(d) Goods, chattels, merchandise, and the like sold; or
(e) Commissions, fees, or other remuneration or payments earned as determined by division (D) below.
(2) The absence of a branch office, store, warehouse, or other permanent place of business within the city shall not exempt or render nonlicensable the net profits of any trade, business, profession, or enterprise or other activity on which a license fee is imposed by this chapter.
(C) In the case of partnership, association, or other unincorporated business owned by one or more persons, the license fee, generally, shall be upon the partnership, association, or business enterprise as an entity and not ordinarily upon the partners or members thereof.
(D) In determining the proportion or amount of the subject net profits of a business entity doing business within the city, the business entity shall use and apply the business allocation percentage formula set forth in § 110.17. For explanation of formula, see division (E) below.
(E) The business allocation percentage is computed as follows:
(l) The license payer shall use the formula set forth in § 110.17 to compute the percentage of the entire net profits, derived from activities both within and outside the city, which is subject under the provision and to determine the license fee payable to the city.
(2) (a) If the license payer was doing business in the city during such period, the business allocation percentage shall be computed on the basis of two following factors:
1. Business receipts within and without the city; and
2. Payrolls within and without the city.
(b) The business allocation percentage is computed by determining the percentages which city business receipts (see division (E)(6) below) bear to licensee’s entire business receipts wheresoever derived, including those derived from the city; and which payrolls paid by the licensee with the city bears to licensee’s entire payroll wheresoever paid, including city payrolls; adding together the two percentages so arrived at, and dividing the total by two.
(3) However, if one of the factors, receipts, or payrolls is missing, the remaining percentage is the business allocation percentage. A factor is not to be deemed missing merely because the expenditures of the licensee for payrolls for the gross receipts of the licensee are found to be situated, incurred, or received entirely within or entirely without the city.
(4) After determining the business allocation, the license fee shall be determined by applying that percentage to the entire net profits of the license payer wheresoever derived, (thus arriving at the subject net profit), and computing 0.65% of the resultant subject net profit.
(5) In case it shall appear to the Director of Finance that any agreement, understanding, or arrangement exists between the license payer and any other person, whereby the activity, business, income, or capital of the license payer is improperly or inaccurately reflected, the Director of Finance may adjust items of income, deductions, and capital, in computing any allocation percentage, provided any income directly traceable thereto is also excluded for the entire net income, so as equitable to determine the license fee.
(6) The percentage of the license payer’s business receipts within the city is determined by ascertaining the taxpayer’s business receipts within the city during the period covered by the license payer’s total business receipts within and without the city during such period.
(7) (a) Receipts from the following are allocable to the city:
1. Sales of the licensee’s tangible personal property, delivered to the buyer within the corporate limits of the city;
2. Work done and performed in the city;
3. Rentals from property situated in the city where the rental of such property is a business activity as defined in § 110.15(A)(2);
4. All other business receipts earned in the city.
(b) All receipts of the period covered by the report (computed on the cash or accrual basis, in accordance with the method of accounting used in the computation of the license payer’s entire net income) must be taken into account.
(F) (1) The term
COMPENSATION, as used in this section, may include not only payment in cash or property, but the gross credits to or charges by the licensee, under its normal and usual accounting practices, for the performance of work or services. For example, a plant, a factory, or other establishment in the city which processes material or manufactures parts for other plants or factories owned by the licensee, and which may receive credit for the performance of such services only by bookkeeping entries, may be chargeable under this section with the gross amount of such entries in applying the formula discussed in division (E) above. Furthermore, such bookkeeping entries may be considered in lieu of cash or property payment in determining the net profits of any license payer under this chapter even though the business allocation percentage formula may not be used by or be applicable to the licensee; provided, however, that whenever such gross credits or charges are included in computing the net profits of any licensee who or which pays a license fee thereon under this chapter, the same licensee shall not be twice subject in the same fee period by the separate imposition of a fee upon such gross credits or charges.
(2) Compensation and other receipts from work done or services performed within the city are allocable to the city and subject under this chapter. All amounts so received, credited, or charged by licensee in payment for such work or services are so allocable, irrespective of whether done or performed by employees of agents of licensees, by subcontractors, or by any other persons. It is immaterial where such amounts were payable or where they were received. Commissions or fees received by the licensee are allocated to the city if the services for which the commissions were paid were performed in the city. If the license payer’s services for which commissions or fees were paid were performed for the license payer by salesperson, or other agents or employees attached to or working out of the place of business in the city of the licensee, the licensee’s services will be deemed to have been performed in the city. Where a lump is received by the licensee in payment for services within and without the city, the amount attributable to services within the city is to be determined on the basis of the relative values of, or amounts of time spent in the performance of, such services within and without the city, or by some other reasonable method approved by the Director of Finance. Full details must be submitted with the licensee’s report.
(3) All business receipts earned by the city licensee within the city are allocated to the city; however, business receipts are not considered to have been earned by the licensee in the city solely by reason of the fact that they were payable or actually received in the city.
(4) Receipts for sales of capital, assets, and property not held by the licensee for sale to customers in the regular course of business are not business receipts. Receipts from the sale of real property held by the licensee as a dealer for the sale to customers in the regular course of business are business receipts and are allocable to the city if the real property was situated in the city. Receipts from sales of intangibles included in business capital, held by the licensee as a dealer for sale to customers in the regular course of business, are business receipts and are allocable to the city, if the sales were made in the city or through a regular place of business of the licensee in the city.
(G) The percentage of the license payer’s payroll allocable to the city is determined by dividing the wages, salaries, and other personal service compensation of the licensee’s employees with the city during the period covered by the report, by the total amount of compensation of all licensee’s employees during such period. Wages, salaries, and other compensation are computed on the cash or accrual basis in accordance with the method of accounting used in the computation of the entire net income of the licensee. Employees with the city include all employees regularly connected with a place of business maintained by the licensee in the city. Wherever it appears that the licensee’s payroll was paid to employees attached to places of business outside the city who performed services within the city, the payroll factor is to be computed by deriving the percentage of the licensee’s payroll paid in the city bears to the total payroll. In any such case, where an employee performs services both within and without the city, the amount treated as compensation for services performed with the city shall be deemed to be:
(1) In the case of an employee whose compensation depends directly on the volume of business secured by him or her, such as a salesperson on a commission basis, the amount received by him or her for the business attributable to his or her efforts within the city;
(2) In the case of an employee whose compensation depends on other results achieved, the proportion of the total compensation which the value of his or her services within the city bears to the value of all his or her services; and
(3) In the case of an employee compensated on a time basis, the proportion of the total amount received by him or her which the working employed in the city bears to the total working time.
(Prior Code, § 110.03) (Ord. 220.23C, passed 6-11-2020)