(a) Rate; Income Taxed. An annual tax for the purposes specified in Section 173.01 hereof is imposed on and after the effective date of this chapter at the rate of one percent (1%) per annum upon the following:
(1) All qualifying wages, commissions, other compensation, and other taxable income earned or received during the effective period of this chapter by residents of this Municipality.
(2) All qualifying wages, commissions, other compensation, and other taxable income earned or received by during the effective period of this chapter by nonresidents for work done or services performed or rendered in this or for the Municipality as an employee or contractor of the Municipality.
(3) A. The portion attributable to this Municipality of the net profits earned during the effective period of this chapter by all resident unincorporated businesses, pass-through entities, professions or other activities, derived from sales made, work done, services performed or rendered, and business or other activities conducted in this Municipality.
B. The portion of the distributive share of the net profits earned by a resident owner of a resident unincorporated business entity or pass- through entity not attributable to the Municipality and not levied against such unincorporated business entity or pass-through entity.
C. The portion of the distributive share of the net profits earned during the effective period of this chapter of a resident partner or owner of a resident unincorporated business entity not attributable to this Municipality and not levied against the unincorporated business entity by this Municipality.
(4) A. The portion attributable to this Municipality of the net profits earned during the effective period of this chapter of all nonresident unincorporated businesses, pass-through entities, professions or other activities, derived from sales made, work done or service performed or rendered, and business or other activities conducted in this Municipality, whether or not the unincorporated business entity has an office or place of business in this Municipality.
B. The portion of the distributive share of the net profits earned during the effective period of this chapter of a resident partner or owner of a nonresident unincorporated business entity or pass-through entity not attributable to this Municipality and not levied against the unincorporated business entity or pass-through entity by this Municipality.
(5) The portion attributable to this Municipality, of the net profits earned during the effective period of this chapter of all corporations that are not pass-through entities from sales made, work done, services performed or rendered, and business or other activities conducted in this Municipality whether or not such corporations have an office or place of business in this Municipality.
(6) On all income received as gambling winnings as reported in IRS Form W- 2G, Form 5754 and/or any other form required by the Internal Revenue Service that reports winnings from gambling, prizes and lottery winnings. (Ord. 4184. Passed 5-11-04.)
(b) Attribution of Profits.
(1) For the purposes of this section, the portion of the net profits of a taxpayer conducting business activities both within and without the boundaries of this Municipality attributable to this Municipality shall be the same proportion as the average ratio of the following:
Multiply the entire net profits of the business by a business apportionment percentage to be determined by:
A. The average original cost of the real and tangible personal property owned or used by the taxpayer in the business or profession in this Municipality 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.
As used in the preceding paragraph, real property shall include property rented or leased by the taxpayer and the value of such property shall be determined by multiplying the annual rental thereon by eight;
B. Wages, salaries and other compensation paid during the taxable period to persons employed in the business or profession for services performed in this Municipality to wages, salaries and other compensation paid during the same period to persons employed in the business or profession, wherever their services are performed, excluding compensation that is not taxable by the municipal corporation under section 718.011 of the Ohio Revised Code;
C. Gross receipts of the business or profession from sales made and services performed during the taxable periods in this Municipality, to gross receipts of the business or profession during the same period from sales and services, wherever made or performed.
D. Adding together the percentages determined in accordance with subsections (b)(1)A., B. and C. hereof, or such of the aforesaid percentages as are applicable to the particular taxpayer and dividing the total so obtained by the number of percentages used in deriving such total.
1. A factor is applicable even though it may be apportioned entirely in or outside the Municipality.
2. Provided however, that in the event a just and equitable result cannot be obtained under the formula provided herein, the Income Tax Supervisor, upon application of the taxpayer, shall have the authority to substitute other factors or methods calculated to effect a fair and proper apportionment.
(2) As used in subsection (b)(1) hereof, the following terms shall have the meanings indicated:
"Sales made in this Municipality" means:
A. All sales of tangible personal property delivered within this Municipality, regardless of where title passes, if shipped or delivered from a stock of goods within the Municipality.
B. All sales of tangible personal property delivered within this Municipality, regardless of where title passes, even though transported from a point outside this Municipality, if the taxpayer is regularly engaged, through its own employees, in the solicitation or promotion of sales within this Municipality, and the sales result from such solicitation or promotion.
C. All sales of tangible personal property shipped from a place within this Municipality to purchasers outside this Municipality, regardless of where title passes, if the taxpayer is not, through its own employees, regularly engaged in the solicitation or promotion of sales at the place where delivery is made.
(c) Operating Losses. A business operating loss may only be offset against the profits of a business of like nature owned by the same taxpayer. Similarly, losses resulting from the operation of rental properties may only be offset against the profits generated by other rentals owned by the same taxpayer. Operating losses may not be offset against salaries, wages, commissions and other compensation as defined in this chapter.
(d) Operating Loss Carry-Forward.
(1) The portion of a net operating loss sustained in any taxable year subsequent to the effective date of this chapter allocable to this Municipality may be applied against the portion of the profit of succeeding years, allocable to this Municipality, until exhausted but in no event for more than three taxable years. No portion of a net operating loss shall be carried back against net profits of any prior year.
(2) The portion of a net operating loss sustained shall be allocated to this Municipality in the same manner as provided herein for allocating net profits to this Municipality.
(3) The Income Tax Supervisor shall provide by rules and regulations the manner in which such net operating loss carry-forward shall be determined.
(e) Consolidated Returns. Filing of consolidated returns may be permitted, required or denied in accordance with rules and regulations prescribed by the Income Tax Supervisor. In the case of a corporation that carries on transactions with its stockholders or with other corporations related by stock ownership, interlocking directorates or some other method, or in case any person operated a division, branch, factory, office, laboratory or activity within this Municipality constituting a portion only of its total business, the Income Tax Supervisor shall require such additional information as he may deem necessary to ascertain whether net profits are properly allocated to this Municipality. If the Income Tax Supervisor finds net profits are not properly allocated to this Municipality by reason of transactions with stockholders or with other corporations related by stock ownership, interlocking directorates or transactions with such division, branch, factory, office, laboratory activity or by some other method, he shall make such allocations as he deems appropriate to produce a fair and proper allocation of net profits to this Municipality.
(f) Exclusions From Tax. The tax provided for herein shall not be levied upon the following:
(1) A military pay or allowance of a member of the armed forces of the United States or income of civic, charitable, religious, 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.
(2) Poor relief, unemployment insurance benefits, old age pensions or similar payments, including disability benefits received from local, State or Federal Governments or charitable, religious or educational organizations.
(3) Proceeds of insurance paid by reason of the death of the insured; pensions, disability benefits, annuities or gratuities not in the nature of compensation for services rendered from whatever source derived.
(4) Receipts from seasonal or casual entertainment, amusements, sports events and health and welfare activities which are conducted by bona fide charitable, religious or educational organizations and associations.
(5) Alimony received.
(6) Personal earnings of any natural person under sixteen years of age.
(7) Compensation for personal injuries or for damages to property, by way of insurance or otherwise.
(8) Interest, dividends and other revenue from intangible property.
(9) Gains from involuntary conversion, cancellation of indebtedness, interest on federal obligations, 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 income from the operations of a business).
(10) The Municipality shall not tax the compensation paid to a nonresident individual for personal services performed by the individual in the Municipality on twelve (12) or fewer days in a calendar year unless one of the following applies:
A. The individual is an employee of another person, the principal place of business of the individual's employer is located in another municipality in Ohio that imposes a tax applying to compensation paid to the individual for services paid on those days; and the individual is not liable to that other municipality for tax on the compensation paid for such services.
B. The individual is a professional entertainer or professional athlete, the promoter of a professional entertainment or sports event, or an employee of such promoter, all as may be reasonably defined by the Municipality.
(11) The income of a public utility, when that public utility is subject to the tax levied under section 5727.24 and 5727.30 of the Ohio Revised Code, except a municipal corporation may tax the following, subject to Chapter 5745, of the Ohio Revised Code:
A. The income of an electric company or combined company;
B. The income of a telephone company.
As used in division (f)(1) of this Section, "combined company", "electric company"' and "telephone company" have the same meaning as in section 5727.01 of the Ohio Revised Code
(12) An S Corporation shareholder’s distributive share of net profits or losses of the S corporation.
(13) 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 powers of the states or their political subdivisions to impose net income taxes on income derived from interstate commerce.
(14) Salaries, wages, commissions and other compensation and net profits, the taxation of which is prohibited by the Constitution of the State or any act of the Ohio General Assembly limiting the power of the City to impose net income taxes.
(Ord. 4173. Passed 12-9-03.)