(a) An annual tax for the purpose specified in Section 890.01 shall be imposed on and after July 1, 2013, at the rate of two and one-half percent per year upon the following:
(1) On all income, qualifying wages, commissions and other compensation earned and/or received on and after July 1, 2013, by residents of the Village.
A. For further clarification income taxable by the Village of Walton Hills shall include all income derived from prizes, awards, gambling, wagering, lotteries, sports winnings or other similar games of chance by residents or nonresidents of the Village within the Village in an amount in excess of ten thousand dollars ($10,000) or on the basis of activities conducted within the Village on or after July 1, 2012. If the taxpayer is considered a professional gambler for Federal income tax purposes, related deductions as permitted by the Internal Revenue Code shall be allowed against gambling and sports winnings, otherwise no such deductions shall be permitted.
(2) On all income, qualifying wages, commissions and other compensation earned and/or received on and after July 1, 2013, by nonresidents of the Village for work done or services performed or rendered within the Village. 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 Village;
A. The Village shall not, however, tax the compensation of a nonresident individual who will be deemed to be an occasional entrant for purposes of the following apply:
1. The compensation is paid for personal services performed by the individual in the Village on 12 or fewer days during the calendar year, in which case the individual shall be considered an occasional entrant for purposes of the Village’s 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 Village and the individual pays tax on compensation described in Section 890.03(b) 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
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 Village.
B. Beginning with the thirteenth day an individual deemed to have been an occasional entrant to the Village performs services within the Village, the employer of said individual shall begin withholding the Village income tax from remuneration paid by the employer to the individual, and shall remit the withheld income tax to the Village 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 within the Village 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 Village.
(3) A. On the portion attributable to the Village of the net profits earned on and after July 1, 2013, of all resident unincorporated business entities or professions or other activities, derived from sales made, work done, services performed or rendered and business or other activities conducted in the Village;
B. On the portion of the distributive share of the net profits earned and/or received on and after July 1, 2013, of a resident partner or owner of a resident unincorporated business entity not attributable to the Village and not levied against such unincorporated business entity by the Village;
(4) A. On the portion attributable to the Village of the net profits earned on or after July 1, 2013, of all nonresident unincorporated business entities, professions or other activities derived from sales made, work done, services performed or rendered and business and other activities conducted in the Village, whether or not such unincorporated business entity has an office or place of business in the Village;
B. On the portion of the distributive share of the net profits earned and/or received on or after July 1, 2013, of a resident partner or owner of a nonresident unincorporated business entity not attributable to the Village and not levied against such unincorporated business entity by the Village;
C. On the portion attributable to the Village of the net profits earned on and after July 1, 2013, of all corporations derived from sales made, work done, services performed or rendered and business or other activities conducted in the Village, whether or not such corporations have an office or place of business in the Village;
(5) In accordance with a ballot issue approved by residents on November 4, 2003, the full amount of the distributive share of S Corporation shareholders is taxable; and
(6) On the portion attributable to the Village pursuant to the terms of this chapter and including income earned by a taxpayer from a royalty interest in the production of an oil or gas well, whether managed, extracted or operated by the taxpayer individually or through an agent or other representative. Such income shall be included in the computation of net profits from a business activity to the extent that such royalty interest constitutes a business activity of the taxpayer. Where the gross income received by a taxpayer from a royalty interest in the production of an oil or gas well in a taxable year exceeds three thousand dollars ($3,000), it shall be prima- facie evidence that the income was derived from a business activity of such taxpayer, and the net income from such royalty interest shall be subject to tax. If the income is three thousand dollars ($3,000) or less, the income shall be taxed as ordinary income.
(b) Net profits from a business or profession conducted both within and without the boundaries of the Village shall be considered as having a taxable situs in the Village for the purpose of income taxation in the same proportion as the average ratio of the factors in divisions (b)(1), (2), and (3) of this section:
(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 Village during the taxable period, to the average original cost of all 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 this 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.
(2) Qualifying wages, commissions and other compensation paid during the taxable period to persons employed in the business or profession for services performed in the Village, to qualifying wages, commissions and other compensation paid during the same period to persons employed in the business or profession, wherever their services are performed.
(3) Gross receipts of the business or profession from sales made and services performed during the taxable period in the Village to gross receipts of the business or profession during the same period from sales and services, wherever made or performed.
(4) Add together the percentages determined in accordance with divisions (b)(1), (2) and (3) hereof, or such of the aforesaid percentages as are applicable to the particular taxpayer, and divide the total so obtained by the number of percentages used in deriving such total, in order to obtain the business allocation percentage referred to in division (a) hereof. A factor is applicable even though it may be allocable entirely in or outside the Village.
(5) In the event that the foregoing apportionment formula in divisions (b)(1), (2), and (3) of this section does not produce an equitable result, another basis (including the use of the books and records method) may, under uniform regulations, be substituted so as to produce such result.
(6) As used in division (b)(3), “sales made in the Village” means:
A. All sales of tangible personal property which is delivered within the Village, regardless of where title passes, if shipped or delivered from a stock of goods within the Village;
B. All sales of tangible personal property which is delivered within the Village, regardless of where title passes even though transported from a point outside the Village, if the taxpayer is regularly engaged through its own employees in the solicitation or promotion of sales within the Village and the sales result from such solicitation or promotion; and
C. All sales of tangible personal property which is shipped from a place within the Village to purchasers outside of the Village, 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) (1) Rental income received by a taxpayer shall be included in the computation of net profits from business activities under divisions (a)(3) and (4) only if, and to the extent that, the rental, ownership, management or operations of the real estate from which such rentals are derived (whether so rented, managed or operated by a taxpayer individually or through agents or other representatives) constitutes a business activity of the taxpayer in whole or in part.
(2) Where the gross monthly rental of any and all real properties, regardless of number and value, aggregates in excess of two hundred fifty dollars ($250.00) per month, it shall be prima facie evidence that the rental, ownership, management or operation of such properties is a business activity of such taxpayer, and the net income of such rental property shall be subject to tax, provided that in the case of commercial property, the owner shall be considered engaged in a business activity when the rental is based on a fixed or fluctuating percentage of gross or net sales, receipts or profits of the lessee, whether or not such rental exceeds two hundred fifty dollars ($250.00) per month, provided, further, that in the case of farm property, the owner shall be considered engaged in a business activity when he or she shares in crops or when the rental is based on a percentage of the gross or net receipts derived from the farm, whether or not the gross income exceeds two hundred fifty dollars ($250.00) per month, and provided, further, that the person who operates a licensed rooming house shall be considered in business whether or not the gross income exceeds two hundred fifty dollars ($250.00) per month.
(3) Rental income of two hundred fifty dollars ($250.00) or less per month shall be taxable as ordinary income.
(d) Operating Loss Carry-Forward.
(1) The portion of a net operating loss sustained in any taxable year subsequent to July 1, 1968, allocable to the Village, may be applied against the portion of the profit of succeeding tax years allocable to the Village until exhausted, but in no event for more than five taxable years immediately following the year in which the loss occurred. No portion of a net operating loss may be carried back against net profits of any prior year.
(2) The portion of net operating loss sustained shall be allocated to the Village in the same manner as provided herein for allocating net profits to the Village.
(3) The Administrator shall provide by rules and regulations the manner in which such net operating loss carry-forward shall be determined.
(e) Exemptions (Sources of Income Not Taxed). The tax provided for in this chapter shall not be levied on the following:
(1) Military pay or allowance of active members of the Armed Forces of the United States and of members of their reserve components, including the National Guard.
(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) 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.
(5) Receipts by bona fide charitable, religious and educational organizations and associations, when those receipts are from seasonal or casual entertainment, amusements, sports events and health and welfare activities, when any such are conducted by bona fide charitable, religious or educational organizations and associations.
(6) Alimony received.
(7) Personal earnings of any natural person under 18 years of age.
(8) 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.
(9) 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.
(10) Compensation paid to a precinct election official, to the extent that such compensation does not exceed one thousand dollars ($1,000) annually.
(11) For taxpayers filing itemized Federal returns, tax shall not be levied on expenses reported in accordance with Federal guidelines for Federal Form 2106, subject to audit and approval by the income tax office.
(12) Interest, dividends and other revenue from intangible property.
(13) Gains from involuntary conversion, cancellation of indebtedness, interest on Federal obligations, items of income already taxed by the State of Ohio which the Village 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).
(14) Income, qualifying 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.
(15) Income, qualifying wages, commissions and other compensation and net profits, the taxation of which is prohibited by the Constitution of the State of Ohio or any act of the Ohio General Assembly limiting the power of the Village to impose net income taxes.
(Ord. 1985-23. Passed 8-5-85; Ord. 2002-8. Passed 3-19-2002; Ord. 2007-23. Passed 6-19-07; Ord. 2012-16. Passed 6-19-12; Ord. 2012-30. Passed 5-7-13 by voters; Ord. 2015-6. passed 11-17-15.)