(A) Tax reciprocity. Notwithstanding any other provision of this chapter which applies to Ohio Residents and Ohio municipalities only:
(1) When an Ohio resident is subject to or has paid, or has acknowledged a liability for a municipal income tax in another Ohio municipality on the same income taxable under this chapter and such other Ohio municipality does not allow a credit to its nonresidents, such resident of the city may claim a credit in the amount of one-half of the amount of such tax paid to such tax paid to such other Ohio municipality, but not in excess of one-half of the tax assessed by this chapter.
(2) (a) When an Ohio resident is subject to and has paid or has acknowledged liability for a municipal income tax in another Ohio municipality on the same basis as provided in division (A)(3) of this section, a credit shall be allowed against the city income tax of 50% of the tax due under the ordinance of such other Ohio municipality, whichever is the lesser.
(b) If the tax due such other Ohio municipality has been paid to or withheld in such other Ohio municipality, a city resident may claim credit for and assign to the city any claim for refund to which he may be entitled from such other Ohio municipality. In the event an amount is not received by the city equal to such credit claimed by reason of tax payment made to or withheld in such other Ohio municipality, then the taxpayer shall be liable to the city for an amount by which the claimed credit exceeds the amount recovered on such assignment by the city, together with penalty and interest. If satisfactory evidence is offered, however, the taxpayer is entitled to the claim covered by assignment, such taxpayer shall be deprived of credit therefore because of fault or neglect on the part of either Ohio municipality.
(c) Assignment of any claim for refund to which an Ohio resident may be entitled from another municipality shall be tentatively accepted as payment of that portion of city income tax represented by such assignment. However, should an overpayment result from the credit allowed by reason of such assignment, no refund thereof shall be made until such assignment has been accepted for payment by such other Ohio municipality.
(3) (a) When a Ohio nonresident is subject to the tax imposed by this chapter and is also subject to tax on the same income in the Ohio municipality of his residence, a credit of 50% of the tax due under this chapter or 50% of the tax due under the ordinance of such other Ohio municipality, whichever is the lesser, shall be allowed against the tax due under this chapter, provided;
1. The other Ohio municipality imposes on its residents a tax on the same income and reciprocal provision is made in the ordinance of such other Ohio municipality granting to nonresidents thereof a credit on the same basis as provided in this division against the tax levied thereby;
2. Such Ohio nonresident is subject to and has paid, or has acknowledged liability in the Ohio municipality of his or her residence for any tax due after such reciprocal credit is allowed; and
3. The Ohio municipality of his or her residence furnishes evidence of payment of tax therein or evidence of assignment by the taxpayer of his or her claim for reciprocal credit to such other Ohio municipality.
(b) The amount due a nonresident as a result of having overpaid the tax due the city, or arising from allowance of a credit provided for herein may, under regulations adopted by the Tax Administrator, be assigned and paid to such other municipality.
(4) The credits provided for in divisions (A)(1), (2) and (3) of this section will not be allowed unless the same are claimed in a timely return or form acceptable to, and filed with the Tax Administrator. In the event that a taxpayer fails, neglects or refuses to file such timely return or form he or she shall not be entitled to such credit and shall be liable for the full amount of tax assessed by this chapter together with such interest and penalties, both civil and criminal, as are proscribed in this chapter.
(5) Any claim for credit for income taxes paid in another municipality on the same income taxable hereunder, or claim for assignment of any refund due to the credit provided for herein, must be filed with the Tax Administrator on or before December 31 of the year following that for which such credit is claimed. However, in the event such claim for reciprocity refunds has been assigned to the municipality of residence, such municipality of residence must file a claim for refund with the Tax Administrator on or before January 31 next following such December 31. Failure to file such claim for reciprocity credit or refund or assignment null and void.
(B) Refundable credit for qualifying loss.
(1) As used in this section:
(a) "Nonqualified deferred compensation plan" means a compensation plan described in § 3121(v)(2)(C) of the Internal Revenue Code.
(b) 1. Except as provided in division (B)(1)(b)2. of this section, "qualifying loss" means the excess, if any, of the total amount of compensation the payment of which is deferred pursuant to a nonqualified deferred compensation plan over the total amount of income the taxpayer has recognized for federal income tax purposes for all taxable years on a cumulative basis as compensation with respect to the taxpayer's receipt of money and property attributable to distributions in connection with the nonqualified deferred compensation plan.
2. If, for one or more taxable years, the taxpayer has not paid to one or more municipal corporations income tax imposed on the entire amount of compensation the payment of which is deferred pursuant to a nonqualified deferred compensation plan, then the "qualifying loss" is the product of the amount resulting from the calculation described in division (B)(1)(b)1. of this section computed without regard to division (B)(1)(b)2. of this section and a fraction the numerator of which is the portion of such compensation on which the taxpayer has paid income tax to one or more municipal corporations and the denominator of which is the total amount of compensation the payment of which is deferred pursuant to a nonqualified deferred compensation plan.
3. With respect to a nonqualified deferred compensation plan, the taxpayer sustains a qualifying loss only in the taxable year in which the taxpayer receives the final distribution of money and property pursuant to that nonqualified deferred compensation plan.
(c) "Qualifying tax rate" means the applicable tax rate for the taxable year for the which the taxpayer paid income tax to a municipal corporation with respect to any portion of the total amount of compensation the payment of which is deferred pursuant to a nonqualified deferred compensation plan. If different tax rates applied for different taxable years, then the "qualifying tax rate" is a weighted average of those different tax rates. The weighted average shall be based upon the tax paid to the municipal corporation each year with respect to the nonqualified deferred compensation plan.
(2) (a) Except as provided in division (B)(4) of this section, a refundable credit shall be allowed against the income tax imposed by a municipal corporation for each qualifying loss sustained by a taxpayer during the taxable year. The amount of the credit shall be equal to the product of the qualifying loss and the qualifying tax rate.
(b) A taxpayer shall claim the credit allowed under this section from each municipal corporation to which the taxpayer paid municipal income tax with respect to the nonqualified deferred compensation plan in one or more taxable years.
(c) If a taxpayer has paid tax to more than one municipal corporation with respect to the nonqualified deferred compensation plan, the amount of the credit that a taxpayer may claim from each municipal corporation shall be calculated on the basis of each municipal corporation's proportionate share of the total municipal corporation income tax paid by the taxpayer to all municipal corporations with respect to the nonqualified deferred compensation plan.
(d) In no case shall the amount of the credit allowed under this section exceed the cumulative income tax that a taxpayer has paid to a municipal corporation for all taxable years with respect to the nonqualified deferred compensation plan.
(3) (a) For purposes of this section, municipal corporation income tax that has been withheld with respect to a nonqualified deferred compensation plan shall be considered to have been paid by the taxpayer with respect to the nonqualified deferred compensation plan.
(b) Any municipal income tax that has been refunded or otherwise credited for the benefit of the taxpayer with respect to a nonqualified deferred compensation plan shall not be considered to have been paid to the municipal corporation by the taxpayer.
(4) The credit allowed under this section is allowed only to the extent the taxpayer's qualifying loss is attributable to:
(a) The insolvency or bankruptcy of the employer who had established the nonqualified deferred compensation plan; or
(b) The employee's failure or inability to satisfy all of the employer's terms and conditions necessary to receive the nonqualified deferred compensation.
(C) Credit for person working in joint economic development district or zone. A municipality shall grant a credit against its tax on income to a resident of the municipality who works in a joint economic development zone created under R.C. § 715.691 or a joint economic development district created under R.C. §§ 715.70, 715.71, or 715.72 to the same extent that it grants a credit against its tax on income to its residents who are employed in another municipal corporation, pursuant to § 110.08(A).
(D) Credit for tax beyond statute for obtaining refund.
(1) Income tax that has been deposited or paid to the municipality, but should have been deposited or paid to another municipal corporation, is allowable by the municipality as a refund, but is subject to the three-year limitation on refunds as provided in § 110.09(F).
(2) Income tax that should have been deposited or paid to the municipality, but was deposited or paid to another municipal corporation, shall be subject to collection and recovery by the municipality. To the extent a refund of such tax or withholding is barred by the limitation on refunds as provided in § 110.09(F), the municipality will allow a non-refundable credit equal to the tax or withholding paid to the other municipality against the income tax the municipality claims is due. If the municipality's tax rate is higher, the tax representing the net difference of the tax rates is also subject to collection by the municipality, along with any penalty and interest accruing during the period of nonpayment.
(3) No carryforward of credit will be permitted when the overpayment is beyond the three-year limitation for refunding of same as provided in § 110.09(F).
(4) Nothing in this section requires a municipality to allow credit for tax paid to another municipal corporation if the municipality has reduced credit for tax paid to another municipal corporation. Section110.08(A) regarding any limitation on credit shall prevail.
(Ord. 12-2015, passed 10-14-15)
Statutory reference:
Refundable credit allowed against income tax imposed by municipal corporation for each qualifying loss sustained by taxpayer, see R.C. § 718.021
Second municipality imposing tax after time period allowed for refund, see R.C. § 718.121
Tax credit to person who works in joint economic development zone or district, see R.C. § 718.16