(A) Individuals. Divisions (A) through (E) pertain to individuals. For residents of West Alexandria, the income tax levied herein shall be on all income, salaries, qualifying wages, commissions and other compensation from whatever source earned or received by the resident, including the resident’s distributive share of the net profit of pass-through entities owned directly or indirectly by the resident and any net profit of the resident. This is further detailed in the definition of income (§ 36.231(C)(16)).
(1) Tax shall be levied on any resident of West Alexandria who is a member or employee of the Ohio General Assembly, including the Lieutenant Governor. The tax shall be levied on the income that is received as a result of services rendered as such member or employee and is paid from appropriated funds of this state. This tax can only be levied by the city of residence.
(2) Tax shall be levied by West Alexandria on the income of a judge sitting by assignment of the Chief Justice or on the income of a district court of appeals judge sitting in multiple locations within the district, received as a result of services rendered as a judge. This tax can only be levied by the municipality of residence.
(3) Tax shall be levied by West Alexandria on the income of the Chief Justice or a justice of the Supreme Court received as a result of services rendered as the chief justice or justice. This tax can only be levied by the municipality of residence and the City of Columbus, and is subject to West Alexandria’s credit provisions.
(B) Nonresidents. For nonresidents, all income, salaries, qualifying wages, commissions and other compensation from whatever source earned or received by the nonresident for work done, services performed or rendered, or activities conducted in the municipal corporation, including any net profit of the nonresident, but excluding the nonresident’s distributive share of the net profit or loss of only pass- through entities owned directly or indirectly by the nonresident.
(C) Reduction of income.
(2) Income, and other compensation, includes but is not limited to:
(a) Tips received by waiters and others;
(b) Bonuses;
(c) Gifts or gratuities in connection with employment;
(d) Compensation paid to domestic servants (see § 36.233(B)(12) for withholding requirement), casual employees and other types of employees;
(e) Fellowships, grants or stipends paid to a graduate in the full amount, except that amount allocated in writing for tuition, books and laboratory fees shall be excluded;
(f) Dismissal pay, severance pay, reduction-in-force pay and other forms of termination pay;
(g) Retirement and other plans: employee contributions to retirement plans are neither excludable nor deductible by the employee. Withholding applies to the employee’s full compensation unreduced by an employee’s contribution to a retirement plan. The same rules apply with respect to other amounts withheld from employees and contributed to other types of plans;
(h) Stock options given as compensation and when exercised. The tax is due to the municipality of the workplace and/or residence (i.e., if full credit is not given by the resident municipality) at the time of the purchase. The amount of taxable income is the difference between the price paid for the stock and the fair market value of the stock at the time of purchase;
(i) Disqualifying disposition of an incentive stock option. The taxpayer is responsible for payment of the tax if, at the time of the disqualifying disposition, the municipal income tax was not withheld by the corporation with respect to whose stock the option has been issued;
(j) Restricted stock given as compensation shall be taxed at the fair market value at the time all restrictions lapse;
(k) Income from pass-through entities: initially taxed at entity level. In regard to subchapter S corporations, a distribution from a subchapter S corporation will be treated as wages if it was for services performed. If a taxpayer does not claim such compensation as wages, RITA will treat the distribution as wages to the extent that it is a fair wage for the services performed;
(l) Royalty income: 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, shall be included in the computation of net profits;
(m) Deferred compensation;
(n) Profit-sharing plans;
(o) Income derived from finance and carrying charges associated with accounts receivable from customers;
(p) Federal Form 1099-MISC income;
(q) Payments made to employees by an employer as vacation, personal or holiday wages are taxable. Payments made to an employee by an employer directly under a wage continuation plan during periods of disability or sickness are also taxable. All payments made under this provision are deemed to be days spent in West Alexandria for purposes of taxation, and therefore are not allocable to other municipalities; and
(r) Covenants not to compete and similar non-competition agreements.
(D) Refundable credit for nonqualified deferred compensation plan.
(1) As used in this division (D):
(a) NONQUALIFIED DEFERRED COMPENSATION PLAN means a compensation plan described in § 3121(v)(2)(C) of the Internal Revenue Code.
(b) QUALIFYING LOSS means the amount of compensation attributable to a taxpayer’s nonqualified deferred compensation plan, less the receipt of money and property attributable to distributions from the nonqualified deferred compensation plan. Full loss is sustained if no distribution of money and property is made by the 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) 1. QUALIFYING TAX RATE means the applicable tax rate for the taxable year for the which the taxpayer paid income tax to West Alexandria with respect to any portion of the total amount of compensation the payment of which is deferred pursuant to a nonqualified deferred compensation plan.
2. 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 West Alexandria each year with respect to the nonqualified deferred compensation plan.
(d) REFUNDABLE CREDIT means the amount of West Alexandria income tax that was paid on the non-distributed portion, if any, of a nonqualified deferred compensation plan.
(2) If, in addition to West Alexandria, a taxpayer has paid tax to other municipal corporations 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.
(3) In no case shall the amount of the credit allowed under this section exceed the cumulative income tax that a taxpayer has paid to West Alexandria for all taxable years with respect to the nonqualified deferred compensation plan.
(4) The credit allowed under this division (D) 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.
(E) Domicile.
(1) (a) An individual is presumed to be domiciled in West Alexandria for all or part of a taxable year if the individual was domiciled in West Alexandria on the last day of the immediately preceding taxable year or if the Tax Administrator reasonably concludes that the individual is domiciled in West Alexandria for all or part of the taxable year.
(b) An individual may rebut the presumption of domicile described in division (E)(1)(a) of this section if the individual establishes by a preponderance of the evidence that the individual was not domiciled in West Alexandria for all or part of the taxable year.
(2) For the purpose of determining whether an individual is domiciled in West Alexandria for all or part of a taxable year, primary factors that may be considered include, but are not limited to, the following:
(a) The individual’s domicile in other taxable years;
(b) The location at which the individual is registered to vote;
(c) The address on the individual’s driver’s license;
(d) The location of real estate for which the individual claimed a property tax exemption or reduction allowed on the basis of the individual’s residence or domicile;
(e) The location and value of abodes owned or leased by the individual;
(f) Declarations, written or oral, made by the individual regarding the individual’s residency;
(g) The primary location at which the individual is employed;
(h) The location of educational institutions attended by the individual’s dependents as defined in § 152 of the Internal Revenue Code, to the extent that tuition paid to such educational institution is based on the residency of the individual or the individual’s spouse in the municipal corporation where the educational institution is located; and
(i) The number of contact periods the individual has with West Alexandria. For the purposes of this division (E), an individual has one “contact period” with West Alexandria if the individual is away overnight from the individual’s abode located outside of West Alexandria and while away overnight from that abode spends at least some portion, however minimal, of each of two consecutive days in West Alexandria.
(3) Secondary factors that may be considered include the following:
(a) The location of financial institutions in which the individual or the individual’s spouse have any accounts, including, but not limited to, checking, savings, certificates of deposit or individual retirement accounts;
(b) The location of issuers of credit cards to the individual or the individual’s spouse or of any other persons making installment loans to the individual or the individual’s spouse;
(c) The location of institutional lenders which have made loans to, or which are guaranteed by, the individual or the individual’s spouse;
(d) The location of investment facilities, brokerage firms, realtors, financial advisors or consultants used by the individual or the individual’s spouse;
(e) The location of either the insurance company that issued or the insurance agent that sold any policy of insurance to the individual or the individual’s spouse, including, but not limited to, life, health, disability, automobile or homeowner’s insurance;
(f) The location of law firms, accounting firms and similar professionals utilized by the individual or the individual’s spouse for legal, tax, accounting, financial or retirement services;
(g) The location of physicians, dentists, osteopaths, optometrists or other health care providers, or veterinarians utilized by the individual or the individual’s spouse;
(h) The location of organizations described in § 501(c) of the Internal Revenue Code to which the individual or the individual’s spouse make contributions or other payments or in which they participate as a congregant, member, board member, committee member, adviser or consultant;
(i) The location of burial plots owned by the individual or the individual’s spouse;
(j) The location of business ventures or business entities in which the individual or the individual’s spouse has a more than 25% ownership interest or in which the individual exercises, either individually or jointly, significant control over the affairs of the venture or entity;
(k) The recitation of residency or domicile in a will, trust or other estate planning document;
(l) The location of the individual’s friends, dependents as defined in § 152 of the Internal Revenue Code, and family members other than the individual’s spouse, if the individual is not legally separated from the individual’s spouse under a decree of divorce or separate maintenance as provided in § 7703(a)(2) of the Internal Revenue Code;
(m) The location of trustees, executors, guardians or other fiduciaries named in estate planning documents of the individual or the individual’s spouse;
(n) The location of all businesses at which the individual or the individual’s spouse makes purchases of tangible personal property;
(o) The location where the individual married; and
(p) The location or identity of recipients of political contributions made by the individual or the individual’s spouse.
(F) Businesses. This division (F) pertains to businesses. This division (F) applies to any taxpayer engaged in a business or profession in West Alexandria, unless the taxpayer is an individual who resides in West Alexandria or the taxpayer is an electric company, combined company, or telephone company that is subject to and required to file reports under R.C. Chapter 5745.
(1) Except as otherwise provided in division (F)(3) of this section, net profit from a business or profession conducted both within and without the boundaries of West Alexandria shall be considered as having a taxable situs in West Alexandria for purposes of municipal income taxation in the same proportion as the average ratio of the following:
(a) 1. The average original cost of the real property and tangible personal property owned or used by the taxpayer in the business or profession in West Alexandria 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; and
2. As used in the division (F)(1)(a)1. of this section, tangible personal or 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 individuals employed in the business or profession for services performed in West Alexandria to wages, salaries, and other compensation paid during the same period to individuals employed in the business or profession, wherever the individual’s services are performed, excluding compensation from which taxes are not required to be withheld under § 36.233(C).
(c) Total gross receipts of the business or profession from sales and rentals made and services performed during the taxable period in West Alexandria to total gross receipts of the business or profession during the same period from sales, rentals and services, wherever made or performed.
(2) The business allocation percentage shall be determined as follows:
(a) Step 1 - Ascertain the percentage which the average original cost of real and tangible personal property, including leasehold improvements owned or used in the business and situated within West Alexandria, is of the average original cost of all real and tangible personal property, including leasehold improvements owned or used in the business wherever situated, during the period covered by the return. The percentage of taxpayer’s real and tangible personal property within West Alexandria is determined by dividing the average original cost of such property within West Alexandria (without deduction of any encumbrances) by the average original cost of all such property within and without West Alexandria. In determining such percentage, property rented by the taxpayer, as well as real and tangible personal property owned by the taxpayer, must be considered.
1. The original cost of real and tangible personal property rented by the taxpayer shall be determined by multiplying gross annual rents payable by eight.
2. Gross rent means the actual sum of money or other consideration payable, directly or indirectly, by the taxpayer for the use and possession of property and includes:
a. Any amount payable for the use or possession of real and tangible personal property or any part thereof, whether designated as a fixed sum of money or as a percentage of sales profits or otherwise; and
b. Any amount payable as additional rent or in lieu of rent such as interest, taxes, insurance, repairs or other amounts required to be paid by the terms of a lease or other arrangement.
(b) Step 2 - Ascertain the percentage which the total wages, salaries commissions and other compensation of employees within West Alexandria is of the total wages, salaries, commissions and other compensation of all the taxpayer’s employees within and without West Alexandria during the period covered by the return.
1. Wages, salaries and other compensation may be computed on the cash or accrual basis. Wages, salaries and other compensation shall be included to the extent that they represent qualifying wages.
2. In the case of an employee who performs services both within and without West Alexandria, the amount treated as compensation for services performed within West Alexandria shall be deemed to be:
a. In the case of an employee whose compensation depends directly on the volume of business secured by him or her, such as a salesman on a commission basis, the amount earned or received by him or her for the business attributable to his or her efforts within West Alexandria; and
b. In the case of an employee whose compensation depends on other than the volume of business transacted, the proportion of the total amount compensation received by him or her which is his or her for working time within West Alexandria of his or her total working time.
3. For the purpose of the computation, wages should include a reasonable amount attributable to the services of executives, officers, and owners (see division (F)(2)(b)2. of this section) for the amount treated as compensation for services performed within West Alexandria.
4. As used in division (F)(1)(b) of this section, WAGES, SALARIES AND OTHER COMPENSATION includes only wages, salaries or other compensation paid to an employee for services performed at any of the following locations:
a. A location that is owned, controlled or used by, rented to or under the possession of one of the following:
i. The employer;
ii. A vendor, customer, client or patient of the employer, or a related member of such a vendor, customer, client or patient; and
iii. A vendor, customer, client or patient of a person described in division (F)(2)(b)4.a.ii. of this section, or a related member of such a vendor, customer, client or patient.
b. Any location at which a trial, appeal, hearing, investigation, inquiry, review, court-martial or similar administrative, judicial or legislative matter or proceeding is being conducted, provided that the compensation is paid for services performed for, or on behalf of, the employer or that the employee’s presence at the location directly or indirectly benefits the employer;
c. Any other location, if the Tax Administrator determines that the employer directed the employee to perform the services at the other location in lieu of a location described in division (F)(2)(b)4.a. or (F)(2)(b)4.b. of this section solely in order to avoid or reduce the employer’s municipal income tax liability. If the Tax Administrator makes such a determination, the employer may dispute the determination by establishing, by a preponderance of the evidence, that the Tax Administrator’s determination was unreasonable.
(c) Step 3 - Ascertain the percentage which the gross receipts of the taxpayer derived from sales and rentals made and services performed in West Alexandria is of the total gross receipts wherever derived during the period covered by the return. In the application of the following sales determination factors, a carrier shall be considered the agent of the seller regardless of the FOB point or other conditions of the sale and the place at which orders are accepted or contracts legally consummated shall be immaterial. Solicitations of customers outside of West Alexandria by mail, telephone or otherwise electronically from an office or place of business within West Alexandria shall not be considered a solicitation of sales outside West Alexandria. For the purposes of this division (F), receipts from sales and rentals made and services performed shall be sitused to West Alexandria as follows:
1. Gross receipts from the sale of tangible personal property shall be sitused to the municipal corporation in which the sale originated. For the purposes of this division (F), a sale of property originates in West Alexandria if, regardless of where title passes, the property meets any of the following criteria:
a. The property is shipped to or delivered within West Alexandria from a stock of goods located within West Alexandria.
b. The property is delivered within West Alexandria from a location outside West Alexandria, provided the taxpayer is regularly engaged through its own employees in the solicitation or promotion of sales within West Alexandria and the sales result from such solicitation or promotion; and
c. The property is shipped from a place within West Alexandria to purchasers outside West Alexandria, provided that the taxpayer is not, through its own employees, regularly engaged in the solicitation or promotion of sales at the place where delivery is made.
2. Gross receipts from the sale of services shall be sitused to West Alexandria to the extent that such services are performed in West Alexandria;
3. To the extent included in income, gross receipts from the sale of real property located in West Alexandria shall be sitused to West Alexandria;
4. To the extent included in income, gross receipts from rents and royalties from real property located in West Alexandria shall be sitused to West Alexandria; and
5. Gross receipts from rents and royalties from tangible personal property shall be sitused to West Alexandria based upon the extent to which the tangible personal property is used in West Alexandria.
(d) Step 4 - Add the percentages determined in accordance with Steps 1, 2 and 3, or such of the aforesaid percentages as may be applicable to the particular taxpayer’s business, and divide the total so obtained by the number of percentages used in ascertaining said total. The result so obtained is the business allocation percentage. In determining the average percentage, a factor shall not be excluded from the computation merely because said factor is found to be allocable entirely outside West Alexandria. A factor is excluded only when it does not exist anywhere.
(e) Step 5 - The business allocation percentage determined in Step 4 above shall be applied to the entire taxable net profits of the taxpayer wherever derived to determine the net profits allocable to West Alexandria.
(3) (a) If the apportionment factors described in division (F)(1) of this section do not fairly represent the extent of a taxpayer’s business activity in West Alexandria, the taxpayer may request, or the Tax Administrator of West Alexandria may require, that the taxpayer use, with respect to all or any portion of the income of the taxpayer, an alternative apportionment method involving one or more of the following:
1. Separate accounting (i.e., books and records). If the Administrator approves the use of books and records as an alternative method, the following shall apply:
a. The net profits allocable to West Alexandria from business, professional or other activities conducted in West Alexandria by corporations or unincorporated entities (whether resident or nonresident) may be determined from the records of the taxpayer only if the taxpayer has bona fide records which disclose with reasonable accuracy what portion of his or her net profits is attributable to that part of his or her activities conducted within West Alexandria;
b. If the books and records of the taxpayer are used as the basis for apportioning net profits, a statement must accompany the return explaining the manner in which such apportionment is made in sufficient detail to enable the Administrator to determine whether the net profits attributable to West Alexandria are apportioned with reasonable accuracy; and
c. In determining the income allocable to West Alexandria from the books and records of a taxpayer, an adjustment may be made for the contribution made to the production of such income by headquarters activities of the taxpayer, whether such headquarters is within or without West Alexandria.
2. The exclusion of one or more of the factors;
3. The inclusion of one or more additional factors that would provide for a more fair apportionment of the income of the taxpayer to the municipal corporation; and
4. A modification of one or more of the factors.
(b) A taxpayer request to use an alternative apportionment method shall be in writing and shall accompany a tax return, timely filed appeal of an assessment or timely filed amended tax return. Such written request accompanying a tax return or timely filed amended tax return must be addressed to the business manager and shall be attached as the first page of the tax return or timely filed amended tax return to which it applies. The taxpayer may use the requested alternative method unless the Tax Administrator denies the request in an assessment issued within the period prescribed by § 36.241(A).
(c) The Tax Administrator may require a taxpayer to use an alternative apportionment method as described in division (F)(3)(a) of this section, but only by issuing an assessment to the taxpayer within the period prescribed by § 36.241(A).
(d) Nothing in division (F)(3) of this section nullifies or otherwise affects any alternative apportionment arrangement approved by the Tax Administrator or otherwise agreed upon by both the Tax Administrator and taxpayer before January 1, 2016.
(4) The net profit received by an individual taxpayer from the rental of real estate owned directly by the individual, or by a disregarded entity owned by the individual, shall be subject to West Alexandria’s tax only if the property generating the net profit is located in West Alexandria or if the individual taxpayer that receives the net profit is a resident of West Alexandria. West Alexandria shall allow such taxpayers to elect to use separate accounting for the purpose of calculating net profit sitused under this division (F) to the municipal corporation in which the property is located.
(5) (a) Commissions received by a real estate agent or broker relating to the sale, purchase or lease of real estate shall be sitused to the municipal corporation in which the real estate is located. Net profit reported by the real estate agent or broker shall be allocated to West Alexandria, if applicable, based upon the ratio of the commissions the agent or broker received from the sale, purchase or lease of real estate located in West Alexandria to the commissions received from the sale, purchase or lease of real estate everywhere in the taxable year.
(b) An individual who is a resident of West Alexandria shall report the individual’s net profit from all real estate activity on the individual’s annual tax return for West Alexandria. The individual may claim a credit for taxes the individual paid on such net profit to another municipal corporation to the extent that such a credit is allowed under West Alexandria’s income tax regulations.
(6) When calculating the ratios described in division (F)(1) of this section for the purposes of that division or division (F)(2) of this section, the owner of a disregarded entity shall include in the owner’s ratios the property, payroll and gross receipts of such disregarded entity.
(7) (a) Intentionally left blank. This indicates that stock options are not exempt from tax. If they are exempt, the following language applies. If, in computing a taxpayer’s adjusted federal taxable income, the taxpayer deducted any amount with respect to a stock option granted to an employee, and if the employee is not required to include in the employee’s income any such amount or a portion thereof because it is exempted from taxation under R.C. § 718.01(C)(12) and (R)(1)(d) by a municipal corporation to which the taxpayer has apportioned a portion of its net profit, the taxpayer shall add the amount that is exempt from taxation to the taxpayer’s net profit that was apportioned to that municipal corporation. In no case shall a taxpayer be required to add to its net profit that was apportioned to that municipal corporation any amount other than the amount upon which the employee would be required to pay tax were the amount related to the stock option not exempted from taxation.
(b) This division (F)(7) applies solely for the purpose of making an adjustment to the amount of a taxpayer’s net profit that was apportioned to a municipal corporation under this section.
(Ord. 917, passed 7-19-2021)