Tax Rules & Regulations
Income Tax Ordinance
Adopted under the authority of Subchapter 38
Section 38.08, of the Village of Oak Harbor Code of Ordinances
Section 38.01 of the subchapter outlines the uses to which funds raised are to be put and the items on which the tax is to be applied.
As used in these Rules and Regulations, the following words shall have the meaning ascribed to them in this Article, except as and if the context clearly indicates or requires a different meaning.
ADMINISTRATOR. The individual designated by this subchapter, appointed by the Mayor, approved by the Village Council, to administer and enforce the provisions of this subchapter.
ASSOCIATION. A partnership, limited partnership, limited liability company, Subchapter S Corporation as defined in the federal tax code, 26 U.S.C. 1361, or any other form of unincorporated enterprise, owned by two or more persons.
BOARD OF REVIEW. The Board created by and constituted as provided in Section 38.12.
BUSINESS. An enterprise, activity, profession, or undertaking of any nature conducted for profit or ordinarily conducted for profit, whether by an individual, partnership, association, corporation or any other entity.
CORPORATION. A corporation or joint stock association organized under the laws of the United States, the State of Ohio, or any other state, territory, or foreign country or dependency, but not including Subchapter S Corporations.
DOMICILE. The permanent legal residence of a taxpayer. A taxpayer may have more than one residence but not more than one domicile.
EMPLOYEE. One who works for wages, salary, commission or other type of compensation in the service of an employer.
EMPLOYER. An individual, partnership, association, corporation, governmental body, unit or agency, or any other entity, whether or not organized for profit, who or that employs one or more persons on a salary, wage, commission or other compensation basis.
FISCAL YEAR. An accounting period of 12 months or less ending on any day other than December 31.
GROSS RECEIPTS. The revenue derived from sales, work done, or service rendered, before any deductions, exceptions, or credits are claimed.
INCOME. Shall include all monies derived from any source whatsoever, including but not limited to:
(A) All salaries, wages, commissions, other compensation and other income from whatever source received by residents of the Village.
(B) All salaries, wages, commissions, other compensation and other income from whatsoever source received by nonresidents for work done or services performed or rendered or activities conducted in the Village.
(C) The portion attributable to the Village of the net profits of all unincorporated businesses, associations, professions, corporations, or other entities, from sales made, work done, services performed or rendered, and business or other activities conducted in the Village.
NET PROFITS. A net gain from the operation of a business, profession, enterprise, or other activity after provisions for all ordinary and necessary expenses, either paid or accrued in accordance with the accounting system used by the taxpayer for federal income tax purposes, without deduction of taxes imposed by this subchapter, federal, state and other taxes based on income; and in the case of an association, without deduction of salaries paid to partners, and other owners; and otherwise adjusted to the requirements of this subchapter. Net profits shall include any amount or value received, realized, or recognized in a sale or other disposition of tangible personal property or real property used in business, in excess of book value
NON-RESIDENT. An individual domiciled outside the Village.
NON-RESIDENT UNINCORPORATED BUSINESS ENTITY. An unincorporated business entity not having an office or place of business within the Village.
PERSON. Every natural person, partnership, fiduciary, association or corporation. Whenever used in any clause prescribing and imposing a penalty, the term PERSON as applied to any unincorporated entity shall mean the partners or members thereof, and as applied to corporations, the officers thereof.
PLACE OF BUSINESS. Any bona fide office (other than a mere statutory office), factory, warehouse or other space which is regularly occupied and used by the taxpayer in carrying on any business activity individually or through one or more of his or her regular agents or employees regularly in attendance.
RESIDENT. An individual domiciled in the Village.
RESIDENT UNINCORPORATED BUSINESS ENTITY. An unincorporated business entity having an office or place of business within the Village.
TAXABLE INCOME. Income minus the deductions and credits allowed by this subchapter.
TAXING VILLAGE. Any municipal corporation or Joint Economic Development District levying a municipal or Joint Economic Development District income tax on income salaries, wages, commissions and other compensation earned or received by individuals, and on the net profits earned from the operation of a business, profession or other activity.
TAXABLE YEAR. The calendar year, or the fiscal year upon the basis of which the net profits are to be computed under this subchapter, and, in the case of a return for the fractional part of a year, the period for which such return is required to be made.
TAXPAYER. A person, whether an individual, partnership, association, or any corporation or other entity, required hereunder to file a return or pay a tax.
IMPOSITION OF TAX
1. Resident Employee:
a. In the case of residents of the Village an annual tax of percent (1%) is imposed on all salaries, wages, commissions, other compensation, and other income (including earnings deposited by the employee into qualified and non-qualified deferred compensation plans and/or medical coverage plans) earned or received during the effective period of the subchapter, whether such income is received or earned directly or through an agent and whether paid in cash or in property. For the purpose of determining the tax on the earnings of resident taxpayers taxed under Section 38.03 of the subchapter, the source of the earnings and the place or places in or at which the services were rendered, are immaterial. All such earnings wherever earned or paid are taxable, except that tax shall not be levied on expenses reported in accordance with Federal guidelines for Federal Form 2106, subject to audit and approval by the Village Income Tax Department.
b. The following items are subject to the tax imposed by Section 38.03:
(1) Gross income, including but not limited to salaries, wages, bonuses and incentive payments earned by an individual, whether directly or through an agent, and whether in cash or in property for services rendered during the tax period as an officer, director or employee of a corporation (including charitable and other non-profit organizations), or association or any other entity or person; an officer or employee (whether elected, appointed, or commissioned) of the United States Government or any of its agencies or of the State of Ohio or any of its political sub-divisions or agencies thereof; or any foreign country or dependency except as provided in Section 38.03(e) of the subchapter.
(2) Commissions earned by a taxpayer, whether directly or through an agent, and whether in cash or in property for services rendered during the effective period of the subchapter, regardless of how computed or by whom or wheresoever paid.
(a) If amounts received as a drawing account exceed the commissions earned and the excess is not subject to the demand of the employer for repayment, the tax is payable on the amounts received as a drawing account.
(b) Amounts received from an employer for expenses and used as such by the individual receiving them are not deemed to be compensation if the employer deducts such expenses or advances as such from his gross income for the purpose of determining his net profits taxable under Federal law, and the employee is not required to include such receipts as income on his Federal income tax return.
(c) If commissions are included in the net earnings of the trade, business, profession, enterprise or activity, carried on by an unincorporated entity or association of which the individual receiving such commission is owner or part owner and therefore subject to Article III A3 or A4 of the Rules and Regulations, they shall not be subject to Article A1 of the Rules and Regulations.
(3) Fees, unless such fees are properly includible as part of the net profits of a trade, business, profession, or enterprise regularly carried on by an unincorporated entity or association owned or partly owned by said individual and such net profits are subject to Article III A3 and/or A4 of the Rules and Regulations.
(4) Other compensation and income, as reported on W-2's or 1099's, including but not limited to tips, bonuses, lump sum distribution from qualified pension and profit sharing trusts not made pursuant to employees retirement, profit sharing, "non-competition" covenants, portions of stock options that are not considered capital gains by the Village, lottery winnings (see Section 38.03(A)(6) of the subchapter), or gifts of any type in connection with services rendered, compensation paid to casual employees and other types of employees, compensation received by domestic servants.
(5) Payments made to an employee by an employer as sick leave, vacation pay, or any other types of payments made under a wage or salary continuation plan, including "sub" pay (such as pay received from unions by individuals in lieu of wages), during periods of absence from work are taxable when paid.
(6) Payments made to an employee by an employer as separation or severance pay-outs (including but not limited to separation pay, termination pay, and early retirement incentives) and reportable as earned income (including, but not limited to, sick pay and vacation pay) are taxable when paid if applicable tax has not previously been paid. On-going retirement benefits, such as pension payments, are exempt from Village income tax.
(7) Moving expenses, to the extent they are reimbursed by employers, are not taxable if deducted on Federal return.
2. Non-Resident Employee:
a. In the case of individuals who are not residents of the Village, there is imposed under Section 38.03 of the subchapter, a tax of one percent (1%) on all salaries, income, wages, commissions, and other compensation (including earnings deposited by the employee into qualified and non-qualified deferred compensation plans and/or medical coverage plans) earned or received during the effective period of the subchapter for work done or services performed or rendered within the Village, whether such income is received or earned directly or through an agent and whether paid in cash or in property. The location of the place from which payment is made is immaterial. Tax shall not be levied on expenses reported in accordance with Federal guidelines for Federal Form 2106, subject to audit and approval by the Village Income Tax Department.
b. The items subject to tax for non-residents are the same as those listed and defined in Article III A1 above. For the methods of computing the extent of such work or services performed within the Village, in cases involving compensation for personal services partly within and partly without the Village, see Article VI A5 of these regulations.
c. Occasional entrant.
(1) Effective January 1, 2001, Village shall not tax the compensation paid to a non-resident individual for personal services or work performed by the individual in the Village on twelve (12) or fewer days in a calendar year (which hereby classifies the individual as an “occasional entrant”) unless one of the following applies:
(a) The individual is the employee of another person, the principal place of business in which the employee normally works is located in another municipal corporation in this state that imposes a tax applying to compensation paid to the individual for services performed on those days, and the individual is not liable to that other municipal corporation for tax on the compensation paid for such services.
(b) The individual is a 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 Village.
(2) For purposes of the 12-day calculation, any portion of a day worked in Village shall be counted as one day worked in Village.
(3) Beginning with the thirteenth day, the employer of said individual shall begin withholding Village income tax from remuneration paid by the employer to the individual, and shall remit the withheld income tax to Village in accordance with Section 181.06 of the income tax ordinance. 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 in Village by the individual for the first twelve (12) days. If the individual is self-employed or an independent contractor, it shall be the responsibility of the individual to remit the appropriate income tax to the Village.
(4) Any tax withheld for Village under Article III A2d(1) is subject to being refunded only to the Village in which the employer’s principal place of business is located, and only after the Village has established that the individual employee has a liability to them. However, any tax that has been withheld for Village under the $150 deminimus provisions of Article VI A2 is not subject to refund even if the employee for which tax was withheld is an occasional entrant.
3. Resident Unincorporated Businesses:
a. In the case of resident unincorporated businesses, associations, or other entities, there is imposed an annual tax of one percent (1%) on the net profits earned, accrued or received during the effective period of the subchapter attributable to the Village under the formula or separate accounting method provided in Section 38.03 of the subchapter, derived from work done or services performed or rendered and business or other activities conducted in the Village.
b. The tax imposed on resident associations or unincorporated entities owned by two or more persons is upon the entities rather than the individual members or owners thereof, but the tax imposed on an unincorporated resident entity owned by one person is upon the individual owner. For tax on that part of a resident owner's distributive share of net profits not taxed against the entity, see Article III A3e and f below.
c. The tax imposed by Section 38.03 of the subchapter is imposed on all resident unincorporated entities or associations having net profits attributable to the Village under the method of allocation provided for in the subchapter, regardless of where the owner or owners of such resident unincorporated business entities or associations reside.
d. Resident unincorporated entities or associations owned by two or more persons, all of whom are residents of the Village, shall disregard the method of allocation provided for in the subchapter and pay the tax on their entire net profits thereof. In such case, the tax paid by the entity shall constitute all tax due from the owners or members of the entity for their distributive share of such net profits; however, a return shall be required from any such owner or member having taxable income other than the distributive share of the net profits from the entity.
e. A resident individual who is sole owner of a resident unincorporated entity or association shall disregard the business allocation formula and pay the tax on the entire net profits of his resident unincorporated business entity or association.
f. In the case of a resident individual partner or part owner of a resident unincorporated entity or association, there is imposed an annual tax of one and one-quarter percent (1%) on such individual’s distributive share of net profits earned, accrued or received during the effective period of the subchapter not attributable to the Village, under the method of allocation provided for in Section 38.03 of the subchapter, and not taxed against the entity.
4. Non-resident Unincorporated Businesses or Associations:
a. In the case of resident unincorporated businesses, associations, or other entities, there is imposed an annual tax of one percent (1%) on the net profits earned, accrued or received during the effective period of the subchapter attributable to the Village, under the formula or separate accounting method provided for in Section 38.03 of the subchapter.
b. The tax imposed on non-resident unincorporated entities or associations owned by two or more persons is upon the entities rather than the individual members or owners thereof. For tax on that part of a resident owner's distributive share of net profits not taxed against the entity, see Article III, A4d and e below.
c. Non-resident unincorporated entities or associations, owned by two or more persons all of whom are residents of the Village, may elect to disregard the method of allocation provided for in the subchapter and pay the tax on the entire net profits. In such case, the tax paid by the entity shall constitute all tax due from the owners or members of the entity for their distributive share of the net profits.
d. A resident individual who is sole owner of a non-resident unincorporated business entity or association shall disregard the business allocation formula and pay the tax on the entire net profits of his unincorporated entity or association.
e. In the case of a resident individual partner or part owner of non-resident unincorporated entity or association, there is imposed an annual tax of one percent (1%) on such individual's distributive share of net profits earned, accrued or received during the effective period of the subchapter not attributable to the Village under the method of allocation provided for in Section 38.03 of the subchapter and not taxed against the entity.
5. Imposition of Tax on Net Profits of Corporations:
a. In the case of corporations, whether domestic or foreign and whether or not such corporations have an office or place of business in the Village, there is imposed an annual tax of one percent (1%) on the net profits earned, received or accrued during the effective period of the subchapter attributable to the Village under the formula or separate accounting method provided for in Section 38.03 of the subchapter.
b. In determining whether a corporation is conducting a business or other activity in the Village, the provisions of Article III C of these regulations shall be applicable.
B. Clarification of taxation of net profits:
The following information is provided to clarify the calculations for net profits subject to taxation.
1. Net Profits:
a. Net Profits as used in the subchapter and these Rules and Regulations means net profits derived from any business, profession or other activity or undertaking carried on for profit or normally carried on for profit.
b. Net Profits as disclosed on any return filed pursuant to the provisions of the subchapter shall be computed by the same accounting method (i.e., either cash or accrual) used in reporting net income to the Federal Internal Revenue Service, providing such method does not conflict with any provisions of the subchapter or these rules ®ulations.
2. Gross Receipts:
a. Gross Receipts shall include, but not be limited to, income in the form of commissions, fees, rentals from real and tangible personal property and other compensation, for work done or services performed or rendered as well as income from sales of stock in trade.
b. From gross receipts there shall be deducted allowable expenses to arrive at the net profit subject to tax.
a. All ordinary and necessary expenses of doing business shall be allowed but no deduction may be claimed for salary or withdrawal of a proprietor or of the partners, members, or other owners of an unincorporated business, enterprise, or association.
(1) If not claimed as part of the cost of goods sold or elsewhere in the return filed, there may be claimed and allowed a reasonable deduction for depreciation, depletion, obsolescence, losses resulting from theft or casualty not compensated for by insurance or otherwise, of property used in the trade or business, but the amount may not exceed that recognized for the purpose of the Federal income tax. Provided, however, that loss on the sale, exchange or other disposition of depreciable property or real estate used in the taxpayer's business shall not be allowed as a deductible expense.
(2) Where depreciable property is voluntarily destroyed only the cost of such demolition and the undepreciated balance thereof will be allowed as an expense in the year of such demolition, to the extent allowable for Federal income tax purposes.
(3) Bad debts in a reasonable amount may be allowed in the year ascertained worthless and charged off, or at the discretion of the Administrator (if the reserve method is used), a reasonable addition to the reserve may be claimed; but in no event shall the amount exceed the amount allowable for Federal income tax purposes.
(4) Only taxes directly connected with the business may be claimed as a deduction. If for any reason the income from property is not subject to the tax then taxes on, and other expenses of, said property are not deductible. In any event, the following taxes are not deductible from income; (1) the tax under the subchapter; (2) Federal or other taxes based upon income; (3) gift, estate or inheritance taxes; and (4) taxes for local benefits or improvements to property which tend to appreciate the value thereof.
4. Other Income or Losses:
a. Capital gains and losses (capital or other) from sale, exchange or other disposition of property used in the trade or business shall not be taken into consideration in arriving at net profits earned. However, any amount or value received, realized or recognized on a sale or other disposition of tangible personal property or real property used in business, in excess of original book value, shall be treated as taxable income under the subchapter to the extent of depreciation previously taken as a deduction. The method of calculating the depreciation deduction shall not be considered when recovering the depreciation as a result of the sale, exchange or other disposition of property. The balance in excess of the amount of depreciation recovered shall be treated as a capital gain.
(1) Definition of Property Used in the Trade or Business. For purposes of this Article, the term "property used in the trade or business" means property used in the trade or business of a character which is subject to the allowance for depreciation and real property used in the trade or business, held for more than 6 months, which is not:
(a) Property of a kind which would properly be includible in the inventory of the taxpayer if on hand at the close of the taxable year;
(b) Property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business; or
(c) A copyright, a literary, musical, or artistic composition, or similar property held by the taxpayer.
b. In general, non-taxable income (and expense incurred in connection therewith) are not to be considered in determining net profits. Income from intangibles, by way of dividends, interest and the like, shall not be included if such income is subject to taxation under the intangible personal property laws of the State of Ohio or is specifically exempt from taxation under said laws.
c. The Administrator, upon submission by the taxpayer of satisfactory evidence showing the amount of expenses attributable to non-taxable income, shall permit the taxpayer to include in his return expenses attributable to non-taxable income in an amount agreed to by the taxpayer and the Administrator. In lieu of such evidence, five percent (5%) of non-taxable income shall be considered to be attributable expenses.
d. Rentals from real property received by the taxpayer are to be included only if and to the extent that the rental, ownership, management or operation of the real estate from which such rentals are derived (whether so rented, managed or operated by taxpayer individually or thorough agents or other representative) constitutes a business activity of the taxpayer in whole or in part.
(1) Where the gross monthly rental of any real properties, regardless of number and value, aggregates in excess of $125.00 per month, it shall be prima facie evidence that the rental, ownership, management or operation of properties is a business activity of the taxpayer, and the net income of such rental properties shall be subject to tax:
(a) Provided that in 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 $125.00 per month.
(b) Provided further that in the case of farm property, the owner shall be considered engaged in a business activity when he shares in the 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 $125.00 per month.
(c) Provided further that the person who operates a rooming house of five or more rooms rented shall be considered in business whether or not the gross income exceeds $125.00 per month.
(2) In determining the amount of gross rental of any real property periods during which (by reason of vacancy or any other cause) rentals that are not received shall not be taken into consideration by the taxpayer.
(3) Rentals received by a taxpayer engaged in the business of buying and selling real estate shall be considered as part of business income.
(4) Real property, as the term is used in this Article, shall include commercial property, residential property, farm property (the owner of which shall be considered engaged in a business activity when he shares in the crops or when the rental is based on a percentage of the gross or net receipts derived from the farm), and any and all other types of real estate.
(5) In determining the taxable income from rentals, the deductible expenses therefrom shall be of the same nature, extent and amount as are allowed by the Internal Revenue Service for Federal income tax purposes.
(6) Residents of the Village are subject to taxation upon the net income from rentals (to the extent above specified), regardless of the location of the real property owned.
(7) Non-residents of the Village are subject to such taxation only if the real property is situated within the Village. Non-residents, in determining whether gross monthly rentals exceed $125.00, shall take into consideration only real estate situated within the Village.
(8) To be considered non-taxable as ground rents, the property must be under a perpetual leasehold by the term of which the lessor performs no services of any type, including the payment of taxes on the property.
(9) Corporations owning or managing real estate are taxable only on that portion of income derived from property located in the Village.
e. Income from patents or copyrights is not to be included in net profits subject to the tax if the income from such patents or copyrights is subject to taxation under the intangible personal property laws of the State. Income in the form of royalties is taxable if the taxpayer’s activities produced the publication or other product, the sale of which produces the royalties.
f. Net operating losses may be carried forward until exhausted, but in no event for five (5) years. No portion of a net operating loss shall be carried back against net profits of a prior year. Losses shall be allocated to the Village in the same manner as provided for herein for allocating net profits to the Village. Losses shall not be allowed (in whole or in part) to be allocated to Village as loss carry forward if the loss occurred during a time period in which gross receipts (in whole or in part) were not allocated and reported to Village.
g. In determining income subject to taxation, losses from the operation of a business or profession cannot be used to reduce wages from employment or other employment compensation.
C. Allocation of Business Profits:
If the books and records of a taxpayer conducting a business or profession both within and without the Village disclose with reasonable accuracy what portion of its net profits is attributable to business conducted within the Village, the separate accounting method may be used. In the absence of such records, the business allocation percentage method will be used.
1. Separate Accounting Method:
a. The net profits allocable to the Village from business, professional or other activities conducted in the Village by corporations or unincorporated entities (whether resident or non-resident) may be determined from the records of the taxpayer if the taxpayer has bona fide records which disclose with reasonable accuracy what portion of his net profits is attributable to that part of his activities conducted within the Village.
b. If the books and records of the taxpayer are used as the basis for apportioning net profits, rather than the business allocation formula, 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 the Village are apportioned with reasonable accuracy.
c. In determining the income allocable to the Village 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 the Village.
2. Business Allocation Percentage Method:
a. STEP 1: Calculate the percentage allocable to the Village of the average net book value of total real and tangible personal property (including lease-hold improvements), wherever situated, owned or used in the business during the period covered by the return.
(1) The percentage of taxpayer's real and tangible personal property within the Village is determined by dividing the average net book value of such property within the Village (without deduction of any encumbrances) by the average net book value of all such property within and without the Village. In determining such percentage, property rented to the taxpayer, as well as real and tangible personal property owned by the taxpayer, must be considered.
(a) The net book value of real and tangible personal property rented by the taxpayer shall be determined by multiplying gross annual rents payable by eight (8).
(b) Gross rent means the actual sum of money or other consideration payable, directly or indirectly, by the taxpayer for the use or possession of property and includes:
(1) 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;
(2) 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: Calculate the percentage allocable to the Village of the total gross receipts of the taxpayer derived from sales made, work done and services rendered, wherever derived, during the period covered by the return.
(1) The following sales shall be considered Village sales:
(a) All sales made through retail stores located within the Village to purchasers within or without the Village except such of said sales to purchasers outside the Village that are directly attributable to regular solicitations made outside the Village personally by the taxpayer or his employees.
(b) All sales of tangible personal property delivered to purchasers within the Village if shipped or delivered from an office, store, warehouse, factory or place of storage located within the Village.
(c) All sales of tangible personal property delivered to purchasers within the Village even though transported from a point outside the Village of the taxpayer is regularly engaged through its own employees in the solicitation or promotion of sales within the Village and the sale is directly or indirectly the result of such solicitation.
(d) All sales of tangible personal property shipped from an office, store, warehouse, factory or place of storage within the Village to purchasers outside the Village if the taxpayer is not, through its own employees, regularly engaged in the solicitation or promotion of sales at the place of delivery.
(e) Charges for work done or services performed incident to a sale, whether or not included in the price of the property, shall be considered gross receipts from such sale.
(2) In the application of the foregoing sub-paragraphs, 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. Solicitation of customers outside the Village by mail, phone, or other electronic means from an office or place of business within the Village shall be considered a solicitation of sales within the Village.
c. STEP 3: Calculate the percentage allocable to the Village of the total wages, salaries, commissions, other compensation and other income of employees, within and without the Village, during the period covered by the return.
(1) Salaries and reasonable compensation paid owners or credited to the account of owners or partners during the period covered by the return are considered wages for the purpose of this computation.
(2) Wages, salaries, and other compensation and other income shall be computed on the cash or accrual basis in accordance within the method of accounting used for income tax purposes.
(3) In the case of an employee who performs services both within and without the Village the amount treated as compensation for services performed within the Village shall deemed to be:
(a) In the case of an employee whose compensation depends directly on the volume of business secured by him, such as a salesman on a commission basis, the amount received by him for the business attributable to his efforts within the Village;
(b) In the case of an employee whose compensation depends on other results achieved, the proportion of the total compensation received which the value of his services within the Village bears to the value of all his services; and
(c) In the case of an employee compensated on a time basis, the proportion of the total amount received by him which his working time within the Village is of his total working time.
d. STEP 4: Add the percentage 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 computing 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 the Village. 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 the Village.
3. Substitute Method:
a. In the event a just and equitable result cannot be obtained under the formula the Administrator, upon application of the taxpayer, may substitute other factors in the formula or prescribe other methods of allocating net income calculated to effect a fair and proper allocation.
b. Application to the Administrator to substitute other factors in the formula or to use a different method to allocate net profits must be made in writing before the end of the taxable year. The application shall state the specific grounds on which the substitution of factors or use of different method is requested and the relief sought to be obtained. No specific form need be followed in making such application. Once a taxpayer has filed under a substitute method, he must continue to so file until given permission to change by the Administrator.
4. A request to change methods of allocation must be made, in writing, to the Administrator before the close of the taxable year.
D. Consolidated Returns:
1. Consolidated returns may be filed by a group of corporations who are affiliated through stock ownership provided such group files consolidated returns for Federal income tax purposes pursuant to section 1501 of the Internal Revenue Code. A consolidated return must include all companies that are so affiliated.
2. Once a consolidated return has been filed for any taxable year the consolidated group must continue to file consolidated returns in subsequent years unless:
a. Permission in writing is granted by the Tax Administrator to file separate returns.
b. A new corporation other than a corporation created or organized by a member of the group has become a member of the group during the taxable year.
c. A corporation member of the group is sold or exchanged. Liquidating a corporation or merging one of the corporations of the group into another will not qualify the group for filing separate returns.
3. If a corporation becomes a member of the group during the taxable year, the consolidated return must include the income from the entire taxable year of the common parent corporation and any subsidiaries which were members of the group for the entire year, plus the income of each subsidiary which becomes a member of the group during the year for the period beginning with the date it became a member of the affiliated group. For the period prior to the time any subsidiary became a member of the group, separate returns must be filed for that subsidiary. When a subsidiary ceases to be a member of the affiliated group, the consolidated return must include the income of such subsidiary for the period during which it was a member of the group, but separate returns must be filed for the period after it ceases to be a member. If a corporation has been a member of the affiliated group for less than one month of the taxable year of the group, it may be considered as not being part of the group. Similarly, a subsidiary may be considered as being a member of the affiliated group during the entire taxable year of the group if the period during which it was not a member of the group does not exceed one month.
If a subsidiary is a member of a consolidated group for only part of a taxable year, the income considered to be earned in such fractional part of the year shall be that portion of the net income for the entire year which the number of days it was a member of the group bears to the total number of days in the taxable year.
4. In determining the allocation fraction where a corporation becomes a member of the group or ceases to be a member of the group during the taxable year, the property factor (Step 1 of the formula) shall be determined on the basis of the average net book value of the property during the period such corporation was a member of the group. The rental portion of the factor, however, shall be computed at 8 times the annual rent. The gross receipts and wage factors shall be based on the actual figures.
5. All subsidiary corporations must agree in writing to the filing of the consolidated return as they will be liable for the tax as well as the parent corporation.
6. In consolidating the net income, the taxable income of each corporation shall be computed in accordance with the provisions governing the taxable income of separate corporations except that there shall be eliminated unrealized profits and losses in transactions between members of the affiliated group.
7. In determining expenses that are not allowable because they are allocable to non-taxable income, such calculations shall be based on the consolidated net income. As an example, inter-company dividends which are eliminated in the consolidation will not be taken into consideration in determining non-taxable income.
The tax provided for herein shall not be levied on:
1. Pay or allowances of active members of the Armed Forces of the United States and of members of their reserve components, including the Ohio National Guard.
2. 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.
3. Unemployment insurance benefits, welfare benefits, and pensions paid as a result of retirement.
4. Proceeds of insurance paid by reason of the death of the insured; retirement disability benefits, annuities or gratuities not in the nature of compensation for services rendered from whatever source derived.
5. Parsonage allowance, to the extent of the rental allowance or rental value of a house provided as a part of an ordained minister’s compensation. The minister must be duly ordained, commissioned, or licensed by a religious body constituting a church or church denomination.
6. Receipts by bona fide charitable, religious and educational organizations and associations, when those receipts are from seasonal or causal entertainment, amusements, sports events and health and welfare activities conducted by bona fide charitable, religious or educational organizations and associations.
7. Gains from involuntary conversion, cancellation of indebtedness, interest on Federal obligations, items of income already taxed by the State of Ohio from which 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).
8. Expenses deductible on Federal form 2106, subject to audit and approval by the Administrator.
9. Compensation paid under section 3501.28 or 3501.36 of the Revised Code to a person serving as a precinct election official, to the extent that such compensation does not exceed one thousand dollars annually.
10. Gross income of any individual under the age of 16 on January 1 of the tax year in question. The taxable portion of the year in which an individual turns 16 shall be determined by the birth-date of the individual.
11. Income, 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 power of the States or their political subdivisions to impose net income taxes on income derived from interstate commerce.
12. Salaries, wages, commissions, other compensation, other income and net profits, including interest and dividends as provided in 718.01 R.C., 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.
The tax shall be levied, collected and paid with respect to the income, salaries, wages, commissions and other compensation, and with respect to the net profits of persons, businesses, professions or other activities, earned from November 4, 1971, until repealed by the Village Council, and with respect to the tax of gross lottery winnings, for all gross lottery winnings received after January 1, 2001.
RETURN AND PAYMENT OF TAX
A. Date and Requirement and Filing.
1.a. On or before April 15th of each year, every person subject to the provisions of Section 38.03 of the subchapter shall, except as hereinafter provided or unless otherwise exempted by the Tax Administrator make and file with the Administrator a return on a form prescribed by and obtainable, upon request, from the Administrator, or on other forms deemed acceptable by the Administrator, whether or not a tax be due.
b. The Village accepts generic forms for Village’s annual tax return. However, to be acceptable the generic form must contain all the information on Village’s regular tax return forms, must comply with all the rules and ordinances of Village regarding income tax forms, and must be in a format that will allow processing of the generic forms without altering Village’s procedures for processing forms. Determination as to whether a generic form meets the criteria shall be the responsibility of the Administrator.
c. The fact that a taxpayer is not required to file a Federal tax return does not relieve the taxpayer from filing a Village tax return.
2. If the return is made for a fiscal year or any period less than a year, said return shall be made within 105 days from the end of the fiscal year or other period.
3. Any taxpayer who received taxable income not subject to withholding under the subchapter must file a return.
4. Any taxpayer having income, wages, other compensation or other income for which a return must be filed, and also having net profits from a business covering the same or a different period, is required to file only one return if self-employed.
5. Trustees of active trusts are required to file returns and pay the tax on the taxable income thereof.
6. Except as provided for herein, the tax is on the partnership or association as an entity, whether resident or non-resident, and a return is required disclosing the net profits allocable to the Village and the tax paid thereon. However, any resident partner or resident member of an unincorporated entity or association is required to make a return and pay the tax in accordance with Article III A3f of these regulations.
7. A husband and wife may file a joint return.
B. Information Required and Reconciliation with Federal Returns:
1.a. Every person subject to the provisions of Section 38.03 of the subchapter shall, except as hereinafter provided, file a return setting forth the aggregate amount of salaries, wages, commissions, and other personal service compensation, net profits from business or other activities, including the rental from real and personal property, and other income taxable under the subchapter, earned or received for the period covered by the return and such other pertinent facts and information in detail as the Administrator may require.
b. Where figures of total income, total deductions, and net profits are included, as shown by a Federal return, any items of income which are not subject to the Village tax and allowable expenses shall be eliminated in determining net income subject to the Village tax.
2. In returns filed hereunder there shall be set forth the amount of tax imposed by the subchapter on all taxable income. Any credits due may then be deducted and the balance of tax, or overpayments if any, set forth.
3. All individuals, businesses, employers, brokers or others doing business in the Village who engage persons, either on a commission basis, or as independent contractors, and are not subject to withholding, shall indicate the total amount of payments, commissions, and bonuses to such as are residents of the Village or do business in the Village, on the appropriate line of Schedule C of their Village income tax returns, supported by Form 1099 attached, providing the same information as is required on federal Form 1099.
4. All contractors doing business in the Village shall indicate the total amount of payments to any subcontractor or contract employees who did business in or is a resident of the Village on the appropriate lines of Schedule C of their Village income tax returns, and shall attach a list which shall indicate names, addresses and amounts paid. In addition, the subcontractors shall be responsible for all income tax withholding requirements under the subchapter.
5. Where space on the return is inadequate to clearly indicate how taxable income was determined, additional schedules must be attached. The Administrator may require additional information at any time he deems necessary to verify the accuracy of any return.
6. Information returns, schedules and statements and/or other documents required to support tax returns shall be attached, including federal forms W-2 and 1099. The Administrator may require additional information at any time he deems necessary to verify the accuracy of any return.
C. Acceptance of Federal Extensions.
1. Any taxpayer that has requested an extension for filing a Federal income tax return may request an extension for the filing of an Village income tax return. The taxpayer shall make the request by filing a copy of the taxpayer’s request for Federal filing extension with the Administrator.
2. Any taxpayer not required to file a Federal income tax return may request an extension for filing an Village tax return in writing.
3. The request for an extension shall be filed not later than the last day for filing the Village tax return as prescribed by ordinance or rule of the Village.
4. A valid extension request extends the due date for filing a return six (6) months from the original due date of such return.
5. The Administrator may deny a taxpayer’s request for extension if the taxpayer:
a. Fails to timely file the request.
b. Fails to file a copy of the Federal extension (if applicable).
c. Owes the Village any delinquent income tax or any penalty, interest, assessment or other charge for the late payment or nonpayment of income tax.
d. Has failed to file any required income tax return, report or other related document for a prior tax period.
6. The granting of an extension for filing an Village income tax return does not extend the last date for payment of the tax; therefore, penalty and interest may apply to any unpaid tax during the period of extension at the rate set out by Section 38.10. No penalty shall be assessed in those cases in which the return is filed and the final tax paid within the extension period provided all other filing and payment requirements of the tax code have been met. Any extension by the Administrator shall be granted with the understanding that declaration filing and payment requirements have been fulfilled; however, if, upon further examination it then becomes evident that declaration filing and payment requirements have not been fulfilled, penalty and interest may be assessed in full and in the same manner as though no extension had been granted.
D. Payment With Return.
1. The taxpayer making a return shall, at the time of the filing thereof, pay to the Administrator the amount of taxes shown as due thereon; provided, however, that where any portion of the tax so due shall have been deducted at the source pursuant to the provisions of Section 38.06 of the subchapter, or where any portion of said tax shall have been paid by the taxpayer pursuant to the provisions of Section 38.07 of the subchapter, or where an income tax has been paid to another municipality, credit for the amount so paid in accordance with Section 38.14 hereof, shall be deducted from the amount shown to be due and only the balance, if any, shall be due and payable at the time of filing said return.
2. A taxpayer who has overpaid the amount of tax to which the Village is entitled under the provisions of the subchapter may have such overpayment applied against any subsequent liability, or at his election indicated on the return, such overpayment (or part thereof) shall be refunded, provided that no additional taxes or refunds of less than five dollars ($5.00) need not be collected and shall not be refunded.
E. Amended Returns.
1. Where necessary an amended return must be filed in order to report additional income and pay any additional tax due, or claim a refund of tax overpaid, subject to the requirements and/or limitations contained in Section 38.11 of the subchapter. Such amended return shall be on a form obtainable, upon request, from the Administrator. A taxpayer may not change the method of accounting or apportionment of net profits after the due date for filing the original return.
2. Within three (3) months from the final determination of any Federal tax liability affecting the taxpayer's Village tax liability, such taxpayer shall make and file an amended Village return showing income subject to the tax based upon such final determination of Federal tax liability, and pay any additional tax shown thereon or make claim for refund of any overpayment.
F. Any business, profession, association or corporation reporting a net loss is subject to the filing requirements of this ordinance.
COLLECTION AT SOURCE
A. Duty of Withholding.
1. Except as otherwise provided herein, it is the duty of each employer within or doing business within the Village to deduct, at the time of payment, the Village income tax of one percent (1%) from gross amount of all salaries, income, wages, bonuses, incentive payments, fees, commissions or other forms of compensation earned or received by employees for service rendered, work performed or other activities engaged in within Village.
2. Employers who do not maintain a permanent office or place of business in the Village but who are subject to tax on net profits attributable to the Village under the method of allocation provided for in the subchapter, are considered to be employers within the Village and subject to the requirements of withholding. However:
a. If not currently required to withhold Village income tax, then a non-resident employer, agent of such employer, or other payer not situated in the Village shall not be required to withhold Village income tax from remuneration paid to employees of the employer until the collective liability of the employees working in Village initially exceeds $150.
b. When the collective tax liability exceeds $150, the non-resident employer is required to begin withholding the appropriate income tax for the Village on behalf of all employees performing work in the Village. The income tax withheld shall be remitted to the Village in accordance with Article VI B.
c. Once the collective liability has exceeded $150, the employer must withhold income tax for the Village (i.e., for work performed in the Village) for the remainder of that calendar year and for subsequent years, even if the liability in subsequent years does not exceed $150. However, if the tax liability for each of the three (3) consecutive years (subsequent to that year in which the employer became liable for withholding Village income tax) does not exceed $150, the employer will be considered as not having performed work in the Village in regard to further tax liability, and will again be subject to Article VI A2a.
3. The mere fact that the tax is not withheld will not relieve the employee of the responsibility of filing a return and paying the tax on the compensation paid in accordance with Article V. If the employer has withheld the tax and failed to pay the tax withheld to the Administrator, the employee is not liable for the tax so withheld.
4. Commissions and fees paid to independent contractors are not subject to withholding or collection of the tax at the source. Such taxpayers must in all instances file a declaration and return and pay the tax pursuant to the provisions of the subchapter and Articles V and VI of these Rules and Regulations.
5. Where a non-resident receives compensation for personal services rendered or performed partly within the City, the employer shall deduct, withhold and remit the tax on that portion of the compensation which is earned within the City in accordance with the following rules of apportionment:
a. If the non-resident is a salesman, agent or other employee whose compensation depends directly on the volume of business transacted or chiefly effected by him, the deducting and withholding shall attach to the portion of the entire compensation which the volume of business transacted or chiefly effected by the employee within the City bears to the total volume of business transacted by him, except as clarified in Article III.
b. The deducting and withholding of personal service compensation of other non-resident employees, including officers of corporations, shall attach to the proportion of the personal service compensation of such employee which the total number of his working hours within the City is of the total number of working hours.
c. The fact that non-resident employees are subject to call at any time does not permit the allocation of pay for time worked within the Village on a seven-day per week basis. The percentage of time worked in the Village will be computed on the basis of a forty-hour week unless the employer notifies the Administrator that a greater or lesser number of hours per week is worked.
d. Wage continuation plans paid by the employer for purpose of health, rest, recuperation or other reward are deemed to have the same tax situs as the primary job assignment or job location of the employee and are taxable on the same ratio as the normal earnings of such employee for his primary job assignment.
6. An employer shall withhold the tax on the full amount of any advances made to any employee on account of commissions.
7. An employer required to withhold the tax on compensation paid to an employee shall, in determining the amount on which the tax is to be withheld, ignore any amount allowed and paid to the employee for expenses necessarily and actually incurred by the employee in the actual performance of his services, provided such expenses are incurred in earning compensation, including commissions, and are not deducted as a business expense by the employee under Article III of these Rules and Regulations.
B. Return and Payment of Tax Withheld and Status of Employers.
1. Each employer within or doing business within the Village who employs one or more persons on a salary, wage, commission or other compensation or other income basis shall, at the time of the payment thereof, deduct the tax of one percent (1%) from the gross salaries, wages, commissions or other compensation or other income due by the employer to the employees for the salaries, wages, commissions or other compensation or other income earned within the Village.
2. Each employer shall, on or before the last day of the month following each calendar quarter, make a return and remit to the Village the tax hereby required to be withheld. Such return shall be on a form prescribed to be acceptable to the Administrator and shall be subject to the Rules and Regulations prescribed therefore by the Administrator.
3. Every employer is deemed to be a trustee for the Village in collecting and withholding the tax required under the subchapter to be withheld and the funds so collected by such withholding are deemed to be trust funds.
4. Every such employer required to deduct and withhold the tax at the source is liable directly to the Village for payment of such tax whether or not the tax was actually collected from such employee.
5. On or before the 31st day of January, following any calendar year in which such deductions have been made by any employer, such employer shall file with the Administrator in the form prescribed by the Administrator, an information return for each employee from whom Village municipal income tax has been withheld, clearly showing the name, address and social security number of the employee, the total Medicare wage paid during the year and the amount of Village income tax withheld from such employee.
6. For the convenience of employers, the information return referred to in paragraph 5 above may be made in one of two ways, as follows:
a. W-2 copies that are complete (including all information required in paragraph 5 above) and fully legible may be submitted.
b. In lieu of W-2’s, employers may submit the tax information using an alphabetized employee list, as long as employee’s full names, addresses, social security numbers, Medicare wages, and Village withheld taxes are accurately reported.
7. In addition to the Withholding Statements, and at the time they are filed, each employer shall file with the Administrator a reconciliation of income tax withheld, comparing the returns of income tax withheld to the total amount of taxes withheld as disclosed by the Withholding Statements.
8. It is the responsibility of any entity or individual to provide copies of Federal Form 1099 to the Village, or such other form used to report commissions, fees, and other compensation paid to non-employees.
C. In deducting and withholding the tax at the source and in payment of any tax due under the subchapter, a fractional part of a cent shall be disregarded unless it amounts to one-half (1/2) cent or more in which case it shall be increased to one (1) cent. No person shall be entitled to a refund merely because such rounding off of the tax results in an apparent overpayment based on his total earnings.
D. Every contractor performing work for the Village shall be bound by the requirements of the subchapter. If the contractor employs subcontractors for work performed in Village, the names, addresses, and Federal Identification Numbers of those subcontractors shall be provided to Village by the contractor prior to commencement of the work. The subcontractors are likewise responsible for complying with the subchapter.
A. Requirements of Filing:
1. A declaration of estimated tax shall be filed by every taxpayer who may reasonably be expected to have taxable income subject to Article III, the tax on which is not or will not be withheld in full by an employer or employers as required by Article VI.
2. A taxpayer's final return for the preceding year may be used as the basis for computing his declaration of estimated tax for the current year. No penalties or interest shall be assessed, for not filing a declaration, on any resident taxpayer who was not domiciled in the Village on the first day of January of the year in which they first became subject to estimated payments, nor shall penalties or interest be assessed on estimated payments if the taxpayer has remitted an amount equal to one hundred percent of the previous year's tax liability, provided that the previous year reflected a twelve-month period.
B. Form For Filing:
1. Such declaration shall be filed upon a form or forms furnished by, or obtainable upon request from, the Administrator, or on other forms deemed acceptable by the Administrator. However, to be acceptable the other form, or generic form, must contain all the information on Village’s regular estimated payment form, must comply with all the rules and ordinances of Village regarding income tax forms, and must be in a format that will allow processing of the generic forms without altering Village’s procedures for processing forms. Determination as to whether a generic form meets the criteria shall be the responsibility of the Administrator.
2. The original estimate of tax liability or any subsequent amendment thereof may be increased or decreased by filing an amendment on or before a quarterly filing date. Such amendment may be made on the regular declaration form or a form furnished by and obtainable from the Administrator.
C. Dates of Filing and Payment:
1. A declaration shall be filed on or before April 15 of each year during the life of the subchapter, except as specifically exempted in paragraph A.2 above.
2. Those taxpayers having a fiscal year or period differing from the calendar year shall file a declaration within 105 days after the start of each fiscal year or period.
3. In the case of individuals, the estimated tax shall be paid in full with the declaration or in four equal installments on or before the last day of the fourth, seventh, tenth and thirteenth month after the beginning of the taxable year, and in the case of associations, businesses, and corporations the estimated tax shall be paid in full with the declaration or in four equal installments on or before April 15, June 15, September 15, and December 15 of the following year. In the case of a fiscal year taxpayer the second, third, and fourth quarterly payments shall be due on the fifteenth day of the sixth, ninth, and twelfth months of the taxable year, respectively.
4. The declaration must be accompanied by at least one installment of the estimated tax shown due thereon.
5. In the event an amended declaration has been filed the unpaid balance shown due thereon shall be paid in equal installments over the remaining payment dates.
6. Interest and penalty amounts may be assessed against estimated payments that result in being less than 100% of the prior tax year or 90% of income taxable to Village for the current year.
D. Final Returns Required:
1. The filing of a declaration does not relieve the taxpayer of the necessity of filing a final return even though there is no change in the declared tax liability. A final return must be filed to obtain refund of any overpayment of five dollars ($5.00) or more.
DUTIES AND POWERS OF THE ADMINISTRATOR
A. Collection of Tax and Retention of Records:
1. It shall be the duty of the Administrator to receive the tax imposed by the subchapter in the manner prescribed therein from the taxpayers; to keep an accurate record thereof and to report daily all monies so received.
2. It shall be the duty of the Administrator to enforce payment of all taxes owing the Village, to keep accurate records for a minimum of six (6) years showing the amount due from each taxpayer required to file a declaration and/or make any return, including taxes withheld, and to show the dates and amounts of payments thereof.
B. Enforcement Provisions:
1. The Administrator is charged with the administration and enforcement of the provisions of the subchapter and is, subject to the approval of the Board of Review, empowered to adopt, promulgate, and enforce Rules and Regulations relating to any matter or thing pertaining to the administration and enforcement of the subchapter. The Administrator has the authority to correct or adjust any return submitted, when a correction or adjustment is necessary to accomplish the intent of the subchapter.
2. The Administrator shall have the authority, when requested by the taxpayer and for good cause shown, to extend the time of making and filing any return whenever he deems it necessary so to do, but not to exceed a period of six months, or one month beyond any extension requested of or granted by the Internal Revenue Service for the filing of the Federal income tax return.
3. The Administrator is authorized to arrange for the payment of unpaid taxes, interest and penalties on a schedule of installment payments when the taxpayer has proved to the Administrator that, due to certain hardship conditions, he is unable to pay the full amount of the tax due, and has submitted a written application for installment payments to the Administrator. Installment payments for all amounts owed by the taxpayer under the subchapter shall not exceed a period in excess of six (6) months.
4. Failure to make any installment payment when due shall cause the total unpaid amount, including penalty and interest, to become payable on demand and the provisions of Sections 38.10, 38.11, and 38.16 of the subchapter shall apply.
5. Payments received shall first be applied to delinquent penalties and interest, and then to taxes.
6. Subject to the consent of the Board of Review or pursuant to regulation approved by the Board of Review, the Administrator shall have the power to compromise any interest or penalty, or both, imposed by Section 38.10.
C. Assessment of Tax by Administrator:
In any case where a taxpayer or employer has failed to file a return or has filed a return which does not show the proper amount of tax due, the Administrator may assess the amount of tax appearing to be due, together with interest and penalties thereon, if any, in the following manner:
1.a. If the Administrator determines that any taxpayer subject to the provisions of the subchapter has a tax liability for which he has filed no return, or has filed an incorrect return and/or has failed to pay the full amount of tax due, the Administrator shall issue a proposed assessment showing the amount of tax due, together with any penalty and interest that may have accrued thereon.
(1) Such a proposed assessment shall be served upon the taxpayer in person or by mailing to his last known address. Proof of mailing furnished by the U. S. Post Office shall be presumptive proof of receipt thereof by the addressee.
(2) A taxpayer may, within fifteen days after the date the proposed assessment was served or mailed, file a written protest with the Administrator. Within fifteen days after receipt of the protest the Administrator shall give the protestant an opportunity to be heard; provided further that the Administrator may extend the date of hearing for good cause shown. After the hearing the Administrator shall withdraw the assessment or he shall adjust or reaffirm the assessment and it shall then become final. If no protest is filed as herein provided, such proposed assessment shall become final thirty (30) days after being served.
b. After a proposed assessment becomes final, notice of such final assessment shall be issued and shall be served in the same manner as a proposed assessment. The taxpayer may then appeal to the Board of Review as provided for in Section 38.12 of the subchapter.
c. When any taxpayer subject to the provisions of the subchapter has filed a return indicating the amount of tax due and has failed to pay said tax to the Village as required by the subchapter, the Administrator need not issue an assessment but may proceed under the provisions of Sections 38.10 and 38.11 of the subchapter.
d. Any taxpayer or employer who does not file a notice of appeal to the Board of Review from a final assessment issued against him shall pay the amount thereof within thirty days after service of such final assessment.
2. Provisions Affecting Employers:
a. If the Administrator determines that an employer subject to the provisions of the subchapter has failed to file a return for tax withheld and has failed to pay to the Village the full amount of said taxes, the Administrator shall issue a proposed assessment showing the amount of tax due, together with any penalties and interest that may have accrued thereon, and the provisions of Section 38.05 of the subchapter shall apply.
b. If the Administrator determines that an employer subject to the provisions of the subchapter has failed to withhold tax the Administrator shall issue a proposed assessment showing the tax due, together with any penalties and interest that may have accrued thereon, and the provisions of Section 38.06 of the subchapter shall then apply.
c. When an employer subject to the provisions of the subchapter has filed a return indicating the amount of tax withheld and has failed to pay said tax to the Village as required by the subchapter, the Administrator may proceed under the provisions of Sections 38.10and 38.11 of the subchapter and need not issue an assessment as provided in Article VIII C.
INVESTIGATIVE POWERS OF THE ADMINISTRATOR;
PENALTY FOR DIVULGING CONFIDENTIAL INFORMATION
A. Investigation by Administrator:
1. The Administrator, or his duly authorized agent, is empowered to examine the books, papers, records and copies of Federal income tax returns of any employer, taxpayer or person subject to the subchapter, for the purpose of verifying the accuracy of any return made to the Village; or if no return was made, to ascertain the tax due under the subchapter.
2. An employer or taxpayer shall furnish within ten (10) days following a written request by the Administrator, or his duly authorized agent, the means, facilities and opportunity for making examinations and investigations authorized by the subchapter.
B. Subpoena of Records and Persons:
1. The Administrator, or any person acting in his capacity, is authorized to examine any person, under oath, concerning any income which was, or should have been, returned for taxation, or any transaction tending to affect such income. The Administrator may compel the production of books, papers, records and copies of Federal income tax returns and the attendance of all persons before him, whether as parties or witnesses, whenever he believes such persons have knowledge of the facts concerning any supposed income or supposed transactions of the taxpayer pertinent to such inquiry.
2. The Administrator may order the appearance before him, or his duly authorized agent, of any party whom he believes to have any knowledge of a taxpayer's income or withholdings, or any information pertaining to the taxpayer under investigation, whether or not the individual so ordered has actual custody of the records of the taxpayer being investigated. The Administrator is specifically authorized to order the appearance of the local manager or representative of any taxpayer.
C. Penalty for Non-Compliance.
The refusal, by any employer or person subject or presumed to be subject to the tax or by any officer or agent or employee of a person subject to the tax or required to withhold tax, to produce books, papers, records and copies of Federal income tax returns, and/or to submit to examination by the Administrator or his duly authorized agent, shall be deemed a violation of the subchapter, punishable as provided in Section 38.16. Further, the failure of any person to comply with the provisions of the section or with an order or subpoena of the Administrator authorized hereby shall be deemed a violation of the subchapter, punishable as provided in Section 38.16.
D. Confidential Nature of Examinations.
Any information gained as a result of any returns, investigations, verifications or hearings before the Administrator required by the subchapter or authorized by these Rules and Regulations shall be confidential and no disclosure thereof shall be made except for official tax purposes or as ordered by a court of competent jurisdiction or upon receipt of a waiver signed by the individual who has submitted the return. Any person divulging such information shall be guilty of a misdemeanor punishable by a maximum fine of five hundred dollars ($500.00) or imprisonment for not more than six months, or both,as provided in Section 10.99. In addition to the above penalty, any employee of the Village who violates the provisions of Section 38.09 of the subchapter relative to the disclosure of confidential information shall be guilty of an offense punishable by immediate dismissal.
E. Retention of Records.
Every taxpayer is required to retain all records necessary to compute his tax liability for a period of six years from the date his return is filed, or the withholding taxes are paid.
INTEREST AND PENALTIES
All taxes imposed and all monies withheld or required to be withheld by employers under the provisions of the subchapter and remaining unpaid ten days after they become due shall bear interest at the rate of one and one-half percent (1.5%) per month.
In addition to interest as provided in paragraph A hereof, penalties based on the unpaid tax are hereby imposed as follows:
1. For failure to file a Village income tax return when due, a late filing fee of $25.
2. For failure to submit a return or pay taxes due, other than taxes withheld; one and one half percent (1.5%) per month, plus $5 per month.
3. For failure to remit taxes withheld from employees: five percent (5%) per month, plus $5 per month.
1. A penalty shall not be assessed on an additional tax assessment made by the Administrator when a return has been filed in good faith and the tax paid thereon within the time prescribed by the Administrator and provided further, that, in the absence of fraud, neither penalty nor interest shall be assessed on any additional tax assessment resulting from a Federal audit, providing an amended return is filed and the additional tax is paid within three months after final determination of the Federal tax liability.
2. Interest but no penalty will be assessed where an extension has been granted by the Administrator and the final tax paid within the period as extended.
3. Upon recommendation of the Administrator, the Board of Review may abate penalty or interest, or both, or upon an appeal from the refusal of the Administrator to recommend abatement of penalty and interest, the Board may nevertheless abate penalty or interest, or both.
COLLECTION OF UNPAID TAXES AND REFUND OF OVERPAYMENTS
A. Unpaid Taxes, Penalties, and Interest:
1. In addition to any criminal penalties which may be imposed, all taxes imposed by the subchapter and not paid when due become, together with interest and penalties thereon, a debt due the Village from the taxpayer and are recoverable as are other debts by suit. Employers who are required to withhold and remit the taxes, and who fail to withhold and/or remit such taxes, become liable to the Village in a suit to enforce the payment of the debt created by such failure.
2. No additional assessment shall be made by the Administrator after three (3) years from the time the return was due or filed, whichever is later. Provided, however, there shall be a six (6) year period of limitation on such additional assessments in the case of a return that omits a substantial portion of income, or filing a false or fraudulent return to evade payment of the tax, or failure to file a return. Failure to report 25% or more of gross income shall be considered a substantial omission.
3. In those cases in which the Administrator of Internal Revenue and the taxpayer have executed a waiver of the Federal statute of limitations, the period within which an assessment may be made by the Administrator is extended to one (1) year from the time of final determination of the Federal tax liability.
4. Those officers or employees having control or supervision of, or charged with, the responsibility of filing the return and making payments for a corporation or association shall be personally liable for failure to file the return or pay the taxes due as required. The dissolution, bankruptcy, or reorganization of any employer does not discharge the officers' or employees' liability for a prior failure of such business to file a return or pay the taxes due.
B. Refunds and Overpayments:
1. Taxes erroneously paid shall not be refunded unless a claim for refund is made within three (3) years from the date on which such payment was made, or the return was due, or three (3) months after the determination of the Federal income tax liability, whichever is later.
2. No refund shall be made to any taxpayer until he has complied with all provisions of the subchapter and has furnished all information required by the Administrator.
3. Items included on Federal Form 2106 are eligible as deductions, subject to review and approval by the Administrator, and subject to limitations imposed by the Federal government.
4. Overpayments will be either refunded, or credited to the taxpayer's current year's liability, at his option. Where no election has been made, overpayments of any year's taxes shall be applied as follows:
a. To unpaid penalty and interest assessments.
b. To the taxes owed for any previous year in the order in which such taxes became due.
c. To his current estimated tax liability.
5. Refunds for days worked out of Village are available only to non-residents, and refunds shall be computed by dividing total wages by total days worked in order to determine an average daily wage. The work year shall be considered two hundred sixty (260) days. Saturdays and Sundays shall not normally be considered work days. Wage continuation plans of any type (including, but not limited to, vacation days, holidays, personal days, and sick days) are deemed to be days spent in Village for purposes of the refund calculation. Additions, deletions, or other changes to the method for calculating refunds shall be at the discretion of the Administrator.
6. Amounts of less than five dollars ($5.00) shall not be refunded or assessed.
BOARD OF REVIEW
A. Board of Review.
A Board of Review, consisting of a chairman and two other individuals, each to be appointed by the Village Council, and to serve staggered terms of three years, is hereby created.
B. Appeals by Taxpayers.
1. Any person dissatisfied with any ruling or decision of the Administrator, which is made under the authority conferred by the subchapter, may appeal therefrom to the Board within thirty (30) days from the announcement of such ruling or decision by the Administrator, provided the taxpayer making the appeal has filed with the Village the required return or other documents concerning the obligation at issue. The appeal shall be in writing and shall state why the decision should be deemed incorrect or unlawful. The Board shall, on hearing, have jurisdiction to affirm, reverse, or modify any ruling or decision or any part thereof. Such hearing shall be scheduled within forty-five (45) days from the date of appeal, unless the taxpayer waives a hearing. The Board's ruling must be made within ninety (90) days from the date of the closing of the record, shall be in writing and filed with the Administrator, and within fifteen (15) days of its decision shall send notice of its decision by ordinary mail to the taxpayer making the appeal.
2. A taxpayer dissatisfied with a decision or filing by the Board of Review may appeal to a court of competent jurisdiction within thirty days from the date of filing of the ruling or decision to which exception is taken.
3. The taxpayer may appear before the Board at the hearing, and/or be represented by an attorney at law, certified public accountant, or other representative.
C. Organizational Procedures.
1. A majority of members present at any hearing or meeting shall constitute a quorum.
2. The Board of Review shall adopt its own procedural rules and keep records of all proceedings accordingly.
3. All hearings upon appeal by the Board shall be conducted privately, unless a public hearing is requested by the taxpayer, and the provisions of Section 38.09 of the subchapter with reference to the confidential character of information required to be disclosed by the subchapter shall apply to such matters as may be heard before the Board of Review.
ALLOCATION OF FUNDS
Funds collected under the provisions of the subchapter shall be used for the purpose of paying all costs of collecting the taxes levied by the subchapter and the cost of administering and enforcing the provisions hereof; the balance of the funds shall be used for purposes of general municipal operations, maintenance, new equipment, extension and enlargement of municipal services and facilities and capital improvements of the Village as provided by ordinances of the Village Council.
CREDIT ALLOWED FOR TAX PAID TO ANOTHER MUNICIPALITY
A . Credits to Residents.
1. A claim for refund or credit under this section shall be made in such manner as the Administrator may by regulation provide.
2. Every individual taxpayer who resides in Village who receives net profits, income, salaries, wages, commissions or other personal service compensation for work done or services performed or rendered outside Village, if it be made to appear that he has paid a municipal income tax on the same income taxable under the subchapter to another municipality, shall be allowed a credit against the tax imposed by the subchapter.
B. Computation of Credit
The credit shall not exceed the tax assessed by the subchapter on such income earned in such other municipality or municipalities where such tax is paid.
COLLECTION OF TAX AFTER TERMINATION OF SUBCHAPTER
A. The subchapter shall continue effective insofar as the levy of taxes is concerned until amended or repealed, and insofar as the collection of taxes levied hereunder and actions or proceedings for collecting any tax so levied or enforcing any provisions of the subchapter are concerned, it shall continue effective until all of such taxes levied in the aforesaid period are fully paid and any and all suits and prosecutions for the collection of such taxes or for the punishment of violations of the subchapter shall have been fully terminated, subject to the limitations contained in Sections 38.10 and 38.11.
B. Annual returns due for all or any part of the last effective year of the subchapter shall be due on the date provided in Sections 38.05 and 38.06 as though the same were continuing.
A. No person shall:
1. Fail, neglect or refuse to make any return or declaration required by the subchapter; or
2. Make any incomplete, false or fraudulent return; or
3. Fail, neglect or refuse to pay the tax, penalties or interest imposed by the subchapter; or
4. Fail, neglect or refuse to withhold the tax from his employees or remit such withholdings to the Administrator; or
5. Refuse to permit the Administrator or any duly authorized agent or employee to examine his books, records, papers and Federal income tax returns relating to the income or net profits of a taxpayer; or
6. Fail to appear before the Administrator and to produce his or his employers’ books, records, papers or Federal income tax returns relating to the income or net profits of a taxpayer upon order or subpoena of the Administrator; or
7. Refuse to disclose to the Administrator any information with respect to the income or net profits of a taxpayer; or
8. Fail to comply with the provisions of the subchapter or any order or subpoena of the Administrator; or
9. Evade or attempt to evade in any manner the payment of the whole or any part of the tax, penalties or interest imposed by the subchapter.
10. Fail to use ordinary diligence in maintaining proper records of employees' residence addresses, total wages paid, and Village income tax withheld, or to knowingly give the Administrator false information; or
11. Attempt to do anything whatsoever to avoid the payment of the whole or any part of the tax, penalties or interest imposed by this subchapter.
Prosecutions under the subchapter must be commenced within the period specified in O.R.C. Section 718.12.
C. Failure to Receive Forms--Not a Defense.
The failure of any employer or person to receive or procure a return, declaration or other required form shall not excuse him (1) from making any information return, declaration, or return, (2) from filing such form, or (3) from paying the tax.
If any sentence, clause, section or part of the subchapter, or any tax against any individual or any of the several groups specified herein, is found to be unconstitutional, illegal or invalid, such unconstitutionality, illegality or invalidity shall affect only such clause, sentence, section or part of the subchapter and shall not affect or impair any of the remaining provisions, sentences, clauses, sections or other parts of the subchapter or the Rules and Regulations. It is hereby declared to be the intention of the Village Council that the subchapter and Rules and Regulations would have been adopted had such unconstitutional, illegal or invalid sentence, clause, section or part thereof not been included herein.