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Ordinance
No. 2003-11-01
SECTION 3. IMPOSITION OF TAX.
A. Subject
to the provisions of Section 16 of this ordinance, an annual tax for the
purposes specified in Section 1 hereof shall be imposed on and after
January 1, 2003 at the rate of one percent (10/o) per
annum upon the following:
1. On all qualifying wages, commissions, other compensation, and other
taxable income earned or received by residents of the Village of
New Waterford.
2. On all qualifying wages, commissions, other compensation, and other
taxable income earned or received by non-residents for work done or
services performed or rendered in the Village of New Waterford.
3. On the portion attributable to the Village of New Waterford of the
net profits earned by all resident unincorporated businesses, pass-through
entities, professions or other activities, derived from work done or
services performed or rendered, and business or other activities conducted
in the Village. On the
portion of the distributive share of the net profits earned by a resident
owner of a resident unincorporated business entity or pass-through entity
not attributable to the Village and not levied against such unincorporated
business entity or pass-through entity.
4. On the portion attributable to the Village of New Waterford of the
net profits earned by all nonresident unincorporated businesses,
pass-through entities, professions or other activities, derived from work
done or services performed or rendered, and business or other activities
conducted in the Village, whether or not such unincorporated business
entity has an office or place of business in the Village. On the portion of the distributive share of the net profits earned
by a resident owner of a nonresident unincorporated business entity or
pass-through entity not attributable to the Village and not levied against
such unincorporated business entity or pass-through entity.
5. On the portion
attributable to the Village of the net profits earned by all corporations
that are not pass-through entities from work done or services performed or
rendered and business or other activities conducted in the Village,
whether or not such corporations have an office or place of business in
the Village.
6. On all income received as gambling winnings as reported on IRS Form
W-2G, Form 5754 and or any other Form required by the Internal Revenue
Service that reports winnings from gambling, prizes, and letter winnings.
B. Businesses both in and outside the Village Boundaries: This section does not apply to taxpayers
that
are subject to and required to file reports under Chapter 5745, of the
Ohio Revised Code. Except
as otherwise
provided in
division (D) of this section, net profit from a business or profession
conducted both within and
without the boundaries of a municipal corporation shall
be considered as having a taxable situs in such village
for purposes of village income taxation in the same
proportion as the average ratio of the following:
Multiply the
entire net profits of the business by a business
apportionment percentage to be determined by:
a. The average original cost of the real and tangible personal
property owned or used by the taxpayer in the
business or profession in
such municipal corporation 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.
b. As used in the preceding paragraph, real property shall include
property rented or leased by the taxpayer
and the value of such property
shall be determined by multiplying the annual rental thereon by eight;
c. Wages, salaries, and other compensation paid during the taxable
period to such persons employed in
the business or profession for services
performed in such municipal corporation to wages, salaries, and
other
compensation paid during the same period to persons employed in the
business or profession,
wherever their services are performed, excluding
compensation that is not taxable by the municipal
corporation under
section 718.011 of the Ohio Revised Code.
d. Gross receipts of the business or profession from sales made and
services performed during the taxable
period in such municipal corporation
to gross receipts of the business or profession during the same period
from sales and services, wherever made or performed.
e. Adding together the percentages determined in accordance with
subsections B.a.c.and d. hereof or such
of the aforesaid percentages as
are applicable to the particular taxpayer and dividing the total so
obtained by
the number of percentages used in deriving such total.
1. A factor is applicable even though it may be apportioned entirely
in or outside the Village.
2. Provided however, that in the event a just and equitable result
cannot be obtained under the formula
provided for herein, the Tax
Administrator, upon application of the taxpayer, shall have the authority
to
substitute other factors or methods calculated to effect a fair and
proper apportionment.
C. As
used in division (B) of this section, “sales made in a municipal
corporation” mean:
1. All sales of tangible personal property delivered within such
municipal corporation regardless of where
title passes if shipped or delivered from a stock of goods within
the Village.
2. All sales of tangible personal property delivered within such
municipal corporation regardless of where
title passes even though transported from a point outside such municipal
corporation if the taxpayer is
regularly engaged through its own employees in the solicitation or
promotion of sales with such municipal
corporation and the sales result from such solicitation or promotion.
3. All sales of tangible personal property shipped from a place within
such municipal corporation to
purchasers outside such municipal corporation regardless of where title
passes if the taxpayer is not,
through its own employees, regularly engaged in the solicitation or
promotion of sales at the place where
delivery is made.
D. Except
as otherwise provided in division (E) of this section, net profit from
rental activity not constituting a
business or profession shall be subject
to tax only by the municipal corporation in which the property
generating
the net profit is located.
E. This
section does not apply to individuals who are residents of the Village
and, except as otherwise provided
in section 718.01 of the Ohio Revised
Code, the Village may impose a tax on all income earned by residents
of
the Village to the extent allowed by the United States Constitution.
F. Net
Operating Loss (NOL)
1. The Village does not allow a net operating loss carry-back or
carry-forward.
2. Nothing in Chapter 718.01 of the Ohio Revised Code requires a
municipality corporation to allow a net
operating loss carry-back or carry-forward.
G. Consolidated
Return
1. A consolidated return may be filed by a group of corporations who
are affiliated through stock ownership
if that affiliated group filed for the same tax period a consolidated
return fro 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,
consolidated returns shall continue to be
filed in subsequent years.
H. Rentals
1. Rental income received by a taxpayer shall be included in the
computation of net profits from business
activities, only if and to the extent that the rental, ownership,
management or operations of the real estate
from which such rentals are derived (whether so rented, managed or
operated by taxpayer individually or
through agents or other representatives) constitutes a business activity
of the taxpayer in whole or in
part
2. Where the gross monthly rental of any and all real properties,
regardless of number and value,
aggregates in
excess of $200.00 per month, it shall be prima facie evidence that the
rental, ownership,
management or operation of such properties is a business activity of such
taxpayer, and the net income
of such
rental property shall be subject to tax; provided that in 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 of profits of the lessee, whether or not such
rental
exceeds $200.00 per month; 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 farms, whether or not the
gross income
exceeds $200.00 per month; and provided further that the person who operates a licensed
rooming
house shall be considered in business whether or not the gross
income exceeds $200.00 per month.
TAXABLE INCOME AMPLIFIED
For purposes of this Ordinance, salaries, wages, commissions,
and other income
or compensation shall be defined to include, but shall not be limited to,
the following:
1. Any payments made by an employer to an employee during periods of
absence from work regardless of the
label attached to the payments by the employee or
the employer. By way of illustration only, these payments
include sick pay, sub pay, vacation pay, supplemental unemployment pay,
short-term disability pay etc. Any
such payment shall be taxable when paid
at the rate of taxation then in effect.
2. Income from wage continuation plans including retirement incentive
plans.
3. Stock options-taxed when exercised on amount indicated on W-2
forms.
4. Cost of group term life insurance over $50,000.00 tax on entire
amount.
5. Severance pay or separation payments.
6. Compensation paid in property or the use thereof at fair market
value to the same extent as taxable under the
Federal Internal Revenue Act
and so indicated on the W-2 form.
7. Tips received by waiters and others, bonuses, gifts, gratuities or
other similar payments received
in connection
with employment
8. Compensation paid to domestic servants.
9. Benefits resulting from an employer assuming a tax.
10. Fellowships,
grants or stipends paid to a graduate student in the full amount except
that any amount allocated in
writing for tuition, books, and laboratory
fees shall be excluded.
11. Dismissal
pay that is receivable as a matter of right or paid by virtue of an
employment contract.
12. Incentive
payments.
13. Tax
shelter plan contributions by an employee to a retirement system are not
deductible by such employee.
If such contributions are deducted by an
employer from the earnings of the employee, such amounts are
subject to
withholding
14. Disability
pay if an employer pays the premium
15. Director’s
fees.
16. Jury
duty fees.
17. Supplemental
unemployment pay if paid by an employer.
18. Union
steward fees.
19. Strike
benefits if paid by the employer.
20. Profit
sharing from a non-qualified plan.
21. Moving
expense reimbursement in excess of any federal allowance for the same.
22. Total
annual combined winnings over $5,000.00 earned or derived from gaming,
wagering, lotteries, including
Ohio or other state lotteries, or games of
chance.
I. Exclusions
The
provisions of this Chapter shall not be construed as levying a tax upon
the following:
1. Proceeds from welfare benefits, unemployment
insurance benefits, social security benefits, and qualified
retirement
plans as defined by the Internal Revenue Service.
2. Proceeds of insurance, annuities, workers
compensation insurance, permanent disability benefits, compensation
for
damages for personal injury and like reimbursements, not including
damages for loss of profits and wages.
3. Dues, contributions and similar payments receive
by charitable, religious, educational organizations, or labor
unions,
trade or professional associations, lodges and similar organizations.
4.Gains from involuntary conversion, cancellation
of indebtedness, interest on Federal obligations and income of a
decedent’s estate during the period of administration (except such
income from the operation of a business).
5. Alimony
6. Compensation for damage to property by way of
insurance or otherwise.
7. Interest and dividends from intangible property.
8. Military pay or allowances of members of the
Armed Forces of the United States and of members of their reserve
components, including the Ohio National Guard (ORC 718.01).
9.Income of any charitable, educational, fraternal
or other type of nonprofit association or organization enumerated in
Ohio
Revised Code 718.01 to the extent that such infome is derived from
tax-exempt real estate, tax-exempt
tangible or intangible property, or
tax-exempt activities.
10. Any association or organization falling in the
category listed in the preceding paragraph receiving income from
non-exempt real estate, tangible or intangible personal property, or
business activities of a type ordinarily
conducted for profit by taxpayers
operating for profit shall not be excluded hereunder.
11. In the event any association or organization
receives taxable income as provided in the preceding paragraph
from real
or personal property ownership or income producing business located both
within and without the
corporate limits of the Village, it shall calculate
its income apportioned to the Village under the method or
methods provided
above.
12. If exempt for federal income tax purposes,
fellowship and scholarship grants are excluded from Village incom
tax.
13. The rental value of a home furnished to a
minister of the gospel as part of his compensation, or the rent
allowance paid to a minister of the gospel as part of his compensation, to
the extent used by him to rent or
provide a home pursuant to section 107
of the Internal Revenue Code.
14. Compensation paid under section 3501.28 or
3501.36 of the Ohio Revised Code to a person serving as a
precinct
official, to the extent that such compensation does not exceed one
thousand dollars ($1,000.00)
annually. Such compensation in excess of one thousand dollars may be
subjected to taxation. The
payer of
such compensation is not required to withhold Municipal income
tax from that compensation.
15. The Village shall not tax the compensation paid
to a nonresident individual for personal services performed by
the
individual in the Village on twelve (12) or fewer days in a calendar year
unless one of the following applies:
a. The
individual is an employee of another person, the principal place of
business of the individual’s employer
is
located in another municipality in Ohio that imposes a tax applying to
compensation paid to the individual
for
services paid on those days; and the individual is not liable to that
other municipality for tax on the
compensation paid for such services.
b. The
individual is a professional entertainer or professional athlete, the
promoter of a professional
entertainment or sports event, or an employee of such promoter, all as may
be reasonably defined by the
Village.
16. The income of a public utility, when that public
utility is subject to the tax levied under section 5727.24 or 5727.3
of
the Ohio Revised Code, except a municipal corporation may tax the
following, subject to Chapter 5745 of t
Ohio Revised Code:
a. The
income of an electric company or combined company;
b. The income of a telephone company.
c. As used in division (F)(17) of this section, “combined
company”, “electric company” and “telephone
company” have the same meanings as in section 5727.01 of the Ohio
Revised Code.
17. An S Corporation shareholder’s distributive
share of net profits of the S Corporation, other than any part of the
distributive share of net profits that represents wages as defined in
section 3121(a) of the Internal Revenue Cod
or net earnings from
self-employment as defined in section 1402(a) of the Internal Revenue
Code, to the extent
such distributive share would not be allocated or
apportioned to this state under division (B)(1) and (2) of section
5733.05
of the Ohio Revised Code if the S corporation were a corporation subject
to the taxes imposed under
Chapter 5733 of the Ohio Revised Code.
Generally the above noted items in this section are the only forms of
income not subject to the tax. Any
other income, benefits, or other forms of compensation shall be taxable.
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