VILLAGE OF RUSSIA, OHIO

INCOME TAX ORDINANCE

AND

INCOME TAX RULES AND REGULATIONS

In Effect as of January 1, 2002

ORDINANCE

ORDINANCE levying a tax to provide funds for the purpose of construction, acquiring, maintaining and operating capital improvements; for general municipal operations; on all salaries, wages, commissions and other compensation earned by residents of the Village of Russia; on all salaries, wages, and commissions and other compensations earned by non-residents of the Village of Russia for work done or services performed or rendered in the Village of Russia; on the net profits earned by all businesses, professions or other activities conducted by residents of the Village of Russia; on the net profits earned by all businesses, professions and/or other activities conducted in the Village of Russia by non-residents and on the net profits earned by all corporations doing business in the Village of Russia as a result of work done or services rendered or performed in the Village of Russia; requiring the filing of income tax returns and the furnishing of information by employers and all others subject to said tax; imposing on employers the duty of collecting the tax at the source and paying the same to the Village of Russia; providing for the administration, collection and enforcement of said tax; declaring violation of said tax ordinance to be a misdemeanor, and imposing penalties therefore.

Be it ordained by this Council for the Village of Russia, State of Ohio:

To provide funds for the purposes of construction, maintaining, operating and acquiring of capital improvements and for general municipal operations in the Village of Russia, Ohio, and there shall be and hereby is levied a tax on salaries, wages, commissions and other compensation and on net profits as hereinafter provided.

As used in this Ordinance, the following words shall have the meanings ascribed to them in this section, except as and if the context clearly indicates or requires a different meaning. The singular shall include the plural, and the masculine shall include the feminine and the neuter:

ASSOCIATION – A partnership, limited partnership, 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 13 of this Ordinance.

BUSINESS – An enterprise, activity, profession, or undertaking of any nature conducted for profit or ordinarily conducted for profit, whether by an individual, co-partnership, association, corporation or any other activity.

BUSINESS ALLOCATION – The portion of net profits to be allocated to the Village of Russia as having been made therein pursuant to SECTION 3 of this Ordinance.

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.

EMPLOYEE – One who works for wages, salary, commission or other types of compensation in the service of an employer. Any person upon whom an employer is required to withhold for either federal income or Social Security purposes or on whose account payments are made under the Workers’ Compensation law shall prima facie be an employee.

EMPLOYER – An individual, co-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 twelve (12) months ending on any day other than December 31^st.

GROSS RECEIPTS – Total income from any source whatsoever.

INCOME TAX COMMISSIONERS – The Income Tax Commissioner of the Income Tax Department of the Village of Russia, or the person executing the duties of the aforesaid Commissioner.

NET PROFITS – The net gain from the operation of a business, profession or enterprise, including any rental activity, after provision for all costs and expenses incurred in the conduct thereof, including reasonable allowance for depreciation, depletion, amortization and reasonable additions to reserves for bad debts, either paid or accrued in accordance with recognized principles of accounting applicable to the method of accounting regularly employed by the taxpayer for federal income tax purposes; but without deduction of taxes imposed by this Ordinance and federal, state and other taxes based on income exclusive of the amount of Ohio franchise tax computed on the net worth basis or, in the case of an association, without deduction of salaries paid to partners and other owners.

NON-RESIDENT – A person, whether an individual, association, corporation or other entity, domiciled outside the Village of Russia.

OTHER ENTITY – A person or unincorporated body not previously named or defined, including but not limited to, fiduciaries.

PERSON – Every natural person, co-partnership, fiduciary, association or corporation or other entity. Whenever used in any clause, prescribing and imposing a penalty, the term "person," as applied to any unincorporated entity, shall mean the partners or sole proprietor thereof, and as applied to a corporation, the officers thereof.

PLACE OF BUSINESS – Any bona fide office (other than a mere statutory office), factory, warehouse or other space which is occupied and used by the taxpayer in carrying on any business activity individually or through one or more employees regularly in attendance.

A taxpayer does not have a regular place of business outside the Village of Russia solely by consigning goods to an independent factor or other contractor outside of the Village for sale.

RESIDENT – A person, whether an individual, association, corporation or other entity, domiciled in the Village of Russia.

TAXABLE YEAR – The calendar year, or fiscal year ending during such calendar year, upon the basis of which the net profits are to be computed under this Ordinance and, in the case of a return for a fractional part of a year, the period for which such return is made. Unless approved by the Income Tax Commissioner, the taxable year of an individual shall be a calendar year.

TAXPAYER – An association, business, corporation, employer, person, or other entity, required by this Ordinance to file a return on earnings or net profits or to pay a tax thereon.

A.    Subject to the provisions of SECTION 16 of this Ordinance, an annual tax for the purposes specified in SECTION 1 hereof, shall be levied on and after July 1, 1988 at the rate of one percent (1%) per annum upon the following:

1. On all salaried, wages, commissions, rentals and other compensation earned on and after July 1, 1988, by residents of the Village of Russia.

2. On all salaries, wages, commissions, rentals and other compensation earned on and after July 1, 1988 by non-residents for work done or services performed or rendered in the Village of Russia.

3.    (A)    On the portion attributable to the Village of Russia of the net profits earned on and after July 1, 1988, of all resident associations, unincorporated businesses, professions or other activities conducted in the Village of Russia.

(B)    On a resident partner’s or owner’s share of the net profits of a resident association or other unincorporated business entity not attributable to the Village of Russia and not levied against such association or other incorporated business entity.

4.    (A)    On the portion attributable to the Village of Russia of the net profits earned on and after July 1, 1988, of all non-resident associations, unincorporated businesses, professions or other activities, derived from sales made, work done or services performed or rendered or business or other activities conducted in the Village of Russia, whether or not such association or unincorporated business entity has an office or place of business in the Village of Russia.

(B)    On a resident partner’s or owner’s share of the net profits of a non-resident association or other unincorporated business entity not attributable to the Village of Russia and not levied against such association or other unincorporated business entity.

5.    On the portion attributable to the Village of Russia of the net profits earned on and after July 1, 1988, of all corporations derived from sales made, work done or services rendered or performed and business or other activities conducted in the Village of Russia, whether or not such corporations have an office or place of business in the Village of Russia.

B.    An employee who pays his business expenses from his commissions or other compensation, without reimbursement from his employer, may deduct from his gross commissions or other compensation business expenses allowed by the Internal Revenue Service for federal income tax purposes but only to the extent said expenses are incurred in earning commissions or other compensation subject to the tax imposed by this Ordinance.

C.    Allocation of Net Profits. Where a person conducts a business both within and outside the village of Russia, the portion of the entire net profits of such business to be allocated as having been made within the Village of Russia may be determined from the records which disclose with reasonable accuracy what portion of its net profits is attributable to that part of its activities conducted within the Village of Russia or, at the option of the taxpayer, may be determined by the following formula, which shall be used if the taxpayer has no bona fide records showing the net profit from Russia business activities, subject, however, to the provisions of subparagraph C2 hereof:

1.    Multiply the entire net profits of the business by a business allocation percentage to be determined by:

(A)    Ascertaining the percentage which the average net book value of the real and tangible personal property owned or used in the business and situated within the Village of Russia, during the period covered by the return, is of the average net book value of all the real and tangible personal property owned or used in the business wherever situated during such period. 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 (8).

(B)    Ascertaining the percentage which the gross receipts of the business from sales made and services performed in the Village of Russia during the period covered by the return, is of the total gross receipts from all sales and services, wherever made or performed during such period. Sales made within the Village of Russia shall be deemed to include:

(1)    All sales of tangible personal property which is delivered within the Village of Russia, regardless of where title passes if shipped or delivered from a stock of goods within the Village of Russia.

(2)    All sales of tangible personal property which is delivered within the Village of Russia, regardless of where title passes, even though transported from a point outside the Village of Russia, if the taxpayer is regularly engaged through its own employees in the solicitation or promotion of sales within the Village of Russia and the sales result from such solicitation or promotion.

(3)    All sales of tangible personal property which is shipped from a place within the Village of Russia to purchasers outside the Village of Russia, regardless of where title passes, if the taxpayer is not, through its own employees, regularly engaged in the solicitation or promotion of sales at the place where delivery is made.

(C)    Ascertaining the percentage which the total wages, salaries and other compensation paid during the period covered by the return to employees for services performed in the Village of Russia is of the total wages, salaries, commissions and other compensation paid during such period, to all employees within and outside the Village of Russia.

(D)    Adding together the percentages determined in accordance with subparagraphs (A), (B), and (C) above 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 said total. A factor is applicable even though it may be allocable entirely in or outside the Village of Russia.

2.    Provided, however, that in the event a just and equitable result cannot be obtained under the formula provided for herein, the Board or Review, upon application of the taxpayer or the Tax Commissioner shall under uniform regulations adopted by the Board, have the authority to substitute other factors or methods calculated to effect a fair and proper allocation.

D.    Net Operating Loss Carry Forward.

1.    The portion of a net operating loss allocable to the Village of Russia in any taxable year ending after July 1, 1988 may be applied against the portion of the profit of succeeding year(s) allocable to the Village of Russia, until exhausted; but in no event for more than five (5) taxable years. No portion of a net operating loss shall be carried back against net profits of any prior year.

2.    The portion of a net operating loss sustained shall be allocated to the Village of Russia in the same manner as provided herein for allocating net profits to the Village of Russia.

3.    The Tax Commissioner shall provide by Rules and Regulations the manner in which such net operating loss carry-forward shall be determined.

E.    Exclusions from Tax.    The tax provided for herein shall not be levied on the following:

1.    The military pay or allowances of members of the armed forces of the United States and of members of their reserve component, including the Ohio National Guard.

2.    Poor relief, pensions, unemployment compensation or similar payments, including disability benefits received from private industry or local, state or federal governments or from charitable, religious or educational organizations.

3.    Alimony received.

4.    Income, dues, contributions, receipts from casual entertainment, amusements, sports events and health and welfare activities received by religious, fraternal, charitable, scientific, literary, educational institutions or organizations.

5.    Any association, organization, corporation, club or trust, which is exempt from federal taxes on income by reason of its charitable, religious, educational, literary, scientific, etc., purposes.

6.    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).

7.    Earnings and income of all persons under seventeen (17) years of age, whether residents or non-residents.

8.    Compensation paid under Section 3501.28 or 3501.36 of the Ohio Revised Code to a person serving as a precinct election official, to the extent that such compensation does not exceed One Thousand Dollars ($1,000.00) annually.

9.    Parsonage allowance pursuant to Section 107 of the Internal Revenue Code.

10.    Compensation paid to an employee of a transit authority for operating a transit bus in or through the Village of Russia, unless the bus is operated on a regularly scheduled route, the operator is a resident or domiciled in the Village of Russia, or the headquarters of the authority or commission is located within the Village of Russia.

11.    Intangible income.

Said tax shall be levied, collected and paid with respect to the salaries, wages, commissions and other compensation earned on and after July 1, 1988, and with respect to the net profits of businesses, professions, or other activities earned on and after July 1, 1988.

Provided, however, that where the fiscal year of the business, profession, or other activity differs from the calendar year, the tax shall be applied to that part of the net profits for the fiscal year as shall be earned on and after July 1, 1988, to the close of the taxpayer’s fiscal year. Thereafter, the taxpayer shall report on its fiscal year basis.

A.    Each person who engages in business, or whose salary, wages, commissions and other compensation are subject to the tax imposed by this Ordinance shall, whether or not a tax be due thereon, make and file on or before April 30 of each year a return with the Village of Russia on a form or forms furnished or obtained upon request setting forth:

1.    The aggregate amount of salaries, wages, commissions, and other compensation earned by him and income from such business, less allowable expenses incurred in the acquisition of such gross income, during the preceding year and subject to said tax;

2.    The amount of the tax imposed by this Ordinance; and

3.    Such other pertinent statements, information returns or other information as the Tax Commissioner requires; including a statement of taxable income as determined for federal income tax purposes, adjusted to set forth only such income as is taxable under the provisions of this Ordinance.

B.    A taxpayer on a fiscal year accounting basis for federal tax purposes shall, beginning with his first fiscal year, any part of which falls within the tax period, pay the tax on the basis of his fiscal year and shall file his annual returns within four (4) months from the end of his fiscal year.

C.    The Tax Commissioner may extend the time for filling of the annual return, upon the written request of the taxpayer, for a period of not to exceed three (3) months, or one (1) month beyond any extension requested of and granted by the Internal Revenue Service for the filing of the federal income tax return. Extension may be granted beyond the above, subject to approval of the Board of Review.

D.    The taxpayer making such return shall, at the time of the filing thereof, pay to the Village of Russia, the amount of taxes shown 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 6 of this Ordinance, or where any portion of said tax shall have been paid by the taxpayer, pursuant to the provisions of SECTION 7 of this Ordinance, or where an income tax has been paid to another municipality, credit for the amount so paid in accordance with SECTIN 15 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. Should it then appear that the taxpayer has paid more than the amount of tax to which the Village of Russia is entitled under the provisions of this Ordinance, such overpayment shall be refunded, or at the option of the taxpayer, credited to his next year’s tax liability; provided, however, that no additional taxes or refunds of less than One Dollar ($1) shall be collected or refunded. Within three (3) months from the final determination of any federal tax liability affecting the taxpayer’s Russia tax liability, such taxpayer shall make and file an amended Russia return showing income subject to the Russia tax based upon such final determination of federal tax liability and pay any additional tax shown due thereon or make claim for refund of any overpayment.

E.    The Tax Commissioner is hereby authorized to accept the return of an employer or employers, showing the total amount of tax deducted by said employer or employers from the salaries, wages, commissions or other compensation of employees, and paid by them to the Village of Russia Income Tax Department as the return required of any employee whose sole income, subject to the tax or taxes under this Ordinance, is such salary, wages, commissions, or other compensation.

F.    A corporation may, at its option, make a consolidated return, if that affiliated group of corporations filed a consolidated return with the Internal Revenue Service pursuant to Section 1501 of the Internal Revenue Code.

G.    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 Sections 11 and 15. A taxpayer may not change the method of accounting or apportionment of net profits after the due date for filing the original return.

H.    An adjustment made to a tax return by the Department of Taxation, after the return has been filed in good faith by the taxpayer, will not be made by the Department if the result of the adjustment is equal to or less than Five Dollars ($5.00) as underpayment or overpayment of tax.

A.    Each employer within or doing business within the Village of Russia, who employees one or more persons on a salary, wage, commission or other compensation basis shall deduct at the time of the payment of such salary, wage, commission or other compensation the tax of one percent (1%) of the gross salaries, wages, commissions or other compensation due by said employer to said employee and shall on or before the last day of April, July, October and January of each year make a return and pay to the Village of Russia Income Tax Department the amount of taxes so deducted during the preceding calendar quarter. Said return shall be on a form or forms prescribed by or acceptable to the Income Tax Department and shall be subject to the rules and regulations prescribed therefore by the Village of Russia.

1.    The Tax Commissioner is authorized to enter into agreements with employers outside the Village, provided they have the written consent of the employees affected, to collect such taxes at the source in the same manner as provided above.

B.    Such employer in collecting said tax shall be deemed to hold the same until payment is made by such employer to the Village of Russia, as a trustee for the benefit of the Village of Russia, and any such tax collected by such employers shall, until the same is paid to the Village of Russia, be deemed a trust fund in the hands of such employer.

C.    Provided, however, that no person shall be required to withhold the tax on the wages, or other compensation paid domestic servants employed exclusively in or about such person’s residence.

D.    A nonresident employer, agent of such an employer, or other payer that is not situated in the Village is not required to deduct and withhold taxes from the income of an individual unless the total amount of tax required to be deducted and withheld for the Village of Russia on account of all of the employer’s employees or all of the other payer’s payees exceeds One Hundred Fifty Dollars ($150.00) for a calendar year. If the total amount of tax require to be deducted and withheld on account of all of the nonresident employer’s employees or all of the other payer’s payees exceeds One Hundred Fifty Dollars ($150.00) for a calendar year, the Village of Russia may require the employer, agent, or other payer to deduct and withhold taxes in each ensuing year even if the amount required to be deducted and withheld in each of those ensuing years is One Hundred Fifty Dollars ($150.00) or less, except as otherwise provided in Division (B) of Ohio Revised Code Section 718.03.

If a nonresident employer, agent of such an employer, or other payer that is not situated in the Village of Russia is required to deduct and withhold taxes for an ensuing year under Division (A) of Ohio Revised Code Section 718.03, and the total amount of tax required to be deducted and withheld under that division in each of three (3) consecutive years is One Hundred Fifty Dollars ($150.00) or less, the Village of Russia shall not require the employer, agent, or other payer to deduct and withhold taxes in any year following the last of those consecutive years unless the amount required to be deducted and withheld in any such following year exceeds One Hundred Fifty Dollars ($150.00).

A.    Every person who anticipates any taxable income which is not subject to the provisions of SECTION 6 hereof, or who engages in any business shall file a declaration setting forth such estimated income or the estimated profit and loss from such business during the year covered by the declaration, together with the estimated tax due thereon, if any.

B.    Each person required to file a declaration shall file such declaration on or before April 30 of each year. In the case of a person starting in business, such declaration shall be filed within four (4) months of the date said taxpayer starts such business.

C.    Such declaration shall be filed upon a form or forms furnished by, or obtainable upon request from, the Income Tax Department, which form or forms may contain a statement that the figures used in making such declaration are the figures used in making the declaration of the estimate for federal income tax, adjusted to set forth only such income as is taxable under the provisions of this Ordinance.

D.    Such declaration of estimated tax to be paid to the Village of Russia shall be accompanied by a payment of at least 22.5% of the estimated tax. Exclusive of taxpayers filing on a fiscal year basis, at least a similar amount shall be paid on or before July 31, October 31 and January 31 of each year. Such estimate may be amended at any time.

E.    A taxpayer reporting on a fiscal year basis shall file, beginning with taxpayer’s first fiscal year, any part of which falls within the tax period, a declaration on or before the fifteenth day of the fourth month of the taxpayer’s fiscal year accompanied by a payment of at least 22.5% of the estimated tax shown due thereon. At least a similar amount shall be paid on or before the fifteenth day of the sixth month, the fifteenth day of the ninth month, and the fifteenth day of the twelfth month of the taxpayer’s taxable year.

F.    Taxpayers that are not individuals must remit 22.5% of the estimated tax liability for the current year on or before the day on which the annual tax return for the prior year is required to be filed disregarding any extension or, in the case of a fiscal year taxpayer, the fifteenth day of the fourth month of the taxpayer’s taxable year. Exclusive of taxpayers filing on a fiscal year basis, at least a similar amount shall be paid on or before June 15, September 15, and December 15 of each year. Such estimate may be amended at any time.

G.    Penalty and interest will not be imposed for the late payment or nonpayment of estimated tax liability if the taxpayer has remitted an amount at least equal to one hundred percent (100%) of the taxpayer’s tax liability for the preceding year, provided that the return for the preceding year reflected a twelve (12) month period and the taxpayer filed a return for the preceding year; or, if the taxpayer, which is an individual, was not domiciled within the Village of Russia on the first day of January of the current calendar year.

A.    Said Commissioner is hereby charged with the enforcement of provisions of this Ordinance and is hereby empowered, subject to the approval of the Board of Review, to adopt and promulgate and enforce rules and regulations relating to any matter or thing pertaining to the collection of taxes and for the administration and enforcement of the provisions of this Ordinance and for the re-examination and correction of returns. The Commissioner is authorized to arrange for the payment of unpaid taxes, interest and penalties on a schedule of installment payments, when the taxpayer has proven to the Commissioner that due to certain hardship conditions, he is unable to pay the full amount of the tax due. Such authorization shall not be granted until proper returns are filed by the taxpayer for all amounts owed by him under the Ordinance.

Failure to make any deferred payments when due shall cause the total unpaid amount, including penalty and interest, to become payable on demand, and the provisions of SECTIONS 10 and 12 of the Ordinance shall apply.

B.    It shall be the duty of the Tax Commissioner to prescribe the form and method of keeping the accounts and reports to be rendered to his office, and he shall maintain accurate records showing the amount received from each taxpayer and the date of said receipt. The Tax Commissioner is hereby charged with the internal audit of all accounts and returns, including the reexamination and correction of the returns. The Tax Commissioner shall further fix the amount of the tax due from a taxpayer who fails to file a return or when the tax has been established from an audit or examination of the taxpayer’s income and shall send to the taxpayer by certified mail a written statement showing the amount of tax so fixed, together with the interest and penalties thereof, if any.

C.    The Tax Commissioner shall demand and receive all taxes due the Village of Russia and shall make a written report to Council at the end of each quarter of all moneys collected during the preceding quarter.

D.    The Tax Commissioner shall be the administrative head of the Income Tax Department, under the supervision of the Mayor, subject to approval of the Council.

E.    Subject to the consent of the Board of Review or pursuant to regulation approved by said Board, the Commissioner shall have the power to compromise any interest or penalty or both imposed by SECTION 10 of this Ordinance.

A.    The Tax Commissioner and any authorized employee is hereby authorized to examine the books, papers and records of any employer, or of any taxpayer or person subject to the tax, for the purposes of verifying the accuracy of any return made, or if no return was made, to ascertain the tax due. Every such employer, supposed employer, taxpayer or supposed taxpayer is hereby directed and required to furnish to the Tax Commissioner or his duly authorized agent or employee, the means, facilities and opportunity for making such examination and investigation as are hereby authorized.

B.    The Tax Commissioner or his duly authorized agent or employee is hereby authorized to examine any person, employer or employee under oath concerning any income which was or should have been returned for taxation and for this purpose may compel the production of books, papers, and records and the attendance of all persons before him, whether as parties or witnesses, whenever he believes such persons have knowledge of such income.

C.    The refusal to produce books, papers, records and federal income tax returns or the refusal to submit to such examination by any employer or person subject to tax or required to withhold tax or the failure of any person to comply with the provisions of this section or with any order or subpoena of the Commissioner authorized hereby shall be deemed a violation of this Ordinance punishable as prescribed in SECTION 12 hereof.

D.    Any information gained as a result of any returns, investigations, hearings or verifications required or authorized by this Ordinance shall be confidential, and no disclosure thereof shall be made unless ordered by a court of competent jurisdiction or unless disclosure is necessary to the conduct of a hearing before the Board of Review. Any person divulging such information in violation of this section shall upon conviction thereof be deemed guilty of a misdemeanor and shall be subject to a fine or penalty of not more than Five Hundred Dollars ($500) or imprisoned not more than six (6) months or both. Each disclosure shall constitute a separate offense.

E.    Every taxpayer shall retain all records necessary to compute the tax liability under this Ordinance for a period of three (3) years from the date his return is filed, or the withholding taxes are paid.

A.    All taxes imposed and all moneys withheld or required to be withheld by employers under the provisions of this Ordinance and remaining unpaid after they become due shall bear interest at the rate of one percent (1%) per month or a fraction thereof.

B.    In addition to interest as provided in paragraph A above, penalties based on the unpaid tax are hereby imposed as follows:

1.    The taxpayer upon whom said taxes are imposed and any employer required by this Ordinance to deduct, withhold and pay taxes imposed by this Ordinance shall be liable in addition hereto to a penalty of five percent (5%) of the amount of the unpaid tax up to the first month after the tax becomes due; ten percent (10%) of the unpaid tax if paid during the second and third months; and fifteen percent (15%) thereafter.

C.    A penalty shall not be assessed or an additional tax assessment made by the Commissioner when a return has been filed in good faith and the tax paid thereon within the time prescribed by the Commissioner; 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 (3) months after final determination of the federal tax liability.

D.    Upon recommendation of the Commissioner of Taxation, the Board of Review may abate penalty or interest, or both, or upon an appeal from the refusal of the Commissioner of Taxation to recommend abatement of penalty and interest, the Board of Review may nevertheless abate penalty or interest or both.

A.    All taxes imposed by this Ordinance shall be collectible, together with any interest and penalties thereon, by suit as other debts of like amount are recoverable. No additional assessment shall be made after three (3) years from the time of payment of any tax due hereunder; provided, however, there shall be no period of limitation on an additional assessment in a case of a return that omits gross income in excess of twenty-five percent (25%) of that required to be reported, in the case of filing a false or fraudulent return with intent to evade the tax or in the case of failure to file a return. In those cases in which the District Director of Internal Revenue and the taxpayer have executed a waiver of the federal statute of limitations, the period within which an additional assessment may be made by the Tax commissioner shall be extended three (3) years from the time of the final determination of federal tax liability.

B.    All taxes erroneously paid shall not be refunded unless a claim for refund is made within three (3) years from the time of payment thereof or within three (3) years after determination of the federal tax liability.

A.    Any person who shall:

1.    Fail, neglect or refuse to make any return or declaration required by this Ordinance; or

2.    Shall knowingly make any incomplete, false or fraudulent tax return; or

3.    Fail, neglect or refuse to pay the tax, penalties or interest imposed by this Ordinance; or

4.    Fail, neglect or refuse to withhold the tax from his employees or remit such withholding to the Commissioner; or

5.    Refuse to permit the Commissioner 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 Commissioner and to produce his books, records, papers or federal income tax returns relating to the income or net profits of a taxpayer upon order or subpoena of the Commissioner; or

7.    Refuse to disclose to the Commissioner any information with respect to the income or net profits of a taxpayer; or

8.    Fail to comply with the provisions of the Ordinance or any order or subpoena of the Commissioner authorized hereby; or

9.    Give to a employer false information as to his true name, correct Social Security number and residence address or fail to promptly notify an employer of any change in residence address and date thereof; or

10.    Fail to use ordinary diligence in maintaining proper records of employees’ addresses, total wages paid and Russia tax withheld or to knowingly give the Commissioner 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 Ordinance.

Shall be guilty of a misdemeanor and shall be fined not more than Five Hundred Dollars ($500) or imprisoned not more than six (6) months, or both, for each offense.

B.    Prosecution for an offense made punishable under this section or any other provisions of this Ordinance shall be commenced within three (3) years after the commission of the offense, provided that in the case of fraud, failure to file a return, or the omission of twenty-five percent (25%) or more of income required to be reported, prosecutions may be commenced within six (6) years after the commission of the offense.

C.    The failure of any employer or person to receive or procure a return, declaration or other required form shall not excuse him from making any information return, return or declaration, from filing such form or from paying the tax.

A.    A Board of Review, consisting of a chairman and two other individuals to be appointed by the mayor for two-year terms, is hereby created. A majority of the members of the Board shall constitute a quorum. The Board shall adopt its own procedural rules and shall keep a record of its transactions. Any hearing by the Board may be conducted privately, and the provisions of SECTION 9 hereto with reference to the confidential character of information required to be disclosed by the Ordinance shall apply to such matters as may be heard before the Board on appeal.

B.    All rules and regulations and amendments or changes thereto, which are adopted by the Commissioner under the authority conferred by this Ordinance must be approved by the Board of Review before the same becomes effective. The Board shall hear and pass on appeals from any ruling or decision of the Commissioner and, at the request of the taxpayer or Commissioner, is empowered to substitute alternate methods of allocation.

C.    Any person dissatisfied with any ruling or decision of the commissioner which is made under the authority conferred by this Ordinance may appeal there from to the Board of Review within thirty (30) days from the announcement of such ruling or decision by the Commissioner, and the Board shall, on hearing, having jurisdiction to affirm, reverse or modify any such ruling or decision, or any part thereof.

The funds collected under the provisions of this Ordinance shall be applied for the following purposes in the following order, and in the percentages stated:

A.    Such part thereof which shall be necessary to defray all costs and expenses of collecting the taxes levied by this Ordinance and the cost of administering and enforcing the provisions hereof.

B.    That thirty percent (30%) of the remaining revenue, after the application of the funds in accordance with paragraph A above, shall be paid into the Capital Improvements Fund for the purpose of construction, acquisition, maintenance and operation of capital improvements and the costs incidental thereto.

C.    That fifty percent (50%) of the revenue, after the application of the funds in accordance with paragraphs A and B above, shall be paid into the Income Tax Fund; provided, however, that the amount of the revenue paid into the Income Tax Fund in any one calendar year shall not exceed Seventy-five Thousand and 00/100 Dollars ($75,000).

D.    The balance of any such funds collected under the provisions of this Ordinance shall be paid into the General Fund.

All income tax refunds shall be obtained from the above funds in the same percentages.

Resident individuals of Russia who are required to pay and do pay tax to a municipality other than Russia on salaries, wages, commissions, and other compensation for work done or services performed outside Russia or on net profits from businesses, professions or other activities conducted outside Russia may claim a credit of the amount of the tax paid by them on their behalf to such other municipality to the extent of the tax imposed by this Ordinance on such income, such credit being limited to one percent (1%) of the amount of income tax by both the Village of Russia and such other municipality. A return must be filed for the purpose of claiming such credit or allowance, together with such evidence of the payment of similar tax to the municipality in which such resident has a source of income as the Tax Commissioner may require.

This Ordinance shall not apply to any person, firm, or corporation or to any property as to whom or which it is beyond the power of Council to impose the tax herein provided for. If any sentence, clause, section or part of this Ordinance, or any tax against or exemption granted any individual or any of the several groups of persons, or forms of income specified herein is found to be unconstitutional or illegal or invalid, such unconstitutionality, illegality or invalidity shall affect only such clause, sentence, section, or part of this Ordinance and shall not affect or impair any of the remaining provisions sentences, clauses, sections, or other parts of this Ordinance. It is hereby declared to be the intention of Council for the Village of Russia that this Ordinance would have been adopted had such unconstitutional, illegal or invalid sentence or part thereof not been included therein.

This Ordinance, upon its passage, shall be effective July 1, 1981, and shall remain in full force and effect until repealed by the Council of the Village of Russia.

RULES AND REGULATIONS TO COMPLEMENT

RUSSIA INCOME TAX ORDINANCE

ARTICLE I

PURPOSE

Section I of the Ordinance deals only with the purposes for which the tax collected will be used.

ARTICLE II

DEFINITIONS

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.

ASSOCIATION means a partnership, cooperative, limited partnership, or any other form of unincorporated enterprise owned by two or more persons.

THE BOARD means the Board of Review provided for in Section 13 of the Ordinance.

BUSINESS means an enterprise, cooperative 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. The ordinary administration of a decedent’s estate by the executor or administrator, and the mere custody, supervision and management of trust property under passive trust, whether inter vivos or testamentary, unaccompanied by the actual operation of a business as herein defined shall not be construed as the operation of a business.

BUSINESS ALLOCATION as used in these Regulations means the portion of net profits to be allocated to the Village of Russia as having been made in Russia, either under separate accounting method, or under the three factor formula of property, payroll and sales, provided for in Section 3 of the Ordinance.

CORPORATION means 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.

EMPLOYEE means one who works for wages, salary, commission or other types of compensation in the service of an employer. Any person upon whom an employer is required to withhold for either federal income or Social Security or on whose account payments are made under the Ohio Workmen’s Compensation law shall prima facie be an employee.

EMPLOYER means an individual, partnership, association, corporation (including a corporation not for profit), governmental agency, board, body, bureau, department, subdivision, unit or any other entity who or that employs one or more persons on a salary, wage, commission or other compensation basis whether or not such employer is engaged in business. It does not include a person who employs only domestic help for such person’s private residence.

FISCAL YEAR means an accounting period of twelve (12) months or less ending on any day other than December 31. Only fiscal years accepted by the Internal Revenue Service for federal income tax purposes may be used for Russia tax purposes.

GROSS RECEIPTS means total income from any source whatsoever.

INCOME TAX COMMISSIONER means the Income tax Commissioner of the Income Tax Department of the Village of Russia, or the person executing the duties of the aforesaid Commissioner.

NET PROFITS means a net gain from the operation of a business, profession, enterprise or other activity after provision for all ordinary, reasonable 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 Ordinance, federal, state, and other taxes based on income exclusive of the amount of Ohio franchise taxes computed on the net worth basis; 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 Ordinance.

NON-RESIDENT means an individual domiciled outside of the Village of Russia.

NON-RESIDENT UNINCORPORATED BUSINESS ENTITY means one not having an office or place of business within the Village of Russia.

THE ORDINANCE means Ordinance No. 81-5 enacted by Council of Russia and any amendments and supplements thereto.

PERSONS means every natural person, partnership, fiduciary, association, corporation or other entity. Whenever used in a clause prescribing or imposing a penalty, the term PERSON as applied to any unincorporated entity shall mean the partners or members thereof; and as applied to a corporation, the officers thereof; and in the case of any unincorporated entity or corporation not having any partner, member or officer within Russia, any employee or agent of such unincorporated entity or corporation who can be found within the corporate limits of Russia.

PLACE OF BUSINESS means any BONA FIDE office (other than a mere statutory office), factory, warehouse or other space which is occupied and used by the taxpayer in carrying on any business activity individually or through one or more of his regular employees regularly in attendance.

RESIDENT means an individual domiciled in Russia.

RESIDENT UNINCORPORATED BUSINESS ENTITY means an unincorporated business entity having an office or place of business within Russia.

TAXABLE INCOME means wages, salaries and other compensation paid by an employer or employers before deductions of any kind, and/or the net profits from the operation of a business, profession or other enterprise or activity adjusted in accordance with the provisions of the Ordinance and these Regulations.

TAXABLE YEAR means the calendar year, or the fiscal year, used as the basis on which net profits are to be computed under the Ordinance; and in the case of a return for a fractional part of a year, the period for which such return is required to be made.

TAXPAYER means an individual association, corporation or other entity required by the ordinance to file a return and/or to pay a tax.

VILLAGE means the Village of Russia.

In all definitions and these Regulations, the singular shall include the plural, and the masculine shall include the feminine and the neuter.

ARTICLE III

IMPOSITION OF TAX

A.    Bases

1.    Resident Employee:

a.    In the case of residents of the Village, an annual tax of one percent (1%) is imposed on all salaries, wages, commissions and other compensation earned during the effective period of the Ordinance. For the purpose of determining the tax on the earnings of resident taxpayers taxed under Section 3, 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.

 

b.    The following are items which are subject to the tax imposed by Section 3, paragraph A1 of the Ordinance:

.1    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:

.01    An officer, director or employee of a corporation (including charitable and other non-profit organizations), joint stock association or joint stock company;

 

.02    An employee (as distinguished from a partner or member) of a partnership, limited partnership, or any form of unincorporated enterprise owned by two or more persons;

 

.03    An employee (as distinguished from a proprietor) of a business, trade or profession conducted by an individual owner;

 

.04    An officer or employee (whether elected, appointed or commissioned) of the United States Government or of a corporation created and owned or controlled by the United States Government, or any of its agencies; or of the State of Ohio or any of its political subdivisions or agencies thereof; or of any foreign country or dependency except as provided in Section 3 of the Ordinances;

 

.05    An employee of any other entity or person, whether based upon hourly, daily, weekly, semi-monthly, monthly, annual, unit of production or piece work rates; and whether paid by an individual, partnership, association, corporation (including charitable and other non-profit corporations), governmental administration, agency, authority, board, body, branch, bureau, department, division, subdivision, section or unit, or any other entity.

.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 Ordinance, regardless of how computed or by whom or where so ever paid.

.01    If the 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.

 

.02    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.

 

.03    If commissions are included in the net earnings of the trade, business, profession, enterprise or activity, carried on by an unincorporated entity of which the individual receiving such commission is owner or part owner and therefore subject to the tax under paragraphs A3 or A4 of Section 3 of the Ordinance, they shall not be taxed under Section 3, paragraph A1.

.3    Fees, unless such fees are properly includable as part of the net profits of a trade, business, profession or enterprise regularly carried on by an unincorporated entity owned or partly owned by said individual and such net profits are subject to the tax under Section 3, paragraph A3 of the Ordinance.

 

.4    Other compensation, including tips, bonuses or gifts of any type, and including compensation paid to domestic servants, casual employees and other types of employees.

 

.5    Payments made to employees by an employer as vacation wages are taxable. Payments made to an employee by an employer under a wage continuation plan during periods of disability or sickness, are taxable.

c.    Where compensation is paid or received in property, its fair market value, at the time of receipt, shall be subject to the tax and to withholding. Board, lodging and similar items received by an employee in lieu of additional cash compensation shall be included in earnings at their fair market value.

.1    In the case of domestics and other employees whose duties require them to live at their place of employment or assignment, board and lodging shall not be considered as wages or compensation earned.

2. Non-resident Employee:

a.    In the case of individuals who are not residents of the Village, there is imposed under Section 3, paragraph A2 of the Ordinance, a tax of one percent (1%) on all salaries, wages, commissions, and other compensation earned during the effective period of the Ordinance for work done or services performed or rendered within the Village, whether such compensation or remuneration is received or earned directly or through an agent and whether paid in cash or in property. The location of the place for which payment is made is immaterial.

 

b.    The items subject to tax under Section 3, paragraph A2 of the Ordinance are the same as those listed and defined in Article III-A1. For the methods of computing the extent of such work or services performed within the Village, in cases involving compensation for person services partly within and partly without the Village, see Article VI-A6.

3.        a.    Imposition of Tax on Net Profits of Resident Unincorporated         

                  Businesses:

.1    In the case of resident unincorporated businesses, professions, enterprises, undertakings or other entities conducted, operated, engaged in, prosecuted or carried on, irrespective of whether such taxpayer has an office or place of business in the Village, there is imposed an annual tax of one percent (1%) on the net profits earned, accrued or received during the effective period of the Ordinance attributable to the Village, under the formula or separate accounting method provided for in Section 3 of the Ordinance, derived from sales made, work done or services performed or rendered and business or other activities conducted in the Village.

 

.2    The tax imposed on resident associations or other 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-A3b.)

 

.3    The tax imposed by Section 3, paragraph A3 (A) of the Ordinance is imposed on all resident unincorporated entities having net profits attributable to the Village under the method of allocation provided for in the Ordinance, regardless of where the owner or owners of such resident unincorporated business entity reside.

 

.4    Resident unincorporated entities owned by two or more persons all of whom are residents of the Village shall disregard the method of allocation provided for in the Ordinance 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, an additional 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.

b.    Imposition of Tax on Resident’s Distributive Share of Profits of a Resident Unincorporated Business Entity, Not Attributable to This Municipality:

.1    A resident individual who is sole owner of a resident unincorporated entity shall disregard the business allocation formula and pay the tax on the entire net profits of this resident unincorporated business entity by the Village.

 

.2    In the case of a resident individual partner or part owner of a resident unincorporated entity, 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 Ordinance not attributable to the Village, under the method of allocation provided for in Section 3 of the Ordinance, and not taxed against the entity by the Village.

4.           a.         Imposition of Tax on Net Profits of Non-Resident

                          Unincorporated Businesses:

.1 In the case of non-resident unincorporated businesses, professions, enterprises, undertakings or other activities conducted, operated, engaged in, prosecuted or carried on, there is imposed an annual tax of one percent (1%) on the net profits earned, accrued or received during the effective period of the Ordinance attributable to the Village, under the formula or separate accounting method provided for in the Ordinance.

 

.2 The tax imposed on non-resident unincorporated entities 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 by the Village, see Article III-A4b.)

 

.3 Non-resident unincorporated entities 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 Ordinance 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; however, a return shall be required from such owner or member having taxable income other than the distributive share of the net profits from the entity. See Article XV for credits.

b.    Imposition of Tax on Resident’s Share of Profits of a Non-Resident Unincorporated Business Entity Not Attributable to This Municipality:

 

See Article XV for credits.

.1    A resident individual who is sole owner of a non-resident unincorporated business entity shall disregard the business allocation formula and pay the tax on the entire net profits of this unincorporated entity.

 

.2    In the case of a resident individual partner or part owner of a non-resident unincorporated entity, 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 Ordinance not attributable to the Village under the method of allocation provided for in Section 3 of the Ordinance and not taxed against the entity by this municipality.

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 Ordinance attributable to the Village under the formula or separate accounting method provided for in the Ordinance.

 

b.    In determining whether a corporation is conducting a business or other activity in the Village, the provisions of Article III-B of these Regulations shall be applicable.

 

c.    Corporations which are required by the provisions of Section 5727.38 to Section 5727.41, inclusive, of the Revised Code of Ohio, to pay an excise tax in any taxable year as defined by the Ordinance, may exclude that part of their gross receipts upon which the excise tax is paid. In such case, expenses incurred in the production of such gross receipts shall not be deducted in computing net profits subject to the tax imposed by the Ordinance.

6.    Amplification:

 

In amplification of the definition contained in Article II of these Regulations but not in limitation thereof, the following additional information respecting net business profits is furnished:

a.    NET PROFITS.

.1    Net Profits as used in the Ordinance and these Regulations means net profits derived from any business, profession or other activity or undertaking carried on for profit or normally carried on for profit.

 

.2    Net Profits as disclosed on any return filed pursuant to the provisions of the Ordinance shall be computed by the same accounting method used in reporting net income to the federal Internal Revenue Service (providing such method does not conflict with any provisions of the Ordinance). Net Profits shown on returns filed pursuant to the Ordinance must be reconciled with the income reported to the federal Internal Revenue Service.

b.    GROSS RECEIPTS.

.1    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 or services performed or rendered as well as income from sales of stock in trade.

 

.2    From Gross Receipts there shall be deducted allowable expenses to arrive at the net profit subject to tax.

c.    EXPENSES.

.1    All ordinary, reasonable and necessary expenses of doing business, including reasonable compensation paid employees, 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 or enterprise.

.01    If not claimed as part of the cost of goods sold 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.

 

.02    Current amortization of emergency facilities under the provisions of the Internal Revenue Code, if recognized as such for federal income tax purposes, may be included as an expense deduction hereunder.

 

.03    Where depreciable property is voluntarily destroyed, only the cost of such demolition and the un-depreciated balance thereof will be allowed as an expense in the year of such demolition, to the extent allowable for federal income tax purposes.

 

.04    Bad debts in a reasonable amount may be allowed in the year ascertained worthless and charged off, or at the discretion of the Commissioner (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.

 

.05    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 form income: (1) the tax under the Ordinance; (2) federal or other taxes based upon income exclusive of the amount of Ohio franchise tax computed on the net worth basis; (3) gift, estate or inheritance taxes; and (4) taxes for local benefits or improvements to property which tend to appreciate the value thereof.

 

.06    In general, nontaxable income and expenses 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 law.

 

.07    If the taxpayer reports income that is nontaxable under the Ordinance and such amounts are deducted in order to reconcile the Village return with the taxpayer’s federal income tax return, expenses attributable to this nontaxable income shall not be allowed. In the absence of records showing the actual expenses attributable to such nontaxable income, and upon approval of the Commissioner, such amount shall be deemed to equal five percent (5%) of such nontaxable income.

 

.08    With respect to certain tangible personal property used in business, the "Federal Investment Credit" for current year investments, as determined for federal income tax purposes, shall be treated as a deduction from income with respect to new or used property, (subject to federal tax limitations in the case of used property), acquired after December 31, 1961, and the remaining costs shall be depreciated in succeeding years on the same basis used for federal income tax purposes. In the event the "Federal Investment Credit" is required to be adjusted by reason of a sale or other early disposition affecting the original amount of the "Federal Investment Credit," such adjustment must be reported and treated as taxable income under the Ordinance in the year of such sale or other early disposition.

 

.09    Capital gains and losses from sale, exchange or other disposition of property shall not be taken into consideration in arriving at net profits earned. Any amount received on a sale or other disposition of tangible personal property used in business,