RULES AND REGULATIONS TO COMPLIMENT

ST. MARYS INCOME TAX ORDINANCE 1995

AS AMENDED BY ORDINANCE NOS. 2187 AND 2000-53

ARTICLE I

Chapter 181.01 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 by Chapter 181.12 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 descendant's estate by the executor or administrator, and the mere custody, supervision, and management of trust property under passive trust, whether intervivos 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 City of St. Marys as having been made in St. Marys, either under separate accounting method, or under the three factor formula of property, payroll, and sales provided in Chapter 181.03 of the ordinance.

CITY means the City of St. Marys.

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.

TAX COMMISSIONER means the Commissioner of the Department of Taxation of the City of St. Marys or person executing the duties of said Commissioner.

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, or unit or any other entity, who or that employs one or more persons on such 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 31st.  Only fiscal years accepted by the Internal Revenue Service for federal income tax purposes may be used for St. Marys tax purposes.

GROSS RECEIPTS means total income from any source whatsoever.

NET PROFITS means a net gain from the operation of a business, profession, enterprise, or other activity after provision 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 ordinance, federal, state, and other taxes based on income; and in the case of association without deduction of salaries paid to partners, and other owners; and otherwise adjusted to the requirements of this ordinance.  (Am. Dec. 1960.)

NON-RESIDENT means an individual domiciled outside of St. Marys.

NON-RESIDENT UNINCORPORATED BUSINESS ENTITY means one not having an office or place of business within St. Marys.

THE ORDINANCE means Ordinance No. 1995 as amended by Ordinance No. 2187 and Ordinance No. 2000-53 enacted by the Council of St. Marys and any amendments and supplements thereto effective January 1, 1965, April 1, 1968, and January 1, 2001 respectively.

PERSON 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 applies 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 the City of St. Marys, any employee or agent of such unincorporated entity or corporation who can be found within the corporate limits of the City of St. Marys.

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 the City of St. Marys.

RESIDENT UNINCORPORATED BUSINESS ENTITY means an unincorporated business entity having an office or place of business within the City of St. Marys.

TAXABLE INCOME means wages, salaries, and other compensation paid by an employer or employers before deduction 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.

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 City of St. Marys, an annual tax of one and one half percent (1-1/2%) 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 Chapter 181.03, of the ordinance, 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 Chapter 181.03, paragraph A-1 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 any foreign country or dependency except as provided in Chapter 181.03 of the ordinance;

 

.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, sub-division, 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 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 A-3 or A-4 of Chapter 181.03 of the ordinance, they shall not be taxed under Chapter 181.03, paragraph A-1.

.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 owned or partly owned by said individual and such net profits are subject to the tax under Chapter 181.03, paragraph A-3 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 City of St. Marys, there is, imposed under Chapter 181.03, paragraph A-2 of the Ordinance, a tax of one and one-half percent (1-1/2%) on all salaries, wages, and commissions, and other compensation earned during the effective period of the ordinance for work done or services performed or rendered within the City of St. Marys, 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 from which payment is made is immaterial.

 

(b.)    The items subject to tax under Chapter 181.03, paragraph A-2 of the Ordinance are the same as those listed and defined in Article III-A.  For the methods of computing the extent of such work or services performed within the City of St. Marys, in cases involving compensation for personal services partly within and partly without the City of St. Marys, see Article V1-A.6.

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 City of St. Marys, there is imposed an annual tax of one and one-half percent (1-1/2%) on the net profits earned, accrued, or received during the effective period of the ordinance attributable to the City of St. Marys, under the formula or separate accounting method provided for in Chapter 181.03 of the ordinance, derived from sales made, work done, or services performed or rendered, and business or other activities conducted in the City of St. Marys.

 

.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 taxes against the entity, see Article III-A.3b).

 

.3    The tax imposed by Chapter 181.03, paragraph A-3a of the ordinance is imposed on all resident unincorporated entities having net profits attributable to the City of St. Marys 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 City of St. Marys, 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 the City of St. Marys.

.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 his resident unincorporated business entity.

 

.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 and one-half percent (1-1/2%) on such individual's distributive share of net profits earned, accrued, or received during the effective period of the ordinance not attributable to the City of St. Marys, under the method of allocation provided for in Chapter 181.03 of the ordinance, and not taxed against the entity.  (See Article XV.)

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 and one-half percent (1-1/2%) on the net profits earned, accrued, or received during the effective period of the ordinance attributable to the City of St. Marys, 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, see Article III-A.4b.)

 

.3    Non-resident unincorporated entities owned by two or more persons, all of whom are residents of the City of St. Marys, 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 profit 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 the City of St. Marys.  (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 his 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 and one-half percent (1-1/2%) on such individual's distributive share of net profits earned, accrued, or received during the effective period of the ordinance not attributable to the city under the method of allocation provided for in Chapter 181.03 of the ordinance 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 City of St. Marys, there is imposed an annual tax of one and one-half percent (1-1/2%) on the net profits earned, received, or accrued during the effective period of the ordinance attributable to the City of St. Marys 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 City of St. Marys, 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 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-A 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 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 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.

 

.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 expenses deduction hereunder.

 

.03    Where depreciable property is voluntarily destroyed, only the cost of such demolitions 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 from income:  (1) the tax under the ordinance; (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.

 

.06    In general, non-taxable 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 City of St. Marys 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 approve of the Commissioner, such amount shall be deemed to equal five percent of such nontaxable income (AM. Sept. 1961)

 

.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.  (Am. Dec. 1962)

 

.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, in excess of book value, shall be treated as taxable income under the ordinance to the extent of depreciation allowable after January 1, 1962.  The balance shall be treated as a capital gain.  (Am. Dec. 1962)

 

.10    Deductions for charitable contributions will not be allowed as a business deduction.

7.    Rental from Real Property:

(a.)    Rentals 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 the taxpayer individually or through agents or other representatives) constitutes a business activity of the taxpayer, in whole or in part.

 

(b.)    In determining the amount of gross monthly rental of any real property, periods during which (by reason of vacancy or any other cause) rentals are not received shall not be taken into consideration by the taxpayer.

 

(c.)    Rentals received by a taxpayer engaged in the business of buying and selling real estate shall be considered as part of business income.

 

(d.)    Real property, as the term is used in this regulation, shall include commercial property, residential property, farm property, and any and all other types of real estate.

 

(e.)    In determining the taxable income from rentals, the deductible expenses shall be of the same nature, extent, and amount as are allowed by the Internal Revenue Service for federal income tax purposes.

 

(f.)    Residents of the City of St. Marys are subject to taxation upon the net income from rental (to the extent above specified), regardless of the location of the real property owned.

 

(g.)    Non-residents of the City of St. Marys are subject to such taxation only if the real property is situated within the City of St. Marys.

 

(h.)    Corporations owning or managing real estate are taxable only on that portion of income derived from property located in the City of St. Marys.

8.    Patents and Copyrights:

(a.)    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 the State Intangible tax.  Conversely, such a state intangible tax is not deductible in determining city tax.  Such items shall be clearly disclosed on an attachment to be filed with the City tax return.

B.    Allocation of Business Profits.

A request to change the method of allocation must be made in writing before the end of the taxable year.

 

1.    Separate Accounting Method.

(a.)    The net profits allocable to the City of St. Marys from business, professional, or other activities conducted in the City of St. Marys by corporations or unincorporated entities (whether resident or non-resident) may be determined from the records of the taxpayer if 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 City of St. Marys.

 

(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 Commissioner to determine whether the net profits attributable to the City of St. Marys are apportioned with reasonable accuracy.

 

(c.)    In determining the income allocable to the City of St. Marys 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 City of St. Marys.

2.    Business Allocation Percentage Method.

(a.)    STEP 1:   Ascertain the percentage which the average net book value of real and tangible personal property, including lease-hold improvements, owned or used in the business and situated within the City of St. Marys, is of the average net book value of all real and tangible personal property, including lease-hold improvements, owned or used in the business wherever situated, during the period covered by the return.

.1    The percentage of taxpayer's real and tangible personal property within the City of St. Marys is determined by dividing the average net book value of such property within the City of St. Marys (without deduction of any encumbrances) by the average net book value of all such property within and without the City of St. Marys.  In determining such percentage, property rented to the taxpayer, as well as real and tangible personal property owned by taxpayer, must be considered.

.01    The net book value of real and tangible personal property rented by taxpayer shall be determined by multiplying gross annual rents payable by eight (8).

 

.02    Gross rents 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:

.001    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;

 

.002    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 arrangements.

(b.)    STEP 2:    Ascertain the percentage which the gross receipts of the taxpayer derived from sales made and service rendered in the City of St. Marys is of the total gross receipts, wherever derived, during the period covered by the return.

.1    The following sales shall be considered the City of St. Marys sales:

.01    All sales made through retail stores located within the City of St. Marys to purchasers within or without the City of St. Marys, except such of said sales to purchasers outside the City of St. Marys that are directly attributable to regular solicitations made outside the City of St. Marys personally by taxpayer's employees.

 

.02    All sales of tangible personal property delivered to purchasers within the City of St. Marys if shipped or delivered from an office, store, warehouse, factory, or place of storage located within the City of St. Marys.

 

.03    All sales of tangible personal property delivered to purchasers within the City of St. Marys even though transported from a point outside the City of St. Marys if the taxpayer is regularly engaged through its own employees in the solicitation or promotion of sales within the City of St. Marys and the sale is directly or indirectly the result of such solicitation.

 

.04    All sales of tangible personal property shipped from an office, store, warehouse, factory, or place of storage within the City of St. Marys to purchasers outside the City of St. Marys if the taxpayer is not, through its own employees, regularly engaged in the solicitation or promotion of sales at the place of delivery.

 

.05    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 subparagraphs, 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 City of St. Marys by mail or phone from an office, or place of business within the City of St. Marys shall not be considered a solicitation of sales outside the City of St. Marys.

(c.)    STEP 3:    Ascertain the percentage which the total wages, salaries, commissions, and other compensation of employees within the City of St. Marys is of the total wages, salaries, commissions, and other compensation of all the taxpayer's employees within and without the City of St. Marys 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 shall be computed on the cash or accrual basis in accordance with the method of accounting used in the computation of the entire net income of the taxpayer.

 

.3    In the case of an employee who performs services both within and without the City of St. Marys, the amount treated as compensation for services performed within the City shall be deemed to be:

.01    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 this efforts within the City of St. Marys.

 

.02    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 City of St. Marys bears to the values of all his services; and

 

.03    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 City of St. Marys is of his total working time.

(d.)    STEP 4:    Add the percentages determined in accordance with Steps 1, 2, and 3, or such of the aforesaid percentages as may be applicable to the particular taxpayer's business, and divide the total so obtained by the number of percentages use din ascertaining said total.  The result so obtained is the business allocation percentage.  In determining the average percentage, a factor shall not be excluded from the computation merely because said factor is found to be allocable entirely outside the City of St. Marys.  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 City of St. Marys.

3.    Substitute Method:

(a.)    In the event a just and equitable result cannot be obtained under the formula, the Board, upon application of the taxpayer or the Commissioner, 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 Board 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 and shall state the specific grounds on which the substitution of factors or use of a different method is requested and the relief sought to be obtained.  A copy thereof shall be served at the time of filing upon the taxpayer or Commissioner as the case may be.  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 Board of Review.

C.    Operating Loss Carry Forward

1.    The portion of a net operating loss, based on income taxable under the ordinance sustained in any taxable year subsequent to January 1, 1965, allocable to the City of St. Marys, may be applied against the portion of the profits of succeeding years allocable to the City of St. Marys until exhausted, but in no event of 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.    In the event net profits are allocated both within and without the City of St. Marys, the portion of a net operating loss sustained shall be allocated to the City of St. Marys in the same manner as provided herein for allocating net profits to the City of St. Marys.  The portion of a net operating loss to be carried forward shall be determined in the year the net operating loss is sustained, on the basis of the allocation factors applicable to that year.  The same method of accounting and allocation must be used in the year to which an operating loss is carried as was used in the year in which the operating loss was sustained.

 

3.    In the case of fiscal years beginning prior to the effective date of the ordinance, the net operating loss deduction will be that portion of the operating loss that the number of months of the fiscal year after the effective date of the ordinance bears to the total number of months of such fiscal year.

 

4.    A short fiscal year (a fiscal year of less than twelve (12) months) in cases where there has been a change in accounting period, where a new taxpayer selects a short fiscal year, or where a new taxpayer operates in the City of St. Marys for less than his full accounting period, shall be considered as a full taxable fiscal year.

 

5.    In any return in which a net operating loss deduction is claimed, a schedule should be attached showing:

(a.)    Year in which net operating loss was sustained.

(b.)    Method of accounting and allocation, used to determine portion of net operating loss allocable to the City of St. Marys.

(c.)    Amount of net operating loss used as a deduction in prior years.

(d.)    Amount of net operating loss claimed as a deduction in current year.

6.    The net operating loss of a business which loses its identity through merger, consolidation, etc., shall not be allowed as a carry-forward loss deduction to the surviving business entity.

 

7.    In the case of a net operating loss in the filing of consolidated returns, see Article III, paragraph D.

D.    Consolidated Returns:

1.    Consolidated returns may be filed by a group of corporations who are affiliated through stock ownership.  For a subsidiary corporation to be included in a consolidated return, 80% of its stock must be owned by the other members of the affiliated group.  A consolidated return must include all companies which are so affiliated in accordance with I.R.S. regulations.

 

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 Commissioner 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 for 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 for the period after it ceases to be a member, separate returns must be filed.  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 the 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 fraction (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 fraction, however, shall be computed at 8 times the annual rent.  The gross receipts and wage fractions 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 will be the parent corporation.

 

6.    The net operating loss carryover of a corporation which filed a separate return in a prior year may be carried over to the consolidated return, but will limited in amount to the amount of that same corporation's net income included in the consolidation.  The net operating loss carryover from a separate year shall be deducted first before application of the allocation fraction, the consolidated net operating loss carryover allocated to the City of St. Marys shall be allowed.

 

7.    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.

 

8.    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.

E.    Exceptions:

       The following shall not be considered taxable.

1.    Poor relief, unemployment insurance benefits, supplemental unemployment benefits, old age pensions, or similar payments received from local, state, or federal governments or charitable or religious organizations.

 

2.    Proceeds of insurance, annuities, workman's compensation insurance, social security benefits, pensions, compensation for damages for personal injuries and like reimbursement, not including damages for loss of profits.

 

3.    Compensation for damage to property by way of insurance or otherwise.

 

4.    Interest and dividends from intangible property.

 

5.    Military pay and allowances received as a member of the armed forces of the United States; to include non-active duty pay, reserve pay, and National Guard pay.

 

6.    Any charitable, educational, fraternal, or other type of non-profit association or organization enumerated in Section 718.01 of the Revised Code of Ohio which is exempt from payment of real estate taxes is exempt from payment of the tax imposed by this ordinance.

 

7.    Any association or organization falling in the category listed in the preceding paragraph not exempt from the payment of real estate taxes is required to file declarations and final returns and remit the taxes levied under this ordinance on all business activities of a type ordinarily conducted for profit by taxpayers operating for profit.

 

8.    Where such non-profit association or organization conducts income-producing business both within and without the corporate limits, it shall calculate its profits allocable to the City of St. Marys under the method or methods provided above.

 

9.    Ministers' housing allowance.

 

10.    Pay received for work performed at an election precinct for amounts less than one thousand dollars ($1,000.00) during a calendar year.

ARTICLE IV

EFFECTIVE PERIOD OF TAX

A.    The tax imposed by Chapter 181.03, paragraphs A-1 and A-2 of the ordinance shall be levied, collected and paid with respect to salaries, wages, bonuses, incentive payments, commissions, fees, and other compensation earned during the effective period of the ordinance.

B.    The tax imposed by Chapter 181.03, paragraphs A-3, A-4, and A-5 of the ordinance, with respect to net profits of trades, businesses, professions, enterprises, undertakings, and other activities is on the net profits earned during the effective period of the ordinance.

ARTICLE V

RETURN AND PAYMENT OF THE TAX

A.    Date and Requirement for Filing:

1.    On or before April 30th of the year following the effective date of the ordinance and each year thereafter, every person subject to the provisions of Chapter 181.03, paragraphs A-1 to A-5, inclusive, of the ordinance shall, except as hereinafter provided, make and file with the Commissioner, a return on a form prescribed by and obtainable upon request from the Commissioner, or a generic form which must contain all of the information requested on the tax form as provided by the Tax Commissioner, whether or not a tax be due.

 

2.    If the return is made for a fiscal year or any period less than a year, said return shall be made within four (4) months from the end of each fiscal year or other period.

 

3.    Every person subject to the provisions of Chapter 181.03 of the ordinance 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 use of real and personal property, and other income, taxable under the ordinance, received for the period covered by the return and such other pertinent facts and information in detail as the Commissioner may require.

 

4.    Where an employee's entire earnings for the tax period as paid by a resident employer or resident employers, and the one and one-half percent (1-1/2%) tax thereon has in each instance been withheld and deducted by the employer or employers from the gross amount of the entire earnings of such employee-taxpayer, and where the resident employer of such employee has filed a report or return in which such employee's entire and only earnings are reported to the Commissioner, and where such employee has no taxable income other than such earnings and the tax so withheld has been paid to the Commissioner, such employee need not file a return.

 

5.    An employee who is permitted to deduct business expenses from gross wages, salaries, or commissions must file a return in order to claim such deductions even though all or part of such wages, salaries, or commissions are subject to withholding.

 

6.    Any taxpayer who received taxable income not subject to withholding under the ordinance must file a return.

 

7.    Any taxpayer having income, wages, or other compensation 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.

 

8.    Trustees of active trusts are required to file returns and pay the tax on the taxable income thereof.

 

9.    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 City of St. Marys and the tax paid thereon.  However, any resident partner or resident member of an unincorporated entity is required to make a return and pay the tax in accordance with Article III-A-3b.2 of these regulations.

 

10.    A husband and wife may, in any tax year, elect to file separate or joint returns.  (Am. Sept. 1961)

 

11.    Operating losses from business or professional activities, the profits of which would be taxable under the ordinance, may be offset against salaries, wages, commissions, and other personal service compensation, or against net profits from other business or professional activities.  To the extent that such losses are offset, they shall not be allowable as an operating loss carry forward under Chapter 181.03, paragraph 3c of the ordinance or Article III-C of the regulations.  (Am. Sept. 1961)

B.    Information Required and Reconciliation with Federal Returns:

1.    In returns filed hereunder, there shall be set forth the aggregate amount of salaries, wages, bonuses, incentive payments, commissions, fees, and other compensation subject to the tax earned from each employer, taxable net profits, and other pertinent information as the Commissioner may require.

 

2.    Where figures of total income, total deductions, and net profits are included as shown by a federal return, any items of income as are not subject to the City of St. Marys tax and unallowable expenses shall be eliminated in determining net income subject to the City of St. Marys.  In the absence of records showing the actual unallowable expenses, such expenses shall be determined in accordance with Article III A-6.c.1.07 of these regulations.  The fact that any taxpayer is not required to file a federal tax return does not relieve him from filing a City of St. Marys tax return.  (Am. Sept. 1961)

 

3.    If a change in federal income tax liability, made by the Federal Internal Revenue Service, or by a judicial decision, results in an additional amount of tax payable to the City of St. Marys, a report of such change shall be filed by the taxpayer within three (3) months after receipt of the final notice from the Federal Internal Revenue Service or final Court decision.

 

4.    If a change in federal income tax liability results in a reduction of taxes due and paid to the City of St. Marys, a claim for refund shall be filed with the Commissioner as prescribed in Chapter 181.05 of the ordinance and Article XI-B of these regulations.

C.    Extensions:

1.    Upon written request of the taxpayer, or upon the receipt of a copy of the taxpayer's federal extension, postmarked on or before the date for filing the return, and for good cause shown, the Commissioner may extend the time for filing such return for a period equal to that allowed or allowable, or granted by the Federal Internal Revenue Service.  Whenever he deems such necessary, the Commissioner may require a tentative return accompanied by payment of the estimated tax.  No penalty will be assessed in those cases in which the return is filed and the final tax paid within the period as extended provided an estimated tax, equal to or greater than 90% of the taxpayer's previous year's liability, is paid on or before the original filing date of the return.  Interest will be assessed on any remaining balance found to be due upon receipt of the extended tax return and that all other filing and payment requirements of the ordinance have been met.

 

2.    Information returns, schedules, and statements needed to support tax returns are to be filed within the time limits set forth for filing the tax returns.

D.    Payment with Return:

1.    The taxpayer making a return shall, at the time of the filing thereof, pay to the Commissioner 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 Chapter 181.06 of the ordinance, or where any portion of said tax shall have been paid by the taxpayer pursuant to the provisions of Chapter 181.07 of the ordinance, or where an income tax has been paid to another municipality, credit for the amount so paid, in accordance with Chapter 181.14 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 City of St. Marys is entitled under the provisions of the ordinance may have such overpayment applied against any subsequent liability hereunder 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 one dollar ($1.00) shall be collected or 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 Chapters 181.10 and 181.11.  Such amended return shall be on a form obtainable on  request from the Commissioner.  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 St. Marys tax liability, such taxpayer shall make and file an amended St. Marys return showing income subject to the City of St. Marys tax based upon such final determination of federal tax liability, and pay any additional tax show due thereon or make claim for refund of any overpayment.

ARTICLE VI

COLLECTION OF TAX AT THE SOURCE

A.    Duty of Withholding:

1.    Except as otherwise provided herein, it is the duty of each employer within or doing business within the City of St. Marys, who employs one or more persons, whether as an employee, officer, director, or otherwise, to deduct each time any compensation is paid the tax of one and one-half percent (1-1/2%) from:

(a.)    The gross amount of all salaries, wages, bonuses, incentive payments, fees, commissions, or other forms of compensation paid to residents of the City of St. Marys, regardless of the place where the services are rendered; and

 

(b.)    All compensation paid non-residents for services rendered, work performed, or other activities engaged in within the City of St. Marys.

2.    All employers within or doing business within the City of St. Marys are required to make the collections and deductions specified in this article, regardless of the fact that the services on account of which any particular deduction is required, as to residents of St. Marys, were performed outside the City of St. Marys.

 

3.    Employers who do not maintain permanent office or place of business in the City of St. Marys, but who are subject to tax on net profits attributable to St. Marys, under the method of allocation provided for in the ordinance, are considered to be employers within St. Marys and subject to the requirement of withholding.

 

4.    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.  If the employer has withheld the tax and failed to pay the tax withheld to the Commissioner, the employee is not liable for the tax so withheld.

 

5.    Commissions and fees paid to professional men, brokers, and others who are independent contractors, and not employees of the payor, 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 ordinance and Articles V and VII of the regulations.

 

6.    Where a non-resident receives compensation for personal services rendered or performed partly within and partly without St. Marys, the withholding employer shall deduct, withhold, and remit the tax on that portion of the compensation which is earned within St. Marys 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 St. Marys bears to the total volume of business transacted by him within and outside St. Marys.

 

(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 St. Marys 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 in St. Marys on a seven-day per week basis.  The percentage of time worked in St. Marys will be computed on the basis of a forty-hour week unless the employer notifies the Commissioner that a greater or lesser number of hours per week is worked.

 

(d.)    The occasional entry into St. Marys of a non-resident employee who performs the duties for which he is employed primarily outside the City, shall not be deemed to take such employee out of the class of those rendering their services entirely outside St. Marys.

7.    An employer shall withhold the tax on the full amount of any advances made to an employee on account of commissions.

 

8.    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 regulations.

 

9.    An employee whose records show that an employee is a non-resident of St. Marys, and has no knowledge to the contrary, shall be relieved of the responsibility of withholding the tax on personal service compensation paid to such employee for services rendered or work done outside St. Marys by such employee, provided, however, that such employer must withhold the tax on all personal service compensation paid such employee after the Commissioner notifies said employer in writing that such employee is a resident of St. Marys.  All employees are required to notify the employer of any change of residence and the date thereof.

 

10.    A St. Marys employer required to withhold the tax from a St. Marys resident for work done or services performed in another municipality, and who does so withhold and remit to such other municipality, shall be relieved from the requirement of withholding the St. Marys tax from such St. Marys resident, except where the rate of tax for such other municipality is less than the rate of tax imposed by this ordinance, in such case the employer shall withhold and remit the difference to the City of St. Marys.

 

11.    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, but such employee shall be subject to all the requirements of the ordinance.

 

12.    On and after January 1, 2001, compensation paid to an individual for personal services performed within the City of St. Marys, if the individual does not reside in the City of St. Marys, performs such personal services in the City of St. Marys on twelve or fewer days in the calendar year and, if the individual is an employee, the principal place of business of the employer is located outside the City of St. Marys, the employer is exempt from withholding the tax from such employee.

 

Beginning January 1, 2001, a non-resident employer who engages in business inside the City of St. Marys will not be required to withhold and pay the tax from the income of their employees working inside the City of St. Marys unless the total amount of tax required to be deducted and withheld 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 beginning on or after that date.

 

If the total amount of tax required to be deducted and withheld on account of all of the non-resident employer's employees or all of the other payer's payees exceeds one hundred fifty dollars ($150.00) for a calendar year, the City of St. Marys will 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.

 

A non-resident employer, agent of such an employer, or other payer that is not situated in the municipal corporation is required to deduct and withhold taxes for an ensuing year, and the total amount of tax required to be deducted and withheld in each of three (3) consecutive ensuing years is one hundred fifty dollars ($150.00) or less, the City of St. Marys 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).

 

B.    Return and Payment of Tax Withheld and Status of Employers.

1.    The deductions from salaries, wages, and other compensation required to be made by employers are to begin with the compensation earned on and after the effective date of the ordinance.

 

The employer (in addition to any return required to be filed with respect to his own earnings or net profits) shall, on or before the last day of the month next following each quarterly period, make a return and pay to the Commissioner the full amount of the tax so deducted or withheld with respect to compensation paid all of his employees subject to the tax under the ordinance.  Provided, however, that where he deems such precaution necessary, the Commissioner may require an employer to remit withholding taxes at more frequent intervals.  The return required to be filed under this article shall be made on a form furnished by or obtainable on request from the Commissioner.

 

2.    If more than the amount of tax required to be deducted by the ordinance is withheld from an employee's pay, such excess may be refunded by the employer or the Commissioner, depending upon the circumstances and the time when the over-withholding is determined as follows:

(a.)    Current Employees:

.1    If the over-withholding is discovered in the same quarterly period, the employer shall make the necessary adjustment directly with the employee, and the amount to be reported on the quarterly form as withheld shall be the corrected amount:

 

.2    If the over-withholding is discovered in a subsequent quarter of the same calendar year, the employer may make proper adjustment with the employee.  In such case the form for the quarter in which the adjustment is made shall indicate the total amount actually withheld, the amount of the adjustment deducted there from, and the corrected amount reported on the report.

 

.3    If the over-withholding is discovered in the following year, the employer should notify the Commissioner of such over-withholding and the circumstances thereof.  Upon proper verification, the Commissioner shall refund to the employee the amount of such excess withholding; upon request of the taxpayer.

(b.)    Former Employees:

.1    In case too much has been withheld from an employee who is no longer employed by the employer, the employer shall notify the Commissioner of the amount and the circumstances of such over-withholding and the Commissioner shall then refund to the employee the amount of such excess withholding, upon request of the taxpayer; or

 

.2    If the error is discovered by the employee, such employee shall file a claim with the Commissioner and, upon verification thereof by the employer, the Commissioner shall refund to the employee the amount of such excess withholding upon request of the taxpayer.

(c.)    Non-Residents Employed Outside the City:

.1    Where an employer has withheld the tax from all wages of a non-resident of St. Marys, and such non-resident has been employed outside of St. Marys for all or a part of the time, such employee shall file a claim with the Commissioner covering such erroneous withholding and the Commissioner shall, upon verification thereof by the employer, refund to the employee the amount of such excess withholding upon request of the taxpayer.

(d.)    Insufficient Withholding:

.1    If less than the amount of tax required to be deducted is withheld from an employee, such deficiency shall be withheld from subsequent wages.  However, if the employee-employer relationship has terminated, the employer shall notify the Commissioner of such deficiency and the reason therefore.

3.    Every employer is deemed to be a trustee for the City of St. Marys in collecting and holding the tax required under the ordinance 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 St. Marys for payment of such tax, whether actually collected from such employee or not.

 

5.    On or before the 31st day of January, following any calendar year in which such deductions have been made by an employer, such employer shall file with the Commissioner, in the form prescribed by the Commissioner, an information return for each employee from whom St. Marys income tax has been withheld, showing the name, address, and social security number of the employee, the total amount of compensation paid during the year, and the amount of St. Marys income tax withheld from such employee.

 

6.    For the convenience of employers, the information return may be made in one of three ways at the election of each employer, as follows:

(a.)    Those employers using Form W-2 furnished commercially, may submit a copy of such commercial Form W-2, providing the copy furnished the City of St. Marys clearly shows the information required in paragraph 5 immediately preceding.

 

(b.)    Those employers not using Form W-2 furnished commercially may obtain forms upon request from the Commissioner.

 

(c.)    Where the furnishing of this information as above indicated will create a distinct hardship, the employer, upon written request to the Commissioner, may be permitted to furnish a list of all employees subject to the tax, which list shall show the employee's full name, last know address, social security number, gross amount of compensation paid during the year, and the amount of St. Marys income tax withheld.  Such list may be compiled on any mechanical equipment presently used by the employer, but provision must be made for spacing equal to at least three lines between each name.  The employer's name must be indicated on each sheet, each sheet must be numbered, and the total number of sheets comprising the complete report indicated on the first page.

 

(d.)    The gross compensation to be reported on each employee shall be for the full twelve (12) calendar months of the year or such portion thereof as the employee reported on was employed.

7.    In addition to such information returns, and at the time the same are filed, such employer shall file with the Commissioner a form to enable the Commissioner to reconcile the sum total of compensation paid and taxes withheld as disclosed by information return W-2, or list of employees, and prior returns and remittances made pursuant to the ordinance.

C.    Fractional Parts of Cent:   In deducting and withholding the tax at the source, and in payment of any tax due under the ordinance, a fractional part of a cent shall be disregarded unless it amounts to one-half cent (1/2c) or more, in which case it shall be increased to one cent (1c).

ARTICLE VII

DECLARATIONS

A.    Requirement of Filing:

1.    A declaration of estimated tax shall be filed by every taxpayer who may reasonably be expected to have taxable income, the tax on which is not or will not be withheld by an employer or employers.  Where required, such declaration shall be filed within four (4) months after the beginning of the taxable year.

 

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.  In the event a taxpayer has not previously been required to file a return, a declaration of estimated tax on anticipated income shall be filed in good faith.

B.    Date of Filing:

1.    A person or other entity conducting a business not previously subject to the tax, or whose employer does not withhold the tax, shall file a declaration within four (4) months after the date he becomes subject to the tax.

 

2.    Those taxpayers having a fiscal year or period differing from the calendar year shall file a declaration within four (4) months after the start of each fiscal year or period.

C.    Form for Filing:

1.    Such declaration shall be filed upon a form or forms furnished by, or obtainable from, the Commissioner.  Provided, however, credit shall be taken for St. Marys tax to be withheld from any portion of such income.  In accordance with the provisions of Chapter 181.14 of the ordinance, credit may be taken for tax to be withheld and remitted to another taxing municipality.

 

2.    The original estimate of tax liability or any subsequent amendment thereof may be increased or decreased by filing an amended declaration on or before any quarterly payment date as set forth in Article VII-D.1.  Such amendment may be made on the regular declaration form or on the back of any quarterly notice.

D.    Dates of Payments:

1.    The estimated tax may be paid in full with the declaration or in equal installments on or before the last day of the fourth, seventh, tenth, and thirteenth month after the beginning of the taxable year.  Corporations, partnerships, or other like business entities must remit the estimated tax on the fifteenth day of the fourth month of the taxpayer's taxable year and 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.  A grace period of fifteen (15) days will be granted for the filing of the declaration and payment of the estimated tax as imposed on all taxpayer whose estimated tax liability is due on the fifteenth day of any calendar month.

 

2.    The declaration must be accompanied by at least 22.5% of the estimated tax shown due thereon.

 

3.    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.

E.    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 a refund of any overpayment of over one dollar ($1.00).

ARTICLE VIII

DUTIES OF THE TAX COMMISSIONER

A.    Collection of Tax and Retention of Records:

1.    It shall be the duty of the Tax Commissioner to receive the tax imposed by the ordinance in the manner prescribed herein from the taxpayers; to keep an accurate record thereof, and to report all monies so received.

 

2.    It shall be the duty of the Commissioner to enforce payment of all taxes owing St. Marys, to keep accurate records for a minimum of five (5) 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 Commissioner is charged with the administration and enforcement of the provisions of the ordinance 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 ordinance.  The Commissioner has the authority to correct or adjust any return submitted, when a correction or adjustment is necessary to accomplish the intent of the ordinance.

 

2.    Any taxpayer or employer desiring a special ruling on any matter pertaining to the ordinance or these rules and regulations, should submit to the Commissioner in writing all the facts involved and the ruling sought.

 

3.    These regulations, together with all amendments and supplements hereto and all changes herein, will be on file at the office of the Commissioner, and will be open to public inspection.

 

4.    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 proved 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.

 

5.    Failure to make any deferred payment when due, shall cause the total unpaid amount, including penalty and interest, to become payable on demand and the provisions of Chapters 181.10 and 181.11 of the ordinance shall apply.

C.    Estimation of Tax by Commissioner:

1.    Whenever the Commissioner has been unable to secure information from the taxpayer as to his taxable income for any year, he may determine the amount of tax appearing to be due and assess the taxpayer upon the basis of such determination, together with the interest and penalties as prescribed in Chapter 181.10 of the ordinance.

 

2.    Such determination of tax may be adjusted upon submission by the taxpayer of actual records from which his tax may be computed.

D.    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 Chapter 181.10 of the ordinance.

ARTICLE IX

EXAMINATION OF BOOKS AND RECORDS, INFORMATION

SO OBTAINED CONFIDENTIAL: PENALTY

A.    Investigations by Tax Commissioner:

1.    The Commissioner, or his duly authorized agent, is authorized to examine the books, papers, records, and federal income tax returns of any employer, taxpayer, or person subject to the ordinance, or whom the Commissioner believes is subject to the provisions of the ordinance, for the purpose of verifying the accuracy of any return made; or , if no return was made, to ascertain the tax due under the ordinance.

 

2.    An employer or taxpayer shall furnish, within ten (10) days following a written request by the Commissioner, or his duly authorized agent, the means, facilities, and opportunity for making examinations and investigations authorized by the ordinance.

B.    Subpoena of Records and Persons:

1.    The Commissioner, 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 Commissioner 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 the facts concerning any supposed income or supposed transaction of the taxpayer.

 

2.    The Commissioner's order to examine any document mentioned in the preceding paragraph shall state whether the examination is to be at the office of the taxpayer or at the office of the Commissioner.

 

3.    The Commissioner 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 Commissioner is specifically authorized to order the appearance of the local manager or representative of any taxpayer.

 

4.    Persons required to attend any hearings shall be notified no less than ten (10) days prior to the time of the hearing.  The notice shall show the time and place of the hearing and what books, papers, or records the witness is to make available at such hearing.

 

5.    The notice shall be served by the Commissioner, or his duly authorized agent, by delivering it to the person named personally, or by leaving the notice at his usual place of business or residence, or by mailing it to the person by registered mail, return receipt requested, addressed to his usual place of business or residence.

C.    Penalty for Non-Compliance:

Refusal by any employer, supposed employer, taxpayer, or supposed taxpayer, or the refusal of any such person to appear before the Commissioner or his duly authorized agent, to submit to such examination and to produce the records requested constitutes a misdemeanor punishable by fine or imprisonment, or both, as prescribed by Chapter 181.99 of the ordinance.

D.    Confidential Nature of Examinations:

Any information gained as a result of any returns, investigations, verifications, or hearings before the Commissioner or the Board, required by the ordinance or authorized by these rules and regulations, shall be confidential and no disclosure thereof shall be made except for official purposes or as ordered by a court of competent jurisdiction.  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 (6) months, or both.

 

In addition to the above penalty, any employee of the City of St. Marys who violated the provisions of this section relative to the disclosure of confidential information shall be guilty of an offense punishable by immediate dismissal.

E.    Retention of Records:

All employers and taxpayers are required to keep such records as will enable the filing of true and accurate returns, whether of taxes withheld at the source, or of taxes payable upon earnings or net profits, or both.  Such records shall be preserved for a period of not less than five (5) years from the date the final return is filed and paid or the withholding taxes are paid.

ARTICLE X

181.10 INTEREST AND PENALTIES

A.    In accordance with Chapter 181.10 of the Ordinance, all taxes imposed and moneys withheld or required to be withheld by employers under the provisions of this chapter and remaining unpaid after they become due shall bear interest at the rate of twelve percent (12%) per annum.

B.    In addition to interest as provided in subsection (a) hereof, penalties based on the unpaid tax are hereby imposed as follows:

The taxpayer upon whom such taxes are imposed and any employer required by this chapter to deduct, withhold, and pay taxes imposed by this chapter shall be liable in addition hereto to a penalty of five percent (5%) of the amount of the unpaid tax for each month after the tax becomes due up to a maximum of twenty-five percent (25%).

1.    A penalty shall not be assessed on 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 months after final determination of the federal tax liability.

 

2.    Upon recommendation of the Commissioner of Taxation, the Board of Review may abate a 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.

C.    Exceptions:

1.    No penalty shall be assessed on additional taxes found on audit to be due when a return was timely filed in good faith and the tax paid thereon within the prescribed time.

 

2.    In the absence of fraud, neither penalty nor interest shall be assessed on any additional taxes resulting from a federal audit for federal income tax purposes, provided an amended return is filed and the additional tax paid within three (3) months after final determination of the federal tax liability.

D.    Appeal from Assessment:

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

ARTICLE XI

COLLECTION OF UNPAID TAXES AND

REFUND OF OVERPAYMENTS

A.    Unpaid Sums- A Civil Debt:

1.    All taxes imposed by the ordinance and not paid when due become, together with interest and penalties thereon, a debt due the city from the taxpayer and are recoverable as are other debts by civil suit.  Employers who are required, under Chapter 181.06 of the ordinance, to withhold and remit the taxes required to be withheld at the source, and who fail to withhold and-or remit, become liable to the city in a civil action to enforce the payment of the debt created by such failure.

 

2.    No additional assessment shall be made by the Commissioner after three (3) years from the time the return was due or filed, whichever is later.  Provided, however, there shall be no 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 Commissioner of Internal Revenue and the taxpayer have executed a waiver of the federal statue of limitations, the period within which an assessment may be made by the Commissioner is extended to three (3) years from the time of final determination of federal tax liability.

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 ordinance and has furnished all information required by the Commissioner, and has paid all taxes, penalties and interest from any given year shown to be due.

 

3.    Overpayments will be either refunded or credited to the taxpayer's current year's liability at his option.  Where no election has been made by the taxpayer, overpayments of any year's taxes shall be applied as follows:

(a.)    To taxes owed for any previous years in the order in which such taxes become due.

 

(b.)    To his current estimated tax liability.

C.    Limitation:

1.    Where the total amount due or refund claimed for a tax year is less than one dollar ($1.00) such amount shall not be collected or refunded.

 

2.    Overpayments due to rounding will not be credited or refunded.

 

3.    An adjustment 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 an underpayment or an overpayment of tax.

ARTICLE XII

VIOLATIONS, PENALTIES

A.    Any person who shall:

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

 

2.    Make any incomplete, false, or fraudulent 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 employers 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 this ordinance or any order or subpoena of the Commissioner authorized hereby; or

 

9.    Give to an employer false information as to this 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' residence addresses, total wages paid, and St. Marys tax withheld, or to knowingly give the Commissioner false information; or

 

11.    Attempt to do anything whatever 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 ($500.00) or imprisoned not more than six (6) months, or both, for each offense.

B.    Prosecutions:

Prosecutions under the ordinance must be commenced within five (5) years from the time of the offense, except in the case of failure to file a return or in the case of filing a false or fraudulent return, in which event the limitation of time within which prosecution must be commenced shall be ten (10) years from the date the return was due or the date the false or fraudulent return was filed.

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 from making any information return declaration or return, from filing such form, or from paying the tax.

ARTICLE XIII

BOARD OF REVIEW OR APPELLATE AUTHORITY

A.    Composition:

Board of Review, consisting of a Chairman and two other individuals to be appointed by the Mayor of the City of St. Marys, 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 Chapter 181.09 hereof 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.  (Am. Dec. 1960)

B.    Duties:

All rules and regulations and amendments or changes thereto, which are adopted by the Commissioner under the authority conferred by the ordinance, must be approved by the Board of Review before the same become 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.    Appeals:

1.    An appeal from a ruling of the Commissioner by a taxpayer or employer is effected by filing a notice of appeal with the Board within thirty (30) days after the announcement of the Commissioner's ruling or decision from which the appeal is taken.  A copy of such notice of appeal must be filed with the Commissioner, and shall state why the decision should be deemed incorrect or unlawful.

 

The Board shall schedule a hearing within forty-five (45) days after receiving the request, unless the taxpayer waives a hearing.  If the taxpayer does not waive the hearing, the taxpayer may appear before the Board and may be represented by any person of his/her choosing.

 

2.    The Board, by a majority vote, may affirm, modify, or reverse, in whole or in part, any such ruling or decision of the Commissioner.  The Board shall issue a decision on the appeal within ninety (90) days after the Board's final hearing on the appeal, and send notice of its decision by ordinary mail to the petitioner within fifteen (15) days after issuing the decision.

 

3.    Hearing before the Board shall be private unless the taxpayer requests a  public hearing.

ARTICLE XIV

USE OF FUNDS

(See Chapter 181.13 of the Ordinance)

ARTICLE XV

CREDIT ALLOWED FOR TAX PAID IN

ANOTHER MUNICIPALITY

A.    Limitation:

1.    Where a resident of St. Marys is subject to a municipal tax, on or measured by income, in another municipality either located within or without the State of Ohio, he shall not pay a total municipal tax on the same income greater than the tax imposed at the higher rate.  (Am. Sept. 1961)

B.    Credits to Residents:

Resident individuals of St. Marys who are required to pay and do pay tax to another municipality on salaries, wages, commissions, or other compensation for work done or services performed in such other municipality or on net profits from businesses, professions, or other activities conducted in such other municipality, may claim a credit of the amount of tax paid by them or on their behalf to such other municipality but only to the extent of one and one-half percent (1-1/2%) tax imposed by the ordinance on such compensation or net profits.

C.    Method of Applying for Credit:

1.    No credit will be given unless the taxpayer claims such on his final return or other form prescribed by the Commissioner, and presents such evidence of the payment of a similar tax to another municipality, as the Commissioner may require.

 

2.    A statement satisfactory to the Commissioner from the taxing authority of the municipality to which the taxes are paid that a St. Marys resident or his employer is paying the tax shall be considered as fulfilling the requirement of the article.

ARTICLE XVI

SAVING CLAUSE

(See Chapter 181.15 of the Ordinance)

ARTICLE XVII

COLLECTION OF TAX AFTER TERMINATION

OF ORDINANCE

A.    Authority to Collect after Termination of Ordinance:

Although the tax imposition of the ordinance will expire when the ordinance is repealed, the ordinance remains in full force and effect for purpose of collection and payment of taxes due and payable beyond that date subject, however, to the provisions of Chapter 181.02 of the ordinance with respect to the limitations of time within which an additional assessment may be made.

B.    Payment of Taxes:

1.    Taxes due and unpaid on account of compensation paid or received and on account of profits earned it the last effective year of the ordinance or any part thereof which remain unpaid, are payable in full on or before the dates specified in Chapters 181.05 and 181.06 of the ordinance and Articles V and VI of these regulations, and all final returns and withholding reports must be filed on or before that date, unless extended by the Commissioner.

 

2.    For purposes of collection of delinquent or unpaid taxes, actions or proceedings for such collection, and-or the collection of interest and penalties thereon, or enforcing any provisions of the ordinance (including prosecutions under the criminal sections of the ordinance and including appeals before the Board of Review), the ordinance remains in full force and effect until such time as all taxes accruing during the term of the ordinance shall have been fully paid, and all actions, suits, prosecutions, appeals, and other judicial or administrative proceedings relative to the collection or payment of such taxes, have been finally terminated.

ARTICLE XVIII

AMENDMENTS & SUPPLEMENTS

A.    From time to time amendments and supplements to these regulations may be issued by the Commissioner.