Label
Amend TMC Chapter 1905
Finance/Taxation
Campbell (x1252)/Zawisza (x1664)
Revised
Title
Repealing various sections of Chapter 1905 of the Toledo Municipal Code “Income Tax”; enacting new sections of Chapter 1905 of the Toledo Municipal Code “Income Tax”; and declaring an emergency.
Body
SUMMARY & BACKGROUND:
H.B. 33 was enacted July 4, 2023, which directly effects the city’s tax code on and after its effective date of October 3, 2023. This ordinance seeks to make various amendments to the Toledo Municipal Code necessitated by these state law changes. These amendments include adding an age exemption for under persons under 18, allowing businesses to apportion net profits to either a “reporting location” or a remote work location, extending the net profit due date, and modifying the late filing fee from a max of $150 to a max of $25 per occurrence.
Summary
NOW, THEREFORE, Be it ordained by the council of the City of Toledo:
SECTION 1. That TMC Section 1905.02(12) which reads as follows:
(12) "Exempt income" means all of the following:
(a) The military pay or allowances of members of the armed forces of the United States or members of their reserve components, including the national guard of any state.
(b) Intangible income.
(c) Social security benefits, railroad retirement benefits, unemployment compensation, pensions, retirement benefit payments, payments from annuities, and similar payments made to an employee or to the beneficiary of an employee under a retirement program or plan, disability payments received from private industry or local, state, or federal governments or from charitable, religious or educational organizations, and the proceeds of sickness, accident, or liability insurance policies. As used in division (C)(12)(c) of this section, "unemployment compensation" does not include supplemental unemployment compensation described in Section 3402(o)(2) of the Internal Revenue Code.
(d) The income of religious, fraternal, charitable, scientific, literary, or educational institutions to the extent such income is derived from tax-exempt real estate, tax-exempt tangible or intangible property, or tax-exempt activities.
(e) Compensation paid under Section 3501.28 or 3501.36 of the ORC to a person serving as a precinct election official to the extent that such compensation does not exceed $1,000 for the taxable year. Such compensation in excess of $1,000 for the taxable year may be subject to taxation by a municipal corporation. A municipal corporation shall not require the payer of such compensation to withhold any tax from that compensation.
(f) Dues, contributions, and similar payments received by charitable, religious, educational, or literary organizations or labor unions, lodges, and similar organizations;
(g) Alimony and child support received.
(h) Compensation for personal injuries or for damages to property from insurance proceeds or otherwise, excluding compensation paid for lost salaries or wages or compensation from punitive damages.
(i) Income of a public utility when that public utility is subject to the tax levied under Section 5727.24 or 5727.30 of the ORC. Division (C)(12)(i) of this section does not apply for purposes of Chapter 5745 of the ORC.
(j) Gains from involuntary conversions, interest on federal obligations, items of income subject to a tax levied by the state and that a municipal corporation is specifically prohibited by law from taxing, and income of a decedent's estate during the period of administration except such income from the operation of a trade or business.
(k) Compensation or allowances excluded from federal gross income under Section 107 of the Internal Revenue Code.
(l) Employee compensation that is not qualifying wages as defined in division (C)(35) of this section.
(m) Compensation paid to a person employed within the boundaries of a United States air force base under the jurisdiction of the United States air force that is used for the housing of members of the United States air force and is a center for air force operations, unless the person is subject to taxation because of residence or domicile. If the compensation is subject to taxation because of residence or domicile, tax on such income shall be payable only to the municipal corporation of residence or domicile.
(n) An S corporation shareholder's distributive share of net profits of the S corporation, other than any part of such distributive share of net profits that represents wages as defined in Section 3121(a) of the Internal Revenue Code or net earnings from self-employment as defined in Section 1402(a) of the Internal Revenue Code.
(o) (i) Except as provided in divisions (C)(12)(o)(ii), (iii), and (iv) of this section, qualifying wages described in division (C)(2) or (5) of Section 1905.06 to the extent the qualifying wages are not subject to withholding for the Municipality under either of those divisions.
is repealed.
SECTION 2. That a new 1905.02(12) of the Toledo Municipal Code is enacted as follows:
(12) "Exempt income" means all of the following:
(a) The military pay or allowances of members of the armed forces of the United States or members of their reserve components, including the national guard of any state.
(b) Intangible income.
(c) Social security benefits, railroad retirement benefits, unemployment compensation, pensions, retirement benefit payments, payments from annuities, and similar payments made to an employee or to the beneficiary of an employee under a retirement program or plan, disability payments received from private industry or local, state, or federal governments or from charitable, religious or educational organizations, and the proceeds of sickness, accident, or liability insurance policies. As used in division (C)(12)(c) of this section, "unemployment compensation" does not include supplemental unemployment compensation described in Section 3402(o)(2) of the Internal Revenue Code.
(d) The income of religious, fraternal, charitable, scientific, literary, or educational institutions to the extent such income is derived from tax-exempt real estate, tax-exempt tangible or intangible property, or tax-exempt activities.
(e) Compensation paid under Section 3501.28 or 3501.36 of the ORC to a person serving as a precinct election official to the extent that such compensation does not exceed $1,000 for the taxable year. Such compensation in excess of $1,000 for the taxable year may be subject to taxation by a municipal corporation. A municipal corporation shall not require the payer of such compensation to withhold any tax from that compensation.
(f) Dues, contributions, and similar payments received by charitable, religious, educational, or literary organizations or labor unions, lodges, and similar organizations;
(g) Alimony and child support received.
(h) Compensation for personal injuries or for damages to property from insurance proceeds or otherwise, excluding compensation paid for lost salaries or wages or compensation from punitive damages.
(i) Income of a public utility when that public utility is subject to the tax levied under Section 5727.24 or 5727.30 of the ORC. Division (C)(12)(i) of this section does not apply for purposes of Chapter 5745 of the ORC.
(j) Gains from involuntary conversions, interest on federal obligations, items of income subject to a tax levied by the state and that a municipal corporation is specifically prohibited by law from taxing, and income of a decedent's estate during the period of administration except such income from the operation of a trade or business.
(k) Compensation or allowances excluded from federal gross income under Section 107 of the Internal Revenue Code.
(l) Employee compensation that is not qualifying wages as defined in division (C)(35) of this section.
(m) Compensation paid to a person employed within the boundaries of a United States air force base under the jurisdiction of the United States air force that is used for the housing of members of the United States air force and is a center for air force operations, unless the person is subject to taxation because of residence or domicile. If the compensation is subject to taxation because of residence or domicile, tax on such income shall be payable only to the municipal corporation of residence or domicile.
(n) An S corporation shareholder's distributive share of net profits of the S corporation, other than any part of such distributive share of net profits that represents wages as defined in Section 3121(a) of the Internal Revenue Code or net earnings from self-employment as defined in Section 1402(a) of the Internal Revenue Code.
(o) (i) Except as provided in divisions (C)(12)(o)(ii), (iii), and (iv) of this section, qualifying wages described in division (C)(2) or (5) of Section 1905.06 to the extent the qualifying wages are not subject to withholding for the Municipality under either of those divisions.
(p) For tax years 2024 and after, the income of individuals under 18 years of age.
SECTION 3. That section 1905.03 of the Toledo Municipal Code which reads as follows:
1905.03. Imposition of Tax.
The income taxes provided for in Section 1905.01 <https://codelibrary.amlegal.com/codes/toledo/latest/toledo_oh/0-0-0-115157> shall be levied on the municipal taxable income of every person who resides in or who earns or receives income in the Municipality.
Individuals.
(A) For residents of the Municipality, the income tax levied herein shall be on all municipal taxable income, as set forth in Section 1905.02 <https://codelibrary.amlegal.com/codes/toledo/latest/toledo_oh/0-0-0-115160>(C)(21)(a)(ii)(a).
(B) For nonresidents, the income tax levied herein shall be on all municipal taxable income, as set forth in Section 1905.02 <https://codelibrary.amlegal.com/codes/toledo/latest/toledo_oh/0-0-0-115160>(C)(21)(a)(ii)(b).
(C) For a person other than an individual, the income tax levied herein shall be on all municipal taxable income, as set forth in Section 1905.02 <https://codelibrary.amlegal.com/codes/toledo/latest/toledo_oh/0-0-0-115160>(C)(21)(a)(i).
Refundable credit for Nonqualified Deferred Compensation Plan.
(D) (1) As used in this division:
(a) "Nonqualified deferred compensation plan" means a compensation plan described in Section 3121(v)(2)(C) of the Internal Revenue Code.
(b) "Qualifying loss" means the amount of compensation attributable to a taxpayer's nonqualified deferred compensation plan, less the receipt of money and property attributable to distributions from the nonqualified deferred compensation plan. Full loss is sustained if no distribution of money and property is made by the nonqualified deferred compensation plan. The taxpayer sustains a qualifying loss only in the taxable year in which the taxpayer receives the final distribution of money and property pursuant to that nonqualified deferred compensation plan.
(c) (i) "Qualifying tax rate" means the applicable tax rate for the taxable year for the which the taxpayer paid income tax to the Municipality with respect to any portion of the total amount of compensation the payment of which is deferred pursuant to a nonqualified deferred compensation plan.
(ii) If different tax rates applied for different taxable years, then the "qualifying tax rate" is a weighted average of those different tax rates. The weighted average shall be based upon the tax paid to the Municipality each year with respect to the nonqualified deferred compensation plan.
(d) "Refundable credit" means the amount of the Municipality's income tax that was paid on the non-distributed portion, if any, of a nonqualified deferred compensation plan.
(2) If, in addition to the income tax levied by the Municipality, a taxpayer has paid tax to other municipal corporations with respect to the nonqualified deferred compensation plan, the amount of the credit that a taxpayer may claim from each municipal corporation shall be calculated on the basis of each municipal corporation's proportionate share of the total municipal corporation income tax paid by the taxpayer to all municipal corporations with respect to the nonqualified deferred compensation plan.
(3) In no case shall the amount of the credit allowed under this section exceed the cumulative income tax that a taxpayer has paid to the Municipality for all taxable years with respect to the nonqualified deferred compensation plan.
(4) The credit allowed under this division is allowed only to the extent the taxpayer's qualifying loss is attributable to:
(a) The insolvency or bankruptcy of the employer who had established the nonqualified deferred compensation plan; or
(b) The employee's failure or inability to satisfy all of the employer's terms and conditions necessary to receive the nonqualified deferred compensation.
Domicile.
(E) (1) (a) An individual is presumed to be domiciled in the Municipality for all or part of a taxable year if the individual was domiciled in the Municipality on the last day of the immediately preceding taxable year or if the Tax Administrator reasonably concludes that the individual is domiciled in the Municipality for all or part of the taxable year.
(b) An individual may rebut the presumption of domicile described in division (E)(1)(a) of this section if the individual establishes by a preponderance of the evidence that the individual was not domiciled in the Municipality for all or part of the taxable year.
(2) For the purpose of determining whether an individual is domiciled in the Municipality for all or part of a taxable year, factors that may be considered include, but are not limited to, the following:
(a) The individual's domicile in other taxable years;
(b) The location at which the individual is registered to vote;
(c) The address on the individual's driver's license;
(d) The location of real estate for which the individual claimed a property tax exemption or reduction allowed on the basis of the individual's residence or domicile;
(e) The location and value of abodes owned or leased by the individual;
(f) Declarations, written or oral, made by the individual regarding the individual's residency;
(g) The primary location at which the individual is employed;
(h) The location of educational institutions attended by the individual's dependents as defined in Section 152 of the Internal Revenue Code, to the extent that tuition paid to such educational institution is based on the residency of the individual or the individual's spouse in the municipal corporation where the educational institution is located;
(i) The number of contact periods the individual has with the Municipality. For the purposes of this division, an individual has one "contact period" with the Municipality if the individual is away overnight from the individual's abode located outside of the Municipality and while away overnight from that abode spends at least some portion, however minimal, of each of two consecutive days in the Municipality.
(3) All additional applicable factors are provided in the Rules and Regulations.
Businesses.
(F) This division applies to any taxpayer engaged in a business or profession in the Municipality, unless the taxpayer is a resident or the taxpayer is an electric company, combined company, or telephone company that is subject to and required to file reports under Chapter 5745 of the ORC.
(1) Except as otherwise provided in division (F)(2) of this Section, net profit from a business or profession conducted both within and without the boundaries of the Municipality shall be considered as having a taxable situs in the Municipality for purposes of municipal income taxation in the same proportion as the average ratio of the following:
(a) The average original cost of the real property and tangible personal property owned or used by the taxpayer in the business or profession in the Municipality during the taxable period to the average original cost of all of the real and tangible personal property owned or used by the taxpayer in the business or profession during the same period, wherever situated.
As used in the preceding paragraph, tangible personal or real property shall include property rented or leased by the taxpayer and the value of such property shall be determined by multiplying the annual rental thereon by eight;
(b) Wages, salaries, and other compensation paid during the taxable period to individuals employed in the business or profession for services performed in the Municipality to wages, salaries, and other compensation paid during the same period to individuals employed in the business or profession, wherever the individual's services are performed, excluding compensation from which taxes are not required to be withheld under division (C) of Section 1905.06;
(c) Total gross receipts of the business or profession from sales and rentals made and services performed during the taxable period in the Municipality to total gross receipts of the business or profession during the same period from sales, rentals, and services, wherever made or performed.
(2) (a) If the apportionment factors described in division (F)(1) of this Section do not fairly represent the extent of a taxpayer's business activity in the Municipality, the taxpayer may request, or the Tax Administrator of the Municipality may require, that the taxpayer use, with respect to all or any portion of the income of the taxpayer, an alternative apportionment method involving one or more of the following:
(i) Separate accounting;
(ii) The exclusion of one or more of the factors;
(iii) The inclusion of one or more additional factors that would provide for a more fair apportionment of the income of the taxpayer to the municipal corporation;
(iv) A modification of one or more of the factors.
(b) A taxpayer request to use an alternative apportionment method shall be in writing and shall accompany a tax return, timely filed appeal of an assessment, or timely filed amended tax return. The taxpayer may use the requested alternative method unless the Tax Administrator denies the request in an assessment issued within the period prescribed by division (A) of Section 1905.066.
(c) The Tax Administrator may require a taxpayer to use an alternative apportionment method as described in division (F)(2)(a) of this Section, but only by issuing an assessment to the taxpayer within the period prescribed by division (A) of Section 1905.066.
(d) Nothing in division (F)(2) of this section nullifies or otherwise affects any alternative apportionment arrangement approved by the Tax Administrator or otherwise agreed upon by both the Tax Administrator and taxpayer before January 1, 2016.
(3) As used in division (F)(1)(b) of this Section, "wages, salaries, and other compensation" includes only wages, salaries, or other compensation paid to an employee for services performed at any of the following locations:
(a) A location that is owned, controlled, or used by, rented to, or under the possession of one of the following:
(i) The employer;
(ii) A vendor, customer, client, or patient of the employer, or a related member of such a vendor, customer, client, or patient;
(iii) A vendor, customer, client, or patient of a person described in (F)(3)(a)(ii) of this Section, or a related member of such a vendor, customer, client, or patient.
(b) Any location at which a trial, appeal, hearing, investigation, inquiry, review, court-martial, or similar administrative, judicial, or legislative matter or proceeding is being conducted, provided that the compensation is paid for services performed for, or on behalf of, the employer or that the employee's presence at the location directly or indirectly benefits the employer;
(c) Any other location, if the Tax Administrator determines that the employer directed the employee to perform the services at the other location in lieu of a location described in division (F)(3)(a) or (b) of this Section solely in order to avoid or reduce the employer's municipal income tax liability. If the Tax Administrator makes such a determination, the employer may dispute the determination by establishing, by a preponderance of the evidence, that the Tax Administrator's determination was unreasonable.
(4) For the purposes of division (F)(1)(c) of this Section, receipts from sales and rentals made and services performed shall be sitused to a municipal corporation as follows:
(a) Gross receipts from the sale of tangible personal property shall be sitused to the municipal corporation in which the sale originated. For the purposes of this division, a sale of property originates in the Municipality if, regardless of where title passes, the property meets any of the following criteria; however, for tax years beginning on or after January 1, 2018, gross receipts from the sale of tangible personal property shall be sitused to the municipal corporation only if, regardless of where title passes, the property meets either the provisions of (F)(4)(a)(i) or (F)(4)(a)(ii):
(i) The property is shipped to or delivered within the Municipality from a stock of goods located within the Municipality.
(ii) The property is delivered within the Municipality from a location outside the Municipality, provided the taxpayer is regularly engaged through its own employees in the solicitation or promotion of sales within the Municipality and the sales result from such solicitation or promotion.
(iii) The property is shipped from a place within the Municipality to purchasers outside the Municipality, provided that the taxpayer is not, through its own employees, regularly engaged in the solicitation or promotion of sales at the place where delivery is made. Division (F)(4)(a)(iii) applies only to tax years prior to the taxable year beginning January 1, 2018.
(Ord. 81-18. Passed 2-27-18.)
(b) Gross receipts from the sale of services shall be sitused to the Municipality to the extent that such services are performed in the Municipality.
(c) To the extent included in income, gross receipts from the sale of real property located in the Municipality shall be sitused to the Municipality.
(d) To the extent included in income, gross receipts from rents and royalties from real property located in the Municipality shall be sitused to the Municipality.
(e) Gross receipts from rents and royalties from tangible personal property shall be sitused to the Municipality based upon the extent to which the tangible personal property is used in the Municipality.
(5) The net profit received by an individual taxpayer from the rental of real estate owned directly by the individual, or by a disregarded entity owned by the individual, shall be subject to the Municipality's tax only if the property generating the net profit is located in the Municipality or if the individual taxpayer that receives the net profit is a resident of the Municipality. The Municipality shall allow such taxpayers to elect to use separate accounting for the purpose of calculating net profit sitused under this division to the municipal corporation in which the property is located.
(6) (a) Commissions received by a real estate agent or broker relating to the sale, purchase, or lease of real estate shall be sitused to the municipal corporation in which the real estate is located. Net profit reported by the real estate agent or broker shall be allocated to the Municipality, if applicable, based upon the ratio of the commissions the agent or broker received from the sale, purchase, or lease of real estate located in the Municipality to the commissions received from the sale, purchase, or lease of real estate everywhere in the taxable year.
(b) An individual who is a resident of the Municipality shall report the individual's net profit from all real estate activity on the individual's annual income tax return filed with the Municipality. The individual may claim a credit for taxes the individual paid on such net profit to another municipal corporation to the extent that such a credit is allowed under this Chapter.
(7) When calculating the ratios described in division (F)(1) of this Section for the purposes of that division or division (F)(2) of this Section, the owner of a disregarded entity shall include in the owner's ratios the property, payroll, and gross receipts of such disregarded entity.
is repealed.
SECTION 4. That a new section 1905.03 of the Toledo Municipal Code is enacted as follows:
1905.03. Imposition of Tax.
The income taxes provided for in Section 1905.01 <https://codelibrary.amlegal.com/codes/toledo/latest/toledo_oh/0-0-0-115157> shall be levied on the municipal taxable income of every person who resides in or who earns or receives income in the Municipality.
Individuals.
(A) For residents of the Municipality, the income tax levied herein shall be on all municipal taxable income, as set forth in Section 1905.02 <https://codelibrary.amlegal.com/codes/toledo/latest/toledo_oh/0-0-0-115160>(C)(21)(a)(ii)(a).
(B) For nonresidents, the income tax levied herein shall be on all municipal taxable income, as set forth in Section 1905.02 <https://codelibrary.amlegal.com/codes/toledo/latest/toledo_oh/0-0-0-115160>(C)(21)(a)(ii)(b).
(C) For a person other than an individual, the income tax levied herein shall be on all municipal taxable income, as set forth in Section 1905.02 <https://codelibrary.amlegal.com/codes/toledo/latest/toledo_oh/0-0-0-115160>(C)(21)(a)(i).
Refundable credit for Nonqualified Deferred Compensation Plan.
(D) (1) As used in this division:
(a) "Nonqualified deferred compensation plan" means a compensation plan described in Section 3121(v)(2)(C) of the Internal Revenue Code.
(b) "Qualifying loss" means the amount of compensation attributable to a taxpayer's nonqualified deferred compensation plan, less the receipt of money and property attributable to distributions from the nonqualified deferred compensation plan. Full loss is sustained if no distribution of money and property is made by the nonqualified deferred compensation plan. The taxpayer sustains a qualifying loss only in the taxable year in which the taxpayer receives the final distribution of money and property pursuant to that nonqualified deferred compensation plan.
(c) (i) "Qualifying tax rate" means the applicable tax rate for the taxable year for the which the taxpayer paid income tax to the Municipality with respect to any portion of the total amount of compensation the payment of which is deferred pursuant to a nonqualified deferred compensation plan.
(ii) If different tax rates applied for different taxable years, then the "qualifying tax rate" is a weighted average of those different tax rates. The weighted average shall be based upon the tax paid to the Municipality each year with respect to the nonqualified deferred compensation plan.
(d) "Refundable credit" means the amount of the Municipality's income tax that was paid on the non-distributed portion, if any, of a nonqualified deferred compensation plan.
(2) If, in addition to the income tax levied by the Municipality, a taxpayer has paid tax to other municipal corporations with respect to the nonqualified deferred compensation plan, the amount of the credit that a taxpayer may claim from each municipal corporation shall be calculated on the basis of each municipal corporation's proportionate share of the total municipal corporation income tax paid by the taxpayer to all municipal corporations with respect to the nonqualified deferred compensation plan.
(3) In no case shall the amount of the credit allowed under this section exceed the cumulative income tax that a taxpayer has paid to the Municipality for all taxable years with respect to the nonqualified deferred compensation plan.
(4) The credit allowed under this division is allowed only to the extent the taxpayer's qualifying loss is attributable to:
(a) The insolvency or bankruptcy of the employer who had established the nonqualified deferred compensation plan; or
(b) The employee's failure or inability to satisfy all of the employer's terms and conditions necessary to receive the nonqualified deferred compensation.
Domicile.
(E) (1) (a) An individual is presumed to be domiciled in the Municipality for all or part of a taxable year if the individual was domiciled in the Municipality on the last day of the immediately preceding taxable year or if the Tax Administrator reasonably concludes that the individual is domiciled in the Municipality for all or part of the taxable year.
(b) An individual may rebut the presumption of domicile described in division (E)(1)(a) of this section if the individual establishes by a preponderance of the evidence that the individual was not domiciled in the Municipality for all or part of the taxable year.
(2) For the purpose of determining whether an individual is domiciled in the Municipality for all or part of a taxable year, factors that may be considered include, but are not limited to, the following:
(a) The individual's domicile in other taxable years;
(b) The location at which the individual is registered to vote;
(c) The address on the individual's driver's license;
(d) The location of real estate for which the individual claimed a property tax exemption or reduction allowed on the basis of the individual's residence or domicile;
(e) The location and value of abodes owned or leased by the individual;
(f) Declarations, written or oral, made by the individual regarding the individual's residency;
(g) The primary location at which the individual is employed;
(h) The location of educational institutions attended by the individual's dependents as defined in Section 152 of the Internal Revenue Code, to the extent that tuition paid to such educational institution is based on the residency of the individual or the individual's spouse in the municipal corporation where the educational institution is located;
(i) The number of contact periods the individual has with the Municipality. For the purposes of this division, an individual has one "contact period" with the Municipality if the individual is away overnight from the individual's abode located outside of the Municipality and while away overnight from that abode spends at least some portion, however minimal, of each of two consecutive days in the Municipality.
(3) All additional applicable factors are provided in the Rules and Regulations.
Businesses.
(F) This division applies to any taxpayer engaged in a business or profession in the Municipality, unless the taxpayer is a resident or the taxpayer is an electric company, combined company, or telephone company that is subject to and required to file reports under Chapter 5745 of the ORC.
(1) Except as otherwise provided in division (F)(2) and G of this Section, net profit from a business or profession conducted both within and without the boundaries of the Municipality shall be considered as having a taxable situs in the Municipality for purposes of municipal income taxation in the same proportion as the average ratio of the following:
(a) The average original cost of the real property and tangible personal property owned or used by the taxpayer in the business or profession in the Municipality during the taxable period to the average original cost of all of the real and tangible personal property owned or used by the taxpayer in the business or profession during the same period, wherever situated.
As used in the preceding paragraph, tangible personal or real property shall include property rented or leased by the taxpayer and the value of such property shall be determined by multiplying the annual rental thereon by eight;
(b) Wages, salaries, and other compensation paid during the taxable period to individuals employed in the business or profession for services performed in the Municipality to wages, salaries, and other compensation paid during the same period to individuals employed in the business or profession, wherever the individual's services are performed, excluding compensation from which taxes are not required to be withheld under division (C) of Section 1905.06;
(c) Total gross receipts of the business or profession from sales and rentals made and services performed during the taxable period in the Municipality to total gross receipts of the business or profession during the same period from sales, rentals, and services, wherever made or performed.
(2) (a) If the apportionment factors described in division (F)(1) of this Section do not fairly represent the extent of a taxpayer's business activity in the Municipality, the taxpayer may request, or the Tax Administrator of the Municipality may require, that the taxpayer use, with respect to all or any portion of the income of the taxpayer, an alternative apportionment method involving one or more of the following:
(i) Separate accounting;
(ii) The exclusion of one or more of the factors;
(iii) The inclusion of one or more additional factors that would provide for a more fair apportionment of the income of the taxpayer to the municipal corporation;
(iv) A modification of one or more of the factors.
(b) A taxpayer request to use an alternative apportionment method shall be in writing and shall accompany a tax return, timely filed appeal of an assessment, or timely filed amended tax return. The taxpayer may use the requested alternative method unless the Tax Administrator denies the request in an assessment issued within the period prescribed by division (A) of Section 1905.066.
(c) The Tax Administrator may require a taxpayer to use an alternative apportionment method as described in division (F)(2)(a) of this Section, but only by issuing an assessment to the taxpayer within the period prescribed by division (A) of Section 1905.066.
(d) Nothing in division (F)(2) of this section nullifies or otherwise affects any alternative apportionment arrangement approved by the Tax Administrator or otherwise agreed upon by both the Tax Administrator and taxpayer before January 1, 2016.
(3) As used in division (F)(1)(b) of this Section, "wages, salaries, and other compensation" includes only wages, salaries, or other compensation paid to an employee for services performed at any of the following locations:
(a) A location that is owned, controlled, or used by, rented to, or under the possession of one of the following:
(i) The employer;
(ii) A vendor, customer, client, or patient of the employer, or a related member of such a vendor, customer, client, or patient;
(iii) A vendor, customer, client, or patient of a person described in (F)(3)(a)(ii) of this Section, or a related member of such a vendor, customer, client, or patient.
(b) Any location at which a trial, appeal, hearing, investigation, inquiry, review, court-martial, or similar administrative, judicial, or legislative matter or proceeding is being conducted, provided that the compensation is paid for services performed for, or on behalf of, the employer or that the employee's presence at the location directly or indirectly benefits the employer;
(c) Any other location, if the Tax Administrator determines that the employer directed the employee to perform the services at the other location in lieu of a location described in division (F)(3)(a) or (b) of this Section solely in order to avoid or reduce the employer's municipal income tax liability. If the Tax Administrator makes such a determination, the employer may dispute the determination by establishing, by a preponderance of the evidence, that the Tax Administrator's determination was unreasonable.
(4) For the purposes of division (F)(1)(c) of this Section, receipts from sales and rentals made and services performed shall be sitused to a municipal corporation as follows:
(a) Gross receipts from the sale of tangible personal property shall be sitused to the municipal corporation in which the sale originated. For the purposes of this division, a sale of property originates in the Municipality if, regardless of where title passes, the property meets any of the following criteria; however, for tax years beginning on or after January 1, 2018, gross receipts from the sale of tangible personal property shall be sitused to the municipal corporation only if, regardless of where title passes, the property meets either the provisions of (F)(4)(a)(i) or (F)(4)(a)(ii):
(i) The property is shipped to or delivered within the Municipality from a stock of goods located within the Municipality.
(ii) The property is delivered within the Municipality from a location outside the Municipality, provided the taxpayer is regularly engaged through its own employees in the solicitation or promotion of sales within the Municipality and the sales result from such solicitation or promotion.
(iii) The property is shipped from a place within the Municipality to purchasers outside the Municipality, provided that the taxpayer is not, through its own employees, regularly engaged in the solicitation or promotion of sales at the place where delivery is made. Division (F)(4)(a)(iii) applies only to tax years prior to the taxable year beginning January 1, 2018.
(Ord. 81-18. Passed 2-27-18.)
(b) Gross receipts from the sale of services shall be sitused to the Municipality to the extent that such services are performed in the Municipality.
(c) To the extent included in income, gross receipts from the sale of real property located in the Municipality shall be sitused to the Municipality.
(d) To the extent included in income, gross receipts from rents and royalties from real property located in the Municipality shall be sitused to the Municipality.
(e) Gross receipts from rents and royalties from tangible personal property shall be sitused to the Municipality based upon the extent to which the tangible personal property is used in the Municipality.
(5) The net profit received by an individual taxpayer from the rental of real estate owned directly by the individual, or by a disregarded entity owned by the individual, shall be subject to the Municipality's tax only if the property generating the net profit is located in the Municipality or if the individual taxpayer that receives the net profit is a resident of the Municipality. The Municipality shall allow such taxpayers to elect to use separate accounting for the purpose of calculating net profit sitused under this division to the municipal corporation in which the property is located.
(6) (a) Commissions received by a real estate agent or broker relating to the sale, purchase, or lease of real estate shall be sitused to the municipal corporation in which the real estate is located. Net profit reported by the real estate agent or broker shall be allocated to the Municipality, if applicable, based upon the ratio of the commissions the agent or broker received from the sale, purchase, or lease of real estate located in the Municipality to the commissions received from the sale, purchase, or lease of real estate everywhere in the taxable year.
(b) An individual who is a resident of the Municipality shall report the individual's net profit from all real estate activity on the individual's annual income tax return filed with the Municipality. The individual may claim a credit for taxes the individual paid on such net profit to another municipal corporation to the extent that such a credit is allowed under this Chapter.
(7) When calculating the ratios described in division (F)(1) of this Section for the purposes of that division or division (F)(2) of this Section, the owner of a disregarded entity shall include in the owner's ratios the property, payroll, and gross receipts of such disregarded entity.
(G)(1) As used in this division:
(a) "Qualifying remote employee or owner" means an individual who is an employee of a taxpayer or who is a partner or member holding an ownership interest in a taxpayer that is treated as a partnership for federal income tax purposes, provided that the individual meets both of the following criteria:
(i) The taxpayer has assigned the individual to a qualifying reporting location.
(ii) The individual is permitted or required to perform services for the taxpayer at a qualifying remote work location.
(b) "Qualifying remote work location" means a permanent or temporary location at which an employee or owner chooses or is required to perform services for the taxpayer, other than a reporting location of the taxpayer or any other location owned or controlled by a customer or client of the taxpayer. "Qualifying remote work location" may include the residence of an employee or owner and may be located outside of a municipal corporation that imposes an income tax in accordance with this chapter. An employee or owner may have more than one qualifying remote work location during a taxable year.
(c) "Reporting location" means either of the following:
(i) A permanent or temporary place of doing business, such as an office, warehouse, storefront, construction site, or similar location, that is owned or controlled directly or indirectly by the taxpayer;
(ii) Any location in this state owned or controlled by a customer or client of the taxpayer, provided that the taxpayer is required to withhold taxes under Section 1905.06(A) on qualifying wages paid to an employee for the performance of personal services at that location.
(d) "Qualifying reporting location" means one of the following:
(i) The reporting location in this state at which an employee or owner performs services for the taxpayer on a regular or periodic basis during the taxable year;
(ii) If no reporting location exists in this state for an employee or owner under division (G)(1)(d)(i) of this section, the reporting location in this state at which the employee's or owner's supervisor regularly or periodically reports during the taxable year;
(iii) If no reporting location exists in this state for an employee or owner under division (G)(1)(d)(i) or (ii) of this section, the location that the taxpayer otherwise assigns as the employee's or owner's qualifying reporting location, provided the assignment is made in good faith and is recorded and maintained in the taxpayer's business records. A taxpayer may change the qualifying reporting location designated for an employee or owner under this division at any time.
(2) For tax years ending on or after December 31, 2023, a taxpayer may elect to apply the provisions of this division to the apportionment of its net profit from a business or profession. For taxpayers that make this election, the provisions of division (F) of this section apply to such apportionment except as otherwise provided in this division.
A taxpayer shall make the election allowed under this division in writing on or with the taxpayer's net profit return or, if applicable, a timely filed amended net profit return or a timely filed appeal of an assessment. The election applies to the taxable year for which that return or appeal is filed and for all subsequent taxable years, until the taxpayer revokes the election.
The taxpayer shall make the initial election with the tax administrator of each municipal corporation with which, after applying the apportionment provisions authorized in this division, the taxpayer is required to file a net profit tax return for that taxable year. A taxpayer shall not be required to notify the tax administrator of a municipal corporation in which a qualifying remote employee's or owner's qualifying remote work location is located, unless the taxpayer is otherwise required to file a net profit return with that municipal corporation due to business operations that are unrelated to the employee's or owner's activity at the qualifying remote work location.
After the taxpayer makes the initial election, the election applies to every municipal corporation in which the taxpayer conducts business. The taxpayer shall not be required to file a net profit return with a municipal corporation solely because a qualifying remote employee's or owner's qualifying remote work location is located in such municipal corporation.
Nothing in this division prohibits a taxpayer from making a new election under this division after properly revoking a prior election.
(3) For the purpose of calculating the ratios described in division (F)(1) of this section, all of the following apply to a taxpayer that has made the election described in division (G)(2):
(a) For the purpose of division (F)(1)(a) of this section, the average original cost of any tangible personal property used by a qualifying remote employee or owner at that individual's qualifying remote work location shall be sitused to that individual's qualifying reporting location.
(b) For the purpose of division (F)(1)(b) of this section, any wages, salaries, and other compensation paid during the taxable period to a qualifying remote employee or owner for services performed at that individual's qualifying remote work location shall be sitused to that individual's qualifying reporting location.
(c) For the purpose of division (F)(1)(c) of this section, and notwithstanding division (F)(4) of this section, any gross receipts of the business or profession from services performed during the taxable period by a qualifying remote employee or owner for services performed at that individual's qualifying remote work location shall be sitused to that individual's qualifying reporting location.
(4) Nothing in this division prevents a taxpayer from requesting, or a tax administrator from requiring, that the taxpayer use, with respect to all or a portion of the income of the taxpayer, an alternative apportionment method as described in division (F)(2) of this section. However, a tax administrator shall not require an alternative apportionment method in such a manner that it would require a taxpayer to file a net profit return with a municipal corporation solely because a qualifying remote employee's or owner's qualifying remote work location is located in that municipal corporation.
(5) Except as otherwise provided in this division, nothing in this division is intended to affect the withholding of taxes on qualifying wages pursuant to Section 1905.06(A).
SECTION 5. That Section 1905.05(G) of the Toledo Municipal Code which reads as follows:
(G) (1) (a) Except as otherwise provided in this chapter, each individual income tax return required to be filed under this Section shall be completed and filed as required by the Tax Administrator on or before the date prescribed for the filing of state individual income tax returns under division (G) of Section 5747.08 of the ORC. The taxpayer shall complete and file the return or notice on forms prescribed by the Tax Administrator or on generic forms, together with remittance made payable to the Municipality. No remittance is required if the net amount due is ten dollars or less.
(b) Except as otherwise provided in this Chapter, each annual net profit return required to be filed under this Section by a taxpayer that is not an individual shall be completed and filed as required by the Tax Administrator on or before the fifteenth day (15th) of the fourth month following the end of the taxpayer's taxable year. The taxpayer shall complete and file the return or notice on forms prescribed by the Tax Administrator or on generic forms, together with remittance made payable to the Municipality. No remittance is required if the net amount due is ten dollars or less.
(2) Any taxpayer that has duly requested an automatic six- month extension for filing the taxpayer's federal income tax return shall automatically receive an extension for the filing of the income tax return required under this Chapter. The extended due date of the income tax return required under this Chapter shall be the 15th day of the tenth month after the last day of the taxable year to which the return relates. An extension of time to file under this division is not an extension of the time to pay any tax due unless the Tax Administrator grants an extension of that date.
(a) A copy of the federal extension request shall be included with the filing of the income tax return required under this Chapter.
(b) A taxpayer that has not requested or received a six-month extension for filing the taxpayer's federal income tax return may submit a written request that the Tax Administrator grant the taxpayer a six-month extension of the date for filing the taxpayer's income tax return required under this Chapter. If the request is received by the Tax Administrator on or before the date the income tax return required under this Chapter is due, the Tax Administrator shall grant the taxpayer's requested extension.
(3) If the Ohio tax commissioner extends for all taxpayers the date for filing state income tax returns under division (G) of Section 5747.08 of the ORC, a taxpayer shall automatically receive an extension of the due date for the filing of the income tax return required under this Chapter. The extended due date of the return required under this Chapter shall be the same as the extended due date of the state income tax return.
(4) If the Tax Administrator considers it necessary in order to ensure the payment of the tax imposed by this Chapter, the Tax Administrator may require taxpayers to file returns and make payments otherwise than as provided in this division, including taxpayers not otherwise required to file annual returns.
(5) To the extent that any provision in this division (G) of this Section conflicts with any provision in divisions (N), (O), (P), or (Q) of this section, the provisions in divisions (N), (O), (P), or (Q) prevail.
is repealed.
SECTION 6. That a new section of the 1905.05(G) of the Toledo Municipal Code is enacted as follows:
(G) (1) (a) Except as otherwise provided in this chapter, each individual income tax return required to be filed under this Section shall be completed and filed as required by the Tax Administrator on or before the date prescribed for the filing of state individual income tax returns under division (G) of Section 5747.08 of the ORC. The taxpayer shall complete and file the return or notice on forms prescribed by the Tax Administrator or on generic forms, together with remittance made payable to the Municipality. No remittance is required if the net amount due is ten dollars or less.
(b) Except as otherwise provided in this Chapter, each annual net profit return required to be filed under this Section by a taxpayer that is not an individual shall be completed and filed as required by the Tax Administrator on or before the fifteenth day (15th) of the fourth month following the end of the taxpayer's taxable year. The taxpayer shall complete and file the return or notice on forms prescribed by the Tax Administrator or on generic forms, together with remittance made payable to the Municipality. No remittance is required if the net amount due is ten dollars or less.
(2) Any taxpayer that has duly requested an automatic six- month extension for filing the taxpayer's federal income tax return shall automatically receive an extension for the filing of the income tax return required under this Chapter. The extended due date of the income tax return required under this Chapter shall be the 15th day of the tenth month after the last day of the taxable year to which the return relates. For tax years ending on or after January 1, 2023, the extended due date of the Municipality’s income tax return for a taxpayer that is not an individual shall be the 15th day of the eleventh month after the last day of the taxable year to which the return relates. An extension of time to file under this division is not an extension of the time to pay any tax due unless the Tax Administrator grants an extension of that date.
(a) A copy of the federal extension request shall be included with the filing of the income tax return required under this Chapter.
(b) A taxpayer that has not requested or received a six-month extension for filing the taxpayer's federal income tax return may submit a written request that the Tax Administrator grant the taxpayer a six-month extension of the date for filing the taxpayer's income tax return required under this Chapter. If the request is received by the Tax Administrator on or before the date the income tax return required under this Chapter is due, the Tax Administrator shall grant the taxpayer's requested extension.
(3) If the Ohio tax commissioner extends for all taxpayers the date for filing state income tax returns under division (G) of Section 5747.08 of the ORC, a taxpayer shall automatically receive an extension of the due date for the filing of the income tax return required under this Chapter. The extended due date of the return required under this Chapter shall be the same as the extended due date of the state income tax return.
(4) If the Tax Administrator considers it necessary in order to ensure the payment of the tax imposed by this Chapter, the Tax Administrator may require taxpayers to file returns and make payments otherwise than as provided in this division, including taxpayers not otherwise required to file annual returns.
(5) If a taxpayer receives an extension for the filing of a municipal income tax return under division (G)(2), (3), or (4) of this section, the tax administrator shall not make any inquiry or send any notice to the taxpayer with regard to the return on or before the date the taxpayer files the return or on or before the extended due date to file the return, whichever occurs first.
If a tax administrator violates division (G)(5) of this section, the municipal corporation shall reimburse the taxpayer for any reasonable costs incurred to respond to such inquiry or notice, up to $150.
Division (G)(5) of this section does not apply to an extension received under division (G)(2) of this section if the tax administrator has actual knowledge that the taxpayer failed to file for a federal extension as required to receive the extension under division (G)(2) of this section or failed to file for an extension under division (G)(2)(b) of this section.
(6) To the extent that any provision in this division (G) of this Section conflicts with any provision in divisions (N), (O), (P), or (Q) of this section, the provisions in divisions (N), (O), (P), or (Q) prevail.
SECTION 7. That Section 1905.11(C) of the Toledo Municipal Code which reads as follows:
(C) Should any taxpayer, employer, agent of the employer, or other payer for any reason fail, in whole or in part, to make timely and full payment or remittance of income tax, estimated income tax, or withholding tax or to file timely with the Municipality any return required to be filed, the following penalties and interest shall apply:
(1) Interest shall be imposed at the rate described in division (A) of this Section, per annum, on all unpaid income tax, unpaid estimated income tax, and unpaid withholding tax.
(2) (a) With respect to unpaid income tax and unpaid estimated income tax, the Municipality may impose a penalty equal to fifteen percent (15%) of the amount not timely paid.
(b) With respect to any unpaid withholding tax, the Municipality may impose a penalty not exceeding fifty percent (50%) of the amount not timely paid.
(3) With respect to returns other than estimated income tax returns, the Municipality may impose a penalty of $25 for each failure to timely file each return, regardless of the liability shown thereon for each month, or any fraction thereof, during which the return remains unfiled regardless of the liability shown thereon. The penalty shall not exceed $150 for each failure.
is repealed.
SECTION 8. That a new Section 1905.11(C) of the Toledo Municipal Code is enacted as follows:
(C) Should any taxpayer, employer, agent of the employer, or other payer for any reason fail, in whole or in part, to make timely and full payment or remittance of income tax, estimated income tax, or withholding tax or to file timely with the Municipality any return required to be filed, the following penalties and interest shall apply:
(1) Interest shall be imposed at the rate described in division (A) of this Section, per annum, on all unpaid income tax, unpaid estimated income tax, and unpaid withholding tax.
(2) (a) With respect to unpaid income tax and unpaid estimated income tax, the Municipality may impose a penalty equal to fifteen percent (15%) of the amount not timely paid.
(b) With respect to any unpaid withholding tax, the Municipality may impose a penalty not exceeding fifty percent (50%) of the amount not timely paid.
(3) (a) For tax years ending on or before December 31, 2022, with respect to returns other than estimated income tax returns, the Municipality may impose a penalty of $25 for each failure to timely file each return, regardless of the liability shown thereon for each month, or any fraction thereof, during which the return remains unfiled regardless of the liability shown thereon. The penalty shall not exceed $150 for each failure.
(b) For tax years ending on or after January 1, 2023, with respect to returns other than estimated income tax returns, the Municipality may impose a penalty not exceeding $25 for each failure to timely file each return, regardless of the liability shown thereon, except that Municipality shall abate or refund the penalty assessed on a taxpayer’s first failure to timely file a return after the taxpayer files that return.
SECTION 9. That this Ordinance is declared to be an emergency measure and shall be in force and effect from and after its passage. The reason for the emergency lies in the fact that same is necessary for the immediate preservation of the public peace, health, safety, and property and for the further reason that this Ordinance must be immediately effective in order to comply with the amendments to State law.
Vote on emergency clause: yeas _____, nays _____.
Passed: _________________, as an emergency measure: yeas _____, nays _____.
Attest: ________________________ __________________________________
Clerk of Council President of Council
Approved: _____________________ __________________________________
Mayor
I hereby certify that the above is a true and correct copy of an Ordinance passed by Council ________________________.
Attest: ________________________
Clerk of Council