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Income Tax Rules & Regulations Page!
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October 25, 2000
Amended July 9, 2001
RULES AND REGULATIONS
ARTICLE 1:00 PURPOSE
1:01 The first chapter of the Village of Grand Rapids income tax ordinances
set forth the purpose for which the tax collected will be used. They are not
repeated here, other than for personal information, they have no effect on these
Rules and Regulations.
ARTICLE 2:00 DEFINITIONS
2:01 As used in these Rules and Regulations the following words defined
herein shall have the meaning ascribed to them herein. In all definitions
contained in these regulations, the singular shall include the plural and the
masculine shall include the feminine and the neuter with regard to the terms,
phrases, words and their derivatives used herein.
2:02 Administrator means the individual designated to administer and
enforce the provisions of the income tax ordinances of the Village of Grand
2:03 Association means any partnership, limited partnership, limited
liability corporation and limited liability partnership, Subchapter S
Corporation (hereinafter referred to as an ‘S Corporation’) as defined in
the Federal Tax Code or any other form of unincorporated business or
enterprise. The term ‘association’ and the term ‘unincorporated
business’ are interchangeable terms.
2:04 Board of Review means the Board created by and constituted as
provided for in the income tax ordinance of The Village of Grand Rapids.
2:05 Business means an enterprise, cooperative activity, profession,
trade or undertaking of any nature conducted for profit or ordinarily conducted
for profit, whether by an individual, proprietorship, partnership, association,
corporation or any other entity, excluding, however, all non-profit corporations
or non-profit associations which are exempt from the payment of Federal
Income Tax due to their non-profit status.
The administration of a decedent’s estate by the executor or administrator
and the mere custody, supervision and management of trust property under an
interviews or testamentary trust unaccompanied by the actual operation of a
business, shall not be construed as the operation of a business.
2:06 Business Allocation as used in these Rules and Regulations, means
the portion of net profits to be allocated as having been made or earned in the
Village of Grand Rapids either under the separate accounting method or under the
three-factor formula of property, payroll and sales, or under a substitute
method, as provided for in the income tax ordinance.
2:07 Business Deductions are the ordinary and necessary expenses
actually incurred in the operation of the business to the same extent allowed
for Federal Income Tax purposes unless specifically allowed or disallowed in
these Rules and Regulations. See Article 3:09 hereof.
2:08 Central Collection Agency means the City of Cleveland Division of
Taxation (and is also referred to as the Division of Taxation)
2:09 Central Collection Agency Member means any municipality which has
designated the Division of Taxation, 1701 Lakeside Avenue, N.E. Cleveland, Oh
44114 as its agency for collecting its income tax.
2:10 City as used herein means the Village of Grand Rapids.
2:11 Corporation means a corporation, joint stock company, or
joint stock association organized under the laws of the United States, the
State of Ohio or any other state, territory or foreign county or dependency.
The term ‘corporation’ as used in these Rules and Regulations does
not include S Corporations as defined by the Federal Income Tax Code or any
other entity defined as an association or unincorporated business entity.
2:12 Deferred Compensation means income that is earned by an
employee for services rendered or performed in one year but not paid to the
employee until a future year. Deferred compensation is considered to be
earned income and is taxable to an employee in the year of deferral.
2:13 Dishonored Check means any check received in payment of taxes,
penalty, interest or service charge that is returned unpaid by the bank.
2:14 Domicile is that place where an individual has his true,
fixed and permanent home, and principal establishment, and to which whenever
he is absent he has the intention of returning. Actual residence is not
necessarily the domicile of an individual. A person may have more than one
residence but not more than one domicile.
Among other factors indicating domicile may be where the person is
registered to vote, receives mail, where their automobile is registered,
where their children attend school. This is not an exhaustive list of
criteria to determine domicile but merely representative examples of some
criteria that may be used to determine a person’s domicile.
In the event of a business, the domicile is that place considered as the
center of business affairs and the place where its functions are primarily
2:15 Earned Income is used in determining whether certain income
is taxable within the effective dates of the ordinance. Unless specified
elsewhere in the Rules and Regulations, earned income is earned when
services giving rise to the income are performed and when there is no
substantial risk of forfeiture to the right to the income. Earned income
includes any elective deferrals of income made by an individual, or that may
be made by the employer for or on the behalf the individual. Earned income
includes hobby income, income from games of chance and income from lottery
2:16 Employee means one who works for wages, salary, commission or
other type of compensation in the service of an employer and shall include
temporary, provisional, casual or part-time employment. Generally, the
relationship of employer and employee exists when the person for whom
services are performed has the right to control and direct the individual
who performs the services, not only as to the result to be accomplished but
also as to the details and means by which that result is accomplished. Any
person for whom an employer is required to withhold for Federal
Income Tax purposes shall, prime facie, be deemed an employee.
2:17 Employee Expenses when required to travel, an employee may
deduct travel expenses when not reimbursed for the same by their employer to
the same extent allowed for Federal Income Tax purposes unless specifically
allowed or disallowed in these Rules and Regulations.
2:18 Employer means an individual, proprietorship, association,
corporation or other entity including nonprofit associations or
corporations that employs one or more persons on a salary, wage,
commission or other compensation basis, whether or not such employer is
engaged in business as herein before defined. The term ‘employer’
includes the State of Ohio, its political subdivisions and its agencies,
instrumentality’s, boards, bureaus, departments, and any and all other
governmental units as well as other governmental subdivisions, agencies,
instrumentality’s, boards, bureaus, departments to the extent that any
such body withholds tax on a mandatory or voluntary basis. No rights, duties
or obligations are imposed with respect to any such body not otherwise
authorized by law.
The term ‘employer’ shall be further defined to be an individual,
partnership, association, corporation or any other entity which books or
contracts for individuals and/or groups to perform or entertain at their
place of business or rents facilities for the purpose of providing such
The term ‘employer’ does not include any person who employs only
domestic help for such person’s private residence.
2:19 Final Return or Complete Return means a return signed by the
taxpayer complete with all necessary schedules and attachments and all
necessary information present on the form. A final return has the same
meaning as a complete return.
2:20 Fiscal Year means an accounting period of twelve 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 municipal income tax purposes.
2:21 Gross Receipts means the gross receipts or sales as indicated
on a taxpayer’s Federal Income Tax return as filed with the Internal
2:22 Independent Contractor is a person who while performing
services for another, is not under the direction and/or control of
such other person, as to the result to be accomplished by his work and as to
the details and means by which that result is accomplished.
2:23 Intangible Property is defined as the following:
a) Shares of stock in corporations, joint stock associations
and joint stock companies, but does not include shares of stock in S
b) Interest bearing obligations, notes, corporate bonds, bonds,
governmental bonds issued by Federal, State or local agencies allowed
by law to issue bonds and savings accounts;
c) Income from purchased annuities;
d) Royalties from patents and copyrights (see Article 3:09 (A) (3)).
For purposes of these Rules and Regulations, income from intangible
property excludes any income from deferred compensation.
2:24 Joint Economic Development District means a District created
under Ohio Revised Code Section 715.69 and 715.71 as amended from time to
2:25 Net Profits means the net gain from the conduct or operation
of a trade, business, profession, enterprise, or other activity after
provision for all ordinary and necessary business expenses deducted
by the taxpayer for Federal Income Tax purposes, except as otherwise
indicated in these Rules and Regulations, and without deduction for
taxes imposed by the income tax ordinance, Federal, State and/or
other taxes based on income; and in the case of an association, without
deduction of salaries and payments to partners and other owners (see Article
2:26 Non-Resident means an individual, a general or limited
partnership, association or other business entity domiciled outside
of the boundaries of The Village of Grand Rapids.
2:27 Non-Resident Unincorporated Business Entity means an
unincorporated business entity not having an office or place of business
within The Village of Grand Rapids.
2:28 Ordinance means the ordinance enacted by The Village
of Grand Rapids, and any amendments and/or supplements effective
on the date the Village of Grand Rapids’ income tax ordinance was
effective and continuing until repealed. Hereinafter, this will be
referred to as ‘the effective period of ordinance’.
2:29 Partnership means a general or limited partnership, or
a limited liability company partnership, or any other entity defined as a
partnership for Federal Income Tax purposes.
2:30 Pensions means distributions from retirement plans as
reported on Federal Form 1099R, or its equivalent or successor form, in the
year paid, and which are designed to provide primarily for the retirement
income of employees.
Pension distributions are not taxable; contributions to pension plans,
retirement plans, deferred compensation plans, as well as any other type of
deferred compensation arrangement or income deferral arrangement or plan,
are taxable in the year the income is earned and deferred.
2:31 Person means every natural person, partnership, fiduciary,
association, corporation, S Corporation or other entity. Whenever the term
‘person’ is used in any clause prescribing or imposing a penalty, the
term as applied to an unincorporated entity shall mean the partners,
members, or owners thereof, and as applied to a corporation, the
2:32 Personal Injury means (1) the underlying cause of action
giving rise to the recovery was based upon tort or tort-type rights; and (2)
the compensatory damages received on account of personal injuries or
sickness. Punitive damages are taxable.
2:33 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. A
taxpayer does not have a place of business outside of the Village of Grand
Rapids solely by consigning goods to an independent factor for sale outside
of said community.
2:34 Rental Income means payments received from the use or
occupancy of property. Rental income includes, but is not limited to, lease
cancellation payments, advance rent, interest, expenses paid by a tenant in
lieu of rent, and property or services provided in lieu of rent. The value
of the property or services paid in lieu of rent should be reported as
rental income. All ordinary and necessary expenses, i.e., depreciation,
property taxes, and repairs are deductible from rental income.
2:35 Resident means an individual, partnership, association or
other business entity domiciled in the Village of Grand Rapids.
2:36 Resident Unincorporated Business Entity means an
unincorporated business entity having an office or place of business within
the Village of Grand Rapids.
2:37 Salaries, Wages, Commissions and other Compensation shall
include salaries, wages, commissions, bonuses, incentive payments, fees and
tips or other earned income, including distributive share income from an
unincorporated business entity or association, that may accrue or be
received by an individual, whether directly or through an agent and whether
in cash or in property for services rendered.
2:38 Taxable Income Means earned income in the form of
compensation, to include wages, salaries, and other compensation, bonuses,
incentive payments, fees, tips, commissions, or other income
that may accrue to or be received by an individual, whether directly or
through an agent and whether in cash or in property for services rendered.
Taxable income includes a resident individual’s distributive share
income from an association against which the individual’s community of
residence has not already levied a tax.
Taxable income includes other income that may accrue or be received by an
individual resident, whether directly or through an agent and whether
received or paid in cash or in property.
Taxable income also means the net profits from the operation of a
business, profession, and other enterprise or activity adjusted in
accordance with the provisions of the income tax ordinances of the Village
of Grand Rapids and these Rules and Regulations.
2:39 Taxable Year means the calendar year or the fiscal year used
as the basis on which net profits or other taxable income 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.
2:40 Taxing Municipality or Community means any municipal
corporation or joint economic development district levying a
municipal income tax on salaries, wages, commissions and other compensation,
and other income earned by individuals, and on the net profits earned
from the operation of business, profession or other activity.
2:41 Taxpayer means a person, whether an individual, partnership,
association, trust, or any other entity, required by the ordinance to file a
return of earnings or of net profits.
2:42 Unincorporated Businesses mean all businesses not
specifically incorporated as a C corporation for Internal Revenue Service
purposes. All unincorporated businesses are taxable as partnerships for
municipal tax purposes. S Corporations are defined as unincorporated
businesses under these Rules and Regulations.
2:43 Village as used herein, means the Village of Grand Rapids
2:44 Wage continuation plans include all types of plans in
displacement and/or termination of employees, regardless of whether
voluntarily chosen by the employee or revocable by the employer, or whether
amounts are paid by installments or in a lump sum. These plans are taxable
to the community where the taxpayer worked.
2:45 Working Day means a day for which an employee receives
compensation whether the services are performed or not performed.
ARTICLE 3:00 IMPOSITION OF TAX
3:01 Resident Employee
(A) In the case of residents of Village, an annual tax is imposed on all
salaries, wages, commissions, other income, and other compensation
earned and received, earned and accrued, or earned and deferred during
the effective period of the ordinance.
For the purpose of determining the tax on earnings of resident taxpayers
under the rate and income taxable section of the ordinance, the source of
earnings and the place or places in or at which the services were rendered are
immaterial. All such earnings wherever earned are taxable. The location of the
place from which payment is made, or where payment is received is immaterial.
(B) The following are items subject to the tax imposed by the rate and
income taxable sections of the Village tax 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, and whether received or deferred, for services
rendered during the tax period as:
(a) An officer, director or employee of a corporation (including
charitable and other non-profit organizations), joint stock associations,
or joint stock company, or any other type of entity;
(b) An employee (as distinguished from a partner, member or owner)
of a partnership, limited partnership, S Corporation, Limited Liability
Partnership and Limited Liability Corporation or any form of
(c) An employee (as distinguished from a proprietor) of a business,
trade, or profession conducted by an individual owner;
(d) 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 the
section of the ordinance indicating sources of income not taxable.
(e) An employee of any other entity or person, whether based upon
hourly, daily, weekly, semi-monthly, annual, unit of production or
piecework rates; and whether paid by an individual, partnership,
association, corporation (including charitable and other non-profit
corporations and associations), governmental administration,
agency, authority, board, body, branch, bureau, department, division,
subdivision, section or unit or any other entity.
(2) Commissions earned by a taxpayer whether directly or through an agent
and whether in cash or in property for services rendered during the
effective period of the ordinance, regardless how computed or by whom or
(a) If the amounts received as a drawing account exceed the commissions
earned and the excess is not subject to the demand of the employer for
repayment, the tax is payable on the amounts received as a drawing
(b) Amounts received from an employer for expenses and used as such by
the individual receiving them are not deemed to be compensation if the
employer deducts such expenses or advances as such from his gross income
for the purpose of determining his net profits taxable under Federal law,
and the employee is not required to include such receipts as income (or
has directly off-setting business expenses) on his Federal Income Tax
(c) 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 on the net profits
provision of the ordinance, they shall not be taxed under the provisions
relating to salaries, wages, or commissions earned.
(3) Fees, unless such fees are properly included 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 (i.e.
fees which are taxable are those fees received by a director or officer of a
(4) Other compensation and other income shall include but are
not limited to:
(a) Tips received by waiters, waitresses and others;
(c) Gifts and gratuities in connection with employment;
(d) Compensation paid to domestic servants, casual employees and other
types of employees;
(e) Benefits resulting from employers assuming a tax;
(f) Fellowships, grants, or stipends paid to a graduate student in the
full amount except that any amount allocated in writing for tuition, books
and laboratory fees shall be excluded;
(g) Dismissal pay which is demandable as a matter of right by virtue of
the contract of employment;
(h) Incentive payments;
(i) Contributions by employees and/or employers on behalf of
employees to retirement plans are not deductible by such employee. If
such contributions are deducted by an employer from the earnings of an
employee, such amounts are subject to withholding tax;
(j) If an employer pays into a retirement or deferred compensation plan
on behalf of an employee in lieu of paying said amount as wages, said
payments are considered additional compensation to the employee and are
subject to withholding tax.
(k) Contributions by employers to a pension, annuity, retirement
or deferred compensation plan, including simplified pension plans and
similar plans, are deemed to be other compensation subject to
(l) Income received on account of covenants not to compete;
(m) Lottery winnings, gambling and gaming winnings, sports winnings;
(n) Severance pay;
(o) Jury fees, if not paid over to a taxpayer’s employer;
(p) Contributions made by or on behalf of employees to cafeteria
plans and profit sharing plans;
(q) Income deemed taxable per Federal Code Section 89 or its
(r) Ordinary gains reported on Federal Form 4797 or its substantial
(s) Punitive damages on account of personal injury;
(t) Hobby income
(5) Vacation, sickness, or any other types of payments made under a
wage or salary continuation plan including ‘sub pay’ received from a
union or other third party in lieu of wages during periods of
absence from work are taxable when paid. Payments made by an employer to
an employee during periods of absence from work are taxable when paid and
at the tax rate in effect at the time of payment. Sick leave or sick pay,
disability pay, vacation pay, terminal pay, supplemental unemployment pay,
and severance pay may not be excluded from taxable income.
Payments made to an employee under a wage continuation plan, either
directly or by an insurance company or another third party may not
be excluded from taxable income. Such payments are attributable to the
city of employment.
(6) 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 compensation shall be included in
earnings at fair market value.
(7) Group term life insurance protection not paid by the employee or if
the coverage paid by the employer exceeds $50,000.00.
(8) Stock options given as compensation. When exercised, regardless of
the treatment by the Internal Revenue Service, the employer is
required to withhold on the difference between the fair market value and
the amount paid by the employee.
Employers must withhold municipal income tax on the exercise of stock
options (qualified or nonqualified) if the employee acquired the option as
compensation or in lieu of wages.
(9) Losses from the operation of a business or profession are not
deductible from employee earnings. Rental and business losses may not be
used to offset wage income.
(10) 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 taxable compensation.
(11) Intrastate, over-the-road drivers and others with similar
situations reporting to a terminal, office, etc. in a member community
must have a minimum of 25% of wages withheld and allocated to the city
where their terminal, office, etc. is located.
(12) Income generated from any illegal Federal, State or municipal
3:02 Non-Resident Employee
(A) In the case of individuals who are not residents of the Village there
is imposed under the ordinance, a tax on all salaries, wages, commissions
and other compensation earned and received, earned and accrued, or
earned and deferred on and after the effective date of the ordinance
for work done or services rendered or performed within the Village whether
such compensation or remuneration is received or earned directly or
through an agent and whether paid in cash or in property. The location of
the place from which payment is made is immaterial.
(B) The items subject to tax under the rate and income taxable section
of the ordinance are the same as those listed and defined in Article
3:01(B) hereof. For the methods of computing the extent of such work or
services performed within the Village, in cases involving compensation for
personal services partly within and partly without said Village, See 8:02
3:03 Resident Unincorporated Business
(A) In the case of resident unincorporated businesses, professions,
enterprises, undertakings or other activities conducted, operated,
engaged in, prosecuted or carried on, irrespective of whether such taxpayer
has an office or place of business in his resident community, there is
imposed an annual tax on the net profits earned during the effective period
of the ordinance attributable to the resident community determined by
the separate accounting method or formula provided for in Article 4:00
hereof, derived from sales made, work done or services performed or rendered
and business or other activities conducted in a resident community.
(B) The tax imposed on resident associations or other unincorporated
entities is upon the entities rather that 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 3:04 hereof.)
(C) The tax imposed by the income tax ordinance is imposed on all
resident unincorporated entities having net profits attributable to the
resident community under the method of allocation provided for in the
ordinance, regardless of where the owner or owners of such resident
unincorporated business entity reside.
(D) Resident unincorporated entities owned by one or more persons all of
whom are residents of the same Village and having all income
allocable to said community or having any income allocable to other
municipalities not levying a similar tax, shall disregard the method of
allocation provided for in the ordinance and pay to the resident community,
the tax on the entire net profits thereof. Payment of the tax by the entity
on the entire net profits thereof shall constitute payment of all the tax
due from the owners or members thereof on their distributive shares of the
entity net profits.
3:04 Resident’s Distributive Share of Profits of a Resident Unincorporated
Business Entity, Not Attributable to Resident Village.
In the case of a resident individual who is a member, partner, shareholder
owner or part owner of a resident unincorporated entity, there is imposed an
annual tax on such individual’s distributive share of net profits earned
during the effective period of the tax ordinance not attributable to the
resident community under the method of allocation provided for in the tax
ordinance, and not taxed against the entity by such resident community.
Provided, however, if any portion thereof is allocable to another Village,
credit for tax due or paid to such other Village shall be claimed in
accordance with Article 11:00 hereof.
3:05 Non-Resident Unincorporated Businesses
(A) 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 on
the net profits earned during the effective period of the ordinance
attributable to the entity’s Village under the formula or
separate accounting method provided for in the ordinance.
(B) The tax imposed on non-resident unincorporated entities is upon the
entities rather than the individual members or owners thereof,
irrespective of where the members or owners reside. (For tax on that part
of a resident owner’s distributive share of net profits not taxed
against the entity, see 3:06 hereof.)
3:06 Resident’s Distributive Share of Profits of a Non-Resident
Unincorporated Business Entity Not Attributable to Resident Community. (See
11:00 for credits.)
In the case of a resident individual who is a member, partner, owner or
part owner of a non-resident unincorporated entity, there is imposed an annual
tax on such individual’s distributive share of net profits earned during the
effective period of the tax ordinance not attributable to the owner’s
resident community under the method of allocation provided for in the
ordinance. Provided, however, that such resident shall be entitled to credit
for tax paid to another taxing municipality in accordance with Article 11:00
(A) In the case of C Corporations, whether domestic or foreign and
whether or not such corporations have an office or place of business in the
Village, there is imposed an annual tax on the net profits earned during
the effective period of the ordinance attributable to said Village under
the formula or separate accounting method provided for in the ordinance.
(B) In determining whether a C Corporation is conducting a business or
other activity in the Village, the provisions of Article 4:00 of these
regulations shall be applicable.
(C) C Corporations which are required by the provisions of Section
5727.38 to 5727.41 of the Ohio Revised Code 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 from their net profits
for that taxable year. 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.
3:08 Effective Period of Tax
(A) The tax imposed by the rate and income taxable section of the
ordinance shall be levied, collected and paid with respect to salaries,
wages, bonuses, incentive payments, commissions, fees, other income and
other compensation earned during the effective period of the ordinance.
(B) The tax imposed by said rate and income taxable section of the
ordinance, with respect to net profits of trade, businesses, professions,
enterprises, undertakings and other activities is on the net profits
earned during the effective period of the ordinance.
In amplifications of the definition contained in Article 2:00 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 in 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 (provided such method does not conflict with any provisions of
3. Income from patents and copyrights is not to be included in net
profits subject to the tax.
All ordinary and necessary expenses of doing business, including
reasonable compensation paid employees, shall be allowed but no
deduction may be claimed for salary, payment, or withdrawal of a
proprietor or of the partners, members, or other owners of an
unincorporated business or enterprise, when such salaries, payments
or withdrawals are not required to be reported as wages for Federal
Income Tax purposes on Federal Form W-2.
(a) 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 by insurance or otherwise, of
property used in the trade or business, but the amount may not exceed
that recognized for Federal Income Tax purposes. 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.
(b) Current amortization of emergency facilities under the provision
of the Internal Revenue Code, if recognized as such for Federal Income
Tax purposes, may be included as a deduction expense thereunder.
(c) Where depreciable property is voluntarily destroyed only the cost
of such demolition and the un-depreciated balance thereof will be allowed
as an expense in the year of such demolition, to the extent allowable
for Federal Income Tax purposes.
(d) Bad debts of a reasonable amount may be allowed in the year
ascertained worthless and charged off, or 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
(e) 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. The following taxes are not deductible from income:
(1) the tax under the ordinance;
(2) Federal, State or other taxes based upon income;
gift, estate or inheritance taxes; and
taxes or assessments for direct benefits or improvements to
property that tend to appreciate the value thereof.
(f) In general, non-taxable income and expenses incurred in
connection therewith are not to be considered in determining net
(g) If the taxpayer reports income that is non-taxable under the
ordinance and such amounts are deducted in order to reconcile the
Village’s tax return with the taxpayer’s Federal Income Tax
return, expenses attributable to this non-taxable income shall not
be allowed. In the absence of records showing the actual expenses
attributable to such non-taxable income, and upon approval of the
Administrator, such amount shall be deemed to equal five percent of
such non-taxable income.
(h) Corporate contributions not to exceed five percent of the
taxable income before the deduction is made to qualified charitable
organizations recognized as such by the Internal Revenue Service
will be permitted as a business expense.
(i) 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 and/or real
property used in business, in excess of book value, shall be
treated as taxable income under the ordinance to the extent of
depreciation allowable under the ordinance. The balance shall be
treated as capital gain. Gains or losses from involuntary conversion
shall not be taken into consideration in arriving at net
ARTICLE 4:00 Determination of Allocation of Tax
A request to change the method of allocation must be made in writing and
submitted to the Administrator before the end of the taxable year.
4:01 Separate Accounting Method
A. The net profits allocable to the Village from business, professional,
or other activities conducted in said Village by corporations or
unincorporated entities (whether resident or non-resident) shall be
determined from the records of the taxpayer if the taxpayer has bona
fide records which disclose with reasonable accuracy what portion of his net
profits is attributable to that part of his activities conducted within said
If the books and records of the taxpayer are used as the basis for
apportioning net profits rather than the business allocation formula, a
statement must accompany the return explaining the manner in which such
apportionment is made in sufficient detail to enable the Administrator to
determine whether the net profits attributable to the Village are
apportioned with reasonable accuracy.
C. In determining the income allocable to the Village from the books and
records of a taxpayer an adjustment may be made for the contribution made to
the production of such income by headquarters activities of the taxpayer,
whether such headquarters is within or without said Village.
4:02 Business Allocation percentage Method (To be used if unable to
conform to Article 4:01 hereof.)
A. Step 1:
Ascertain the percentage which the average net book value (the
total cost of an asset less accumulated depreciation, as reported by the
entity for Federal Income Tax purposes) of real and tangible
personal property, including leasehold improvements, owned or used in
the business and situated within said Village is of the average net book
value of real and tangible personal property, including leasehold
improvements, owned or used in the business wherever situated, during
the period covered by the return. Average net book value of property may
be computed on a monthly, quarterly, semi-annual, or annual basis,
provided such method is consistently followed each year.
1. The percentage of the taxpayer’s real and tangible
personal property within the Village is determined by dividing
the average net book value of such property within the Village
(without deduction of any encumbrances) by the average net book value of
all such property within and without the Village. In determining
such percentage, property rented to the taxpayer as well as real and
tangible personal property owned by the taxpayer must be
(a) The net book value of real and tangible personal property
rented by the taxpayer shall be determined by multiplying gross
annual rents as deducted for Federal Income Tax purposes by
(b) Gross annual 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:
(1) Any amount paid for the use or possession of real and
tangible personal property or any part thereof, whether
designated as a fixed sum of money or as a percentage of sales
profits or otherwise.
(2) Any amount paid 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
B. Step 2:
Ascertain the percentage which the total wages, salaries,
commissions, other income and other compensation of employees
within the Village is of the total wages, salaries, commissions, other
income and other compensation of all the taxpayer’s employees
within and without the Village during the period covered by the
(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, other income, 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 taxable
income or loss of the taxpayer.
(3) In the case of an employee who performs services both within and
without the Village, the amount treated as compensation for
services performed within the Village shall be deemed to be:
(a) In the case of an employee whose compensation depends
directly on the volume of business secured by him, such as a
salesman on a commission basis, the amount received by him for the
business attributable to his efforts within the Village.
(b) In the case of an employee whose compensation depends
on other results achieved, the proportion of the total compensation
received which the value of his services within the Village
bears to the value of all his services.
(c) In the case of an employee compensated on a time basis, the
proportion of the total amount received by him for time worked within
the Village to his total working time.
C. Step 3:
Ascertain the percentage which gross receipts or sales of the
taxpayer derived from sales made and services rendered in the
Village is of the total gross receipts or sales wherever derived
during the period covered by the return, (i.e. line 1 of the entity’s
Federal Tax Return as filed). See Article 4:03 and 4:04 hereof.
Income not taxable and deducted on Schedule X is not to be included in
4:03 Sales made in the Village
A. All sales made through retail stores located within the Village
to purchasers within or without said Village except such of said sales to
purchasers outside of the Village that are directly attributable to regular
solicitations made outside the Village personally by the taxpayer’s
B. All sales of tangible personal property delivered to purchasers within
the Village if shipped or delivered from an office, store, warehouse,
factory, or from any other place of business or place of storage
located within the Village.
C. All sales of tangible personal property delivered to purchasers within
the Village even though transported from a point outside of the
Village if the taxpayer is regularly engaged through its own employees in
the solicitation or promotion of sales within the Village and the
sale is directly or indirectly the result of such solicitation.
D. All sales of tangible personal property shipped from an office, store,
warehouse, factory or from any other place of business or place of
storage within the Village to purchasers outside of the Village
if the taxpayer is not, through its own employees, regularly engaged in the
solicitation or promotion of sales at the place of delivery.
All solicitation of customers outside of the Village by mail, telephone,
fax, electronic mail or other electronic media from an office or place of
business within the Village shall be considered a solicitation of sales
within the Village.
E. Charges for work done or services performed incident to a sale,
whether or not included in the price of the property shall be considered
gross receipts from such sales.
F. In the application of the foregoing subparagraphs a carrier shall be
considered the agent of the seller regardless of the freight on board point
or other conditions of the sale; and the place at which orders are accepted
or contracts legally consummated shall be immaterial.
4:04 Total Allocation
A. Step 4:
Add the percentage determined in accordance with Steps 1, 2 and 3 in
Articles 4:02 and 4:03 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 added in ascertaining
said total. The result so obtained is the business allocation
percentage. In determining the average percentage, however, if one of
the factors, (property, receipts or payroll) is not applicable,
the other two percentages are added and the sum is divided by two, and
if two of the factors are not applicable the remaining percentage
is the business allocation percentage.
B. Step 5:
The business allocation percentage determined in Step 4 above shall
be applied to the entire taxable net profits of the taxpayer wherever
derived to determine the net profits allocable to the Village.
C. Substitute Method
(a) In the event a just and equitable result cannot be obtained under
the formula, the Board of Review, upon application of the
taxpayer or the Administrator, 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 of Review to substitute other
factors in the formula or to use a different method to allocate net
profits must be made in writing not less than sixty days 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 Administrator 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 file until given permission to change. In the event a substitute
method of allocation is authorized, a statement should be attached to
each annual return indicating that the allocation is in conformity with
the ruling and setting forth the date of the ruling.
4:05 See Article 5:00 Rentals From Real Property
4:06 Operating Loss Carry Forward
A. The portion of loss based on income taxable under the ordinance,
sustained in any taxable year subsequent to the effective date of
the income tax ordinance, and allocable to the Village may
be applied against the portion of the profit of succeeding year(s)
allocable to said Village until exhausted, but in no event for more than
five years. No portion of a net operating loss shall be carried back
against net profits of prior years.
The loss may continued to be carried forward in subsequent years only
when in each year following that in which the loss occurred the taxpayer
has offset the profits of such years up to the entire amount of such
profit by the amount of carry forward loss needed to offset such profit.
Any amount of carry forward loss not so used is lost for subsequent
When succeeding losses are experienced, the first year loss
can be carried forward for five years, and the second, third, etc. need
not be claimed until the first year loss has been used up.
However, even in such cases the five-year limitation is followed.
B. In the event net profits are allocated both within and without the
Village, the portion of net operating loss sustained shall be allocated
to the Village in the same manner as provided therein for
allocating net profits to said Village. 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.
C. 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
in such fiscal year.
1. A short fiscal year (fiscal year of less than twelve 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 Village for less than his full accounting period, shall be
considered as a full taxable fiscal year.
D. In any return in which a net operating loss deduction is claimed,
a schedule should be attached showing:
1. Each year in which the net operating loss was
2. Method of accounting and allocation used to determine portion of
net operating loss allocable to the Village.
3. Amount of net operating loss used as a deduction in prior years.
4. Amount of net operating loss claimed as a deduction in the
E. The five year loss carry forward will not be allowed unless all
Net Profit tax returns for the business have been timely filed.
Individuals with Federal Schedule C income, and/or Federal Schedule
K-1 income, and/or Federal Schedule E rental income must also timely
file all municipal income tax returns prior to taking a loss carry
forward. Any loss carry forward will be disallowed if all municipal
income tax returns were not timely filed.
F. Loss from one Village may never be used to offset a gain in
Partnership and S Corporation distributive share losses are not
deductible from an individual’s rental or sole proprietorship income.
G. The net operating loss of a business which loses its identity
through merger, consolidation, etc., shall be allowed as a carry forward
loss deduction to the surviving business entity to the extent permitted
by the Internal Revenue Code.
H. In the case of a net operating loss in the filing of consolidated
returns, see Article 7:04 hereof.
ARTICLE 5: Rentals from Real Property
A. Rentals received by the taxpayer are to be included in the computation of
net profits from business activities only if and to the extent that the rental,
ownership, management or operation of the real estate from 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. Where the gross monthly rental of any real properties, regardless of
number and value aggregate in excess of (see rental schedule) per month in any
one month of a taxable year, it shall be prima facie evidence that the rental,
ownership, management or operation of such rental properties shall be subject to
tax; provided that in case of commercial property, the owner shall be considered
engaged in a business activity when the rental is based on a fixed or
fluctuating percentage of gross or net sales, receipts or profits of the lessee,
whether or not such rental exceeds (see rental schedules) per month; provided,
further, that in the case of farm property, the owner shall be considered
engaged in a business activity when his shares in crops or net income
exceed (see rental schedule) per month; and provided, further that the person
who operates a licensed rooming house shall be considered in business whether or
not the gross income exceeds (see rental schedule) per month.
1. The test of whether rental income constitutes a business activity is
determined by the property or properties without regard to the number of
registered owners of property. The tax is then imposed against the business
entity and not the separate owners (e.g., when husband and wife own
properties, under no formal agreement, which yields in excess of (see rental
schedule) in any month of the taxable year, one tax return must be
filed that includes the tax liability for all of the properties so
C. 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.
D. Rentals received by a taxpayer engaged in the business of buying and
selling real estate shall be considered as part of business income.
E. Real property, as the term is used in this regulation, shall include
commercial property, residential property, farm property, oil and gas wells,
easements, licenses, concession agreements, and any and all other types of real
F. In determining the taxable income from rentals, the deductible expenses
shall be of the same nature, extent and amount as allowed by the Internal
Revenue Service for Federal Income Tax purposes. Passive losses as defined by
Internal Revenue Service Code are not deductible in this determination.
G. Owners of rental property who are non-residents of a taxing community,
whether individuals or business entities, are subject to tax only on the income
from real property located in said Village and, in determining whether gross
monthly rentals exceed Village limits (see rental schedule) shall take into
consideration only the income from such properties located within said Village.
H. Owners of rental property who are residents of the Village are subject to
tax on the net income from rentals (to the extent above specified), regardless
of the location of the real property owned excepting that, if any such property
is located in and subject to a municipal income tax by another taxing
municipality credit shall be claimed for tax due or paid such other taxing
municipality in accordance with Article 11 hereof.
I. Owners of rental property who are residents of said Village may offset net
losses against net profits from all rental property located within said Village
and any other municipality which does not levy a similar tax. Net profits and
losses from one Village property and/or property in a nontaxing municipality may
not be combined with net profits and losses in other municipalities levying a
J. Owners of rental property who are not residents of the Village that the property is located in may offset net losses against net profits only
between rental properties located in said Village.
K. Associations and corporations and any other form of business
entity engaged in the business of owning or managing real estate are taxable
only on the portion of income derived from property located in the Village.
L. Any person receiving rental income from any property, irrespective of the
rental amount limitation, must file a return whether or not there is any tax
ARTICLE 6: EXCEPTIONS
6:01 Income, Members of Armed Forces and Certain Institutions
A. All military pay and allowances of any member of the Armed Forces and
of any member of the respective components of the Armed Forces of the United
States, including the Ohio National Guard, for active duty as defined by
Federal law is exempt from the tax imposed by the ordinance. This
exemption includes not only the military pay and allowances received by the
members themselves, but also military pay and allowances, such as dependency
allowances, received by another person by reason of the member’s service.
Any bonus or additional compensation paid to a person by the United States,
State of Ohio, or any other state for active duty in the Army, Navy,
or Air Force, shall also be exempt from tax. Income received on account
of inactive duty is taxable.
B. The income of religious, fraternal, charitable, scientific, literary
or educational institutions is exempt from the tax imposed by the ordinance
to the extent that such income is derived from tax exempt real estate, tax
exempt tangible or intangible property or tax exempt activities. The income
and profits of organizations exempt from Federal Income Tax under Section
501(a) of the Internal Revenue Code shall be exempt from taxation under the
C. Income received by the Federal government, its agencies, the State or
its agencies or political subdivisions shall be exempt from taxation under
6:02 Payments From Governments and Certain Organizations
A. Payments for the relief of poverty, unemployment insurance benefits,
old age pensions or similar payments, including permanent disability
benefits, received from local, state, or federal governments or charitable,
religious or educational organizations are exempt from the tax imposed by
the ordinance. The exempted benefits include all types of payments and
allowances made or given by such governments or organizations for the relief
or correction of poverty, unemployment, delinquency, problems of health or
advanced age, lack of education and similar problems. The exempted benefits
include, for example, aid to dependent children and the aged; rent, food and
clothing allowances or subsidies; job training allowances; Social Security
and Medicare benefits; and workmen compensation benefits.
B. Salaries and wages not considered received by the individual member
but by the religious order of organization under a vow of poverty are exempt
from the tax imposed by the ordinance. Housing allowances for clergy
to the extent that the allowance is used to provide for a home are exempt
from the tax imposed by the ordinance.
6:03 Insurance and Annuity Proceeds, Certain Employee Benefits and Gifts.
A. The following additional items are specifically exempted from the
tax imposed by this ordinance:
(1) Proceeds of insurance paid by reason of the death of the insured;
(2) Distributions from pension plans reported to the payee on Federal
Form 1099-R or substantive equivalent;
(3) Death benefits made to the beneficiary of an employee; disability
benefits (not under a wage continuation plan), the proceeds of health
and accident insurance and similar benefits received by a retired
employee (or to the beneficiary of an employee) after the employee has
reached the employer’s minimum retirement age, and that are reported
on Federal Form 1099-R or its substantive equivalent;
(4) Annuities not in the nature of compensation for services
(5) Inheritance, bequest of cash or property received under a will or
under the Statute of Descent and Distribution;
(6) Scholarships and student grants-in-aid, but not fellowships
described in Article 3:01 (B)(4)(f) hereof;
(7) Compensation not exceeding $1,000.00 annually for serving as a
precinct election official;
(8) Compensation paid to an employee of a transit authority, regional
transit authority or regional transit commission created under Chapter
306 of the Ohio Revised Code for operating a transit bus or other motor
vehicle for the authority or commission in or through the municipal
corporation, unless the bus or vehicle is operated on a regularly
scheduled route, the operator is subject to such a tax by reason of
residence or domicile in the municipal corporation, or the headquarters
of the authority or commission is located within the municipal
(9) Religious offerings, which are goodwill offerings made by individuals
for performance of religious ceremonies such as baptisms, weddings,
funerals, etc. received by clergy are considered unearned income and are
(10) Gifts not in connection with services rendered or work performed
B. The following items are not exempt from the tax imposed by the
ordinance (this an not an exhaustive list):
(1) Benefits under a wage continuation plan;
(2) Deferred compensation of any kind, whether deferred under a
retirement plan or under any other type of compensation arrangement or
contract, including any qualified or nonqualified deferrals made by an
employer or the employee or both;
(3) Supplemental unemployment benefits;
(4) Payments for longevity;
(5) Severance pay;
(6) Disability benefits paid prior to the employee attaining the
employer’s minimum retirement age (considered sick pay and not
(7) Contributions to S.T.R.S and P.E.R.S. made on behalf of a public
employee by a public employer (‘picked up on behalf of an employee’)
are not excludable from gross income and are subject to withholding
6:04 Receipts of Certain Organization and Associations
Receipts from seasonal or casual entertainment, amusement, sports events
and health and welfare activities, when any such are conducted by
governmental, charitable, religious or educational organizations or
associations (and receipts are payable to the organization
or association) are exempt from the tax imposed by the ordinance. This
exemption refers only to the receipts of the organization payable to the
organization and not to the compensation of employees. (Promoters see Article 8.02, Entertainers)
Alimony received is exempt from the tax imposed by the ordinance. Support
payments made by one spouse for the benefit of the other spouse or children
in connection with any divorce or separation, whether or not awarded by the
court, shall be deemed alimony for purposes of this exemption.
6:06 Natural Persons Under Age 18
Personal earnings of any natural person under 18 years of age are exempt
from the tax imposed by the ordinance.
6:07 Personal Injuries and Damage to Property
Compensatory damages from personal injuries or for damages to
property by way of insurance or otherwise are exempt from the tax
imposed by the ordinance. Punitive damages are not exempt from taxation.
6:08 Interest, Dividends and Other Revenue From Intangible Property.
Income from intangibles by way of dividends, interest and such other
intangible income subject to taxation under the intangible personal
property laws of the State of Ohio or specifically exempt from municipal
taxation under said law are exempt from the tax. Distributive share
income from S Corporations is treated the same as income from a
partnership and is not considered intangible income and is not exempt from
6:09 Involuntary Conversion and Other Exemptions
Gains from involuntary conversion, cancellation of indebtedness to the
extent exempt from Federal Income Tax, interest on Federal obligations,
items of income already taxed by the State of Ohio which the Village is
specifically prohibited from taxing, and income of a decedent’s estate
during the period of administration (except income from the operation of a
business) are exempt from the tax imposed by the ordinance.
6:10 Taxation Prohibited by the Federal Government
Salaries, wages, commissions, other compensation, other income and net
profits, the taxation of which is prohibited by the United States
Constitution or any Act of Congress limiting the power of the States or
their political subdivisions to impose net income tax on income derived from
interstate commerce, are exempt from the tax imposed by the ordinance.
6:11 Taxation Prohibited by the State of Ohio
Salaries, wages, commissions and other compensation, other income and net
profits, the taxation of which is prohibited by the Constitution of the
State of Ohio or any act of the Ohio General Assembly limiting the power of
a municipality to impose net income taxes, are exempt from the tax imposed
by the ordinance.
No person or item of income shall be exempt from the imposition of
this income tax unless specifically excluded or exempted by the laws of the
United States or the State of Ohio, the municipality’s ordinance or
these Rules and Regulations. Upon request of the Administrator, any
person who claims exemption from tax under the ordinance shall provide
detailed information to show the basis of such claim. The information shall
be furnished on a form supplied by the Administrator and be returned within
thirty days after receipt of the request.
ARTICLE 7:00 RETURNS
7:01 Dates and Requirements For Filing
A. On or before April 30th of the year following the effective
date of the ordinance and on or before April 30th of each year
thereafter, every person subject to the rate and income taxable provisions
of the ordinance shall, except as herein provided, make and file with the
Administrator, a return on a form prescribed by and obtainable upon request
from the Administrator, whether or not a tax is due.
B. If a return is made for a fiscal year or any period less than a year,
said return shall be made within four months from the end of each fiscal
year or other period.
C. Every person subject to the provisions of the rate and income taxable
section of the ordinance shall, except as herein provided, file a return
setting forth the aggregate amount of salaries, wages, commissions and other
income, net profits from business or other activities, including the rental
from use of real and tangible personal property, and other income taxable
under the ordinance, for the period covered by the return and such other
pertinent facts and information in detail as the Administrator may require.
D. Where an employee’s entire taxable earnings for the tax period are from
an employer or employers, and the current rate of tax thereon has in each
instance been withheld and deducted by the employer or employers from the
gross amount of the entire taxable earnings of such employee, and where the
employer or employers of such employee filed a report or return in
which such employee’s entire taxable earnings were reported to the
Administrator and the tax so withheld paid to the Administrator, and where
such employee has no taxable income other than such earnings; such employee
need not file a return with the employment city. The exception to this rule
is the filing requirements of the community of residence. (see
E. An individual taxpayer who is permitted for Federal Income Tax
purposes to deduct certain business expenses from gross wages, salaries, or
commissions, may file a copy of Federal Income Tax Form 2106 or its
equivalent form, or an itemized statement of expenses with the municipal
income tax return, claiming only deductions allowable to the same extent
allowed as deductions for Federal Income Tax purposes, no matter whether
all or part of such wages, salaries, or commissions are subject to
F. City income tax withheld on moving expenses reimbursed by the employer
for transport, storage, travel or lodging expenses and so indicated
on Federal Form W-2, Federal Form 3903 or its equivalent form,
are taken into consideration when refunds are requested.
G. Except as otherwise provided, a return must be filed by an employee
who has taxable income not subject to withholding under the ordinance.
H. Any taxpayer having income, wages or other compensation, or other
income for which a return must be filed, and also having net profits
from a business, may report the wage income, other compensation, other
income and business operation income on the same return. However,
business losses cannot be offset against wage or other non-business
income. Losses are to be treated in accordance with Article 4:06 of these Rules
and Regulations and the applicable ordinance.
I. Except as otherwise provided, the tax is imposed on the unincorporated
business, partnership, or association as an entity, whether resident or
non-resident, and a return is required disclosing the net profits allocable
to the Village and tax paid thereon. However, any owner or partner of an
unincorporated business is required to file a return and pay the tax thereon
to his community of residence on such income allocable outside of the
Village and not previously subject to tax by the taxpayer’s residence
community in accordance with Articles 3:04 and 3:06 hereof.
J. Trustees of a trust and executors and administrators of estates having
taxable income are required to file a return and pay the tax thereon.
K. Unreimbursed moving expenses reported on Internal Revenue Service Form
3903 or its equivalent are deductible to the extent allowed under Federal
guidelines. Form 2106 business expenses are deductible as to the extent
allowed under Federal guidelines.
7:02 Information Required and Reconciliation With Federal Returns.
A. 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,
other income, taxable net profits and other pertinent information as the
Administrator may require.
B. Where figures of total income, total deductions, and net profits are
included as shown by a Federal return, then any items of income that are not
subject to municipal income tax and any unallowable expenses
shall be eliminated in determining net income subject to municipal tax. The
fact that a taxpayer is not required to file a Federal tax return
does not relieve him from filing a municipal income tax return provided he
has income as defined in the rate and income taxable provisions of the
C. If a change in Federal income tax liability, as finally determined by
the Internal Revenue Service, or by a judicial decision, results in an
additional amount of tax payable to the Village, a report of such
change shall be filed by the taxpayer within three months from the final
determination of the Federal tax liability. See Article 10:01 hereof.
D. If a change in Federal income tax liability results in a reduction of
taxes owed and paid to the Village, a claim for refund shall be filed with
the Administrator as prescribed in the refunds and overpayments sections of
the ordinance and Article 10:02 of these Rules and Regulations.
E. Where the credit is claimed for taxes due or paid another taxing
municipality the amount of such credit shall be determined and claimed in
accordance with Article 11 hereof.
F. Every taxpayer must retain records necessary to compute his tax
liability or to justify an exemption certificate for a period of five
years from the date the return is filed or the taxes withheld are paid,
whichever is later.
Upon written request of the taxpayer made on or before the date for
filing the return, and for good cause shown, the Administrator may extend
the time for filing such return for a period not to exceed six months, or to
one month beyond any extension requested of or granted by the Internal
Revenue Service. Whenever he deems necessary, the Administrator may require
a tentative return accompanied by the payment of the estimated taxes. 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 all other filing and
payment requirements of the ordinance have been met. In any event, such
payments made after the due date shall be subject to interest charges as
provided in Article 9 hereof or as provided by ordinance. The
Administrator will honor a copy of the Federal automatic extension of time.
If any additional time is requested Form CCA 120-26 must be submitted for
7:04 Consolidated Returns
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.
A. Consolidated returns may be filed by a group of corporations who are
affiliated through stock ownership and who file as a consolidated group
for Federal Income Tax purposes. 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 that are so affiliated, along with all required schedules and
amount and manner of determining income subject to municipal income tax.
B. Once a consolidated return has been filed for any taxable year, the
consolidated group must continue to file consolidated returns in subsequent
1. Permission in writing is granted by the Administrator to file
separate returns; or
2. 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
3. A corporate 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.
Members of a group filing consolidated returns who begin to file separate
returns under one of the provisions contained herein shall indicate on their
separate returns the change in status and identify the previous consolidated
C. 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 each subsidiary 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
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.
D. In determining the allocation fraction where a corporation becomes a
member of the group or ceases to be a member of the group during a 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 eight (8) times the annual rent. The
gross receipts and wage fractions shall be based on the actual figures.
E. All subsidiary corporations must agree in writing to the filing of the
consolidated return, in accordance with Federal Income Tax guidelines,
as they will be liable for the tax as well as will be the parent
F. The net operating loss carry forward of a corporation which filed a
separate return in a prior year may be carried over to a consolidated return
year to the extent permitted by the Internal Revenue Code, but not to exceed
the limitation of the operating loss carry forward provisions of the
For purposes of this rule, to the extent that the loss can only be
carried forward to the same corporation’s taxable net income, the net
income attributable to the Village in a year a loss is being utilized
shall be computed by using only the same corporation’s net income and
G. 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.
H. 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 that are
eliminated in consolidation will not be taken into consideration in
determining non-taxable income.
7:05 Allocation of Net Profits By Administrator
In case of a corporation that carried on transactions with its stockholders
or with other corporations related by stock ownership, interlocking
directorates, or some other method, or in the case of an
entity that operates a division, branch, factory, office, laboratory or
activity within a Village constituting a portion only of its total business,
the Administrator shall require such additional information as he may deem
necessary to ascertain whether net profits are properly allocated to a
If the Administrator finds that net profits are not properly allocated to
the Village by reason of transactions with stockholders or with other
corporations related by stock ownership, interlocking directorates, or
transactions with such divisions, branches, factory, office, laboratory or
activity or by such other method, he shall make such allocation as he deems
appropriate to produce a fair and proper allocation of net profits to the
7:06 Amended Returns
A. 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 the
ordinance. Such amended return shall be on a form obtainable on
request from the Administrator. A taxpayer may not change the method of
accounting or apportionment of net profits after the due date for filing the
B. Within three months from the final determination of any Federal tax
liability affecting the taxpayer’s municipal tax liability, such taxpayer
shall make and file an amended municipal income tax return showing income
subject to the municipal income tax based upon such final determination of
Federal tax liability, and pay any additional tax shown due thereon or make
claim for refund of any overpayment.
ARTICLE 8:00 PAYMENT OF TAX
8:01 Payment With Return
A. The payment due at the time of filing the return shall be the amount
of the tax:
1. withheld by the employer from employee wages pursuant to the
provisions of the ordinance;
2. the amount due on a declaration of estimated income tax after taking
into consideration any overpayment of previous years’ tax which has not
been otherwise applied, less amounts paid previously on said declaration.
B. Except as otherwise provided, should the return indicate an
overpayment of the tax to which the Village is entitled under the provisions
of the ordinance, such overpayment may be applied against a subsequent
liability or at the election of the taxpayer and so indicated on the return,
such overpayment (or portion thereof) shall be refunded. See Article 10
hereof. Provided however, that no additional taxes or refunds of less than
One Dollar ($1.00) shall be collected or refunded (see applicable
C. Whenever the ordinance or these regulations require filing a return or
payment of tax to the Administrator, or to the Village, such returns and/or
payments for the municipalities in the Central Collection Agency
shall be made directly to The Central Collection Agency, 1701 Lakeside
Avenue, Cleveland, OH 44114, or, if instructed, to the Village of Grand
Rapids, PO Box 309, Grand Rapids, Ohio 43522.
8:02 Withholding Collection at Source
A. It is the duty of each employer who employs one or more persons on a
salary, wage, commission, or other compensation basis to deduct each time
any such compensation is paid to or earned and deferred by an
employee subject to the ordinance, the tax at the current rate from such
salary, wage, bonus, incentive payment, commission or other compensation due
by said employer to said employee, together with the tax at the current rate
from the tips or gratuities reported to said employer by each said
employee for Social Security, Medicare or Federal Income Tax purposes and
shall make a return and pay to the Administrator the amount of taxes so
1. The tax shall be calculated on the gross amount of all salaries,
wages, bonuses, incentive payments, commissions or other form of
compensation paid to or earned and deferred by an employee who is
a resident of the Village regardless of the place where the services
2. The tax shall be calculated on the gross amount of all
compensation paid to or earned and deferred by an employee who is a non-resident of the employment community for services
rendered, work performed, or other activities engaged in to earn such
compensation within said employment community.
3. Employers are required to withhold on the value of non-cash
compensation such as the value of an employee’s personal use of a
vehicle owned or leased by an employer.
B. All employers within or doing business within a Village 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 the Village were
performed at a place of business of any such employer situated outside said
Employers who do not maintain a permanent office or place of business in
the Village, but who are subject to tax on net profits under the ordinance,
are considered to be employers within the Village subject to the
requirement of withholding.
C. The mere fact that tax is not withheld will not relieve the employee
of the responsibility of filing a return and paying the tax on the
D. All individuals, businesses, employers, brokers or others doing
business who engage persons, either on a commission basis or as independent
contractors, sub-contractors, or contract employees who are not
subject to withholding shall indicate the total amount of earnings,
payments, commissions and bonuses to residents of the Village (or
to non-residents who do business in the Village) on copies of Federal
Form 1099 or successor form, or shall attach a list which shall
indicate social security numbers, names, addresses and amounts paid.
E. In the case of employees who are non-residents of the Village, the
amount to be deducted is the current rate of tax on the compensation paid or
earned and deferred with respect to personal services rendered in
Where a non-resident receives compensation for personal services,
rendered or performed partly within and partly outside the Village, the
withholding employer shall withhold, report and pay the tax on that portion
of the compensation which is earned within the Village in accordance with
the following rules of apportionment:
1. Employees Compensated on an Hourly, Daily, Weekly, or Monthly Basis.
(a) General Rule
The deduction and withholding shall attach to the personal service
compensation for the exact amount of compensation paid or earned and
deferred for services performed in the Village, when such exact
amount of compensation can be established. When no such exact
determination of amounts earned or derived in the Village is possible,
the income of employees who are compensated on an hourly, daily, weekly
or monthly basis must be apportioned to the Village as follows:
Multiplying the gross income, wherever earned from the employment
which includes employment carried on in the Village, by a fraction, the
numerator of which is the number of days spent working in the Village
and the denominator of which is the total working days (including
holidays, vacation days, sick days and paid or unpaid leave).
The total number of working days should not exceed 260 days, unless
for travel outside the United States. In those cases in which the
employee is required to travel outside of the United States, the total
weekend days in which the employee was required to work while outside of
the United States must be added to both the numerator and the
The result is the amount of the non-resident’s income allocable to
(b) Apportionment Where Employee Performs Services In More Than One
Village Each Day.
In the case of an employee compensated hourly, daily, weekly, or
monthly, who regularly performs services in more than one taxing
community each day, income is apportioned to the Village by multiplying
the gross income, wherever earned, from the employment which includes
employment carried on in the Village, by a fraction, the numerator of
which is the number of hours spent working in the Village and the
denominator of which is the total number of working hours.
If the non-resident is a salesman, agent or other employee whose
compensation on the basis of commissions depends directly on the volume of
business transacted by him, the deduction and withholding shall attach to
the portion of the entire compensation which the volume of business
transacted by the employee within the Village bears to the volume
of business transacted by him within and outside of the Village.
Real Estate Agents
licensed real estate agents who are non-employees or independent
contractors (i.e. non-employee agents, or independent agents) the
municipal income tax is imposed on any income (commission or otherwise)
earned as a result of the sale of real property located within a taxing
community. The tax is imposed
on the agent’s income resulting from the sale of property that is
physically located within the taxing community, regardless of where the
office or offices of the agent is or are located.
For non-resident licensed real estate agents who are employees of a real
estate brokerage or real estate company, the municipal income tax is
imposed on any salary, commission, or other compensation earned, as a
result of the employer’s maintenance of an office in the taxing
4. Over the Road Drivers
Over the road intrastate drivers and other similarly situated employees
reporting to a terminal, warehouse, or office in the Village must have a
minimum of 25% of wages withheld and allocated to the Village.
5. Self-Employed Non-Residents Carrying on a Trade or Business Within
the Village and Elsewhere.
See Article 4:00, et seq., hereof.
6. Professional Athletes.
In the case of employees who are non-resident professional athletes,
the deduction and withholding of personal service compensation shall
attach to the entire amount of compensation earned for games that
occur in the Village. In the case of a non-resident athlete not paid
specifically for the game played in a Village, the following apportionment
formula must be used:
The compensation earned and subject to tax is the total income earned
during the taxable year, including incentive payments, signing bonuses,
reporting bonuses, incentive bonuses, roster bonuses and other extras,
multiplied by a fraction, the numerator of which is the number of
exhibition, regular season, and post-season games the athlete played (or
was available to play for his team, as for example, with substitutes), or
was excused from playing because of injury or illness, in the Village
during the taxable year, and the denominator of which is the total number
of exhibition, regular season, and post-season games which the
athlete was obligated to play under contract or otherwise during the
taxable year, including games in which the athlete was excused from
playing because of injury or illness. For purposes of these Rules and
Regulations, exhibition games include only those games played before a
paying audience, and played against another professional team from the
same professional league.
In the case of non-resident salaried athletic team employees who are
not professional athletes, deduction and withholding shall attach to
personal service income in the manner set forth in Paragraph 1(a), supra.
1.(a) Any person who shall employ or contract for the services of any
entertainer, entertainment act, sports event, promotional booth, special
event, band, orchestra, rock group, theatrical performance, lecturers,
speakers, etc. (this is not an exhaustive list of types of entertainers
required to withhold, report or pay over a municipal income tax) shall be
deemed to be an employer and shall, for purposes of the collection of the
income tax, be required to withhold, report and pay over to the
Administrator the tax at the applicable rate on the gross amount so paid
on the completion of the engagement, said reports to be on forms provided
by the Administrator.
(b) Any person who, acting as a promoter, booking agent or employer,
engages the services of or arranges the appearance of any entertainer,
entertainment act, sports event, band, orchestra, rock group, theatrical
performance, etc., in the Village, and who makes any payment
arising from said appearance shall be deemed to be an employer and shall,
for purposes of the collection of the income tax, be required to withhold,
report and pay over to the Administrator the tax at the applicable rate,
on the gross amount so paid on the completion of the engagement, said
reports to be on forms provided by the Administrator.
(c) Any person who rents facilities to any entertainer, entertainment
act, sports event, promotional booth, special event, band, orchestra, rock
group, theatrical performance, etc. for use in performing services
in the Village, and who makes any payment arising from said use of
facilities shall be deemed to be an employer and shall, for purposes of
the collection of the income tax, be required to withhold, report and pay
over to the Administrator the applicable tax at the applicable rate hereof
based on the gross amount so paid on completion of the engagement, said
reports to be on forms provided by the Administrator.
The income of non-resident entertainers is the entire amount received
for performances, engagements or events that occurred in the Village. In
the case of a non-resident entertainer who is not paid specifically for a
performance, the following apportionment formula must be used:
The income earned and subject to the tax is the total annual
compensation multiplied by a fraction, the numerator of which is the
number of performances the entertainer performed (or was available to
perform, as, for example with understudies) in the Village, and the
denominator of which is the total number of performances which the
entertainer was obligated to perform under contract or otherwise during
the taxable year.
8. Excluded Personal Services
The deduction and withholding obligation shall attach in the case of
any personal service compensation for labor or personal services performed
in the Village irrespective of the residence of the employee (or, in the
case of an entertainer, irrespective of the residence of the promoter,
booking agent or lessor), the place in which the contract for the labor or
service was made, or the place or time of payment; except that such
compensation shall be deemed not to be income derived within the Village
(a) the compensation for such labor or services does not exceed a
gross amount of $50.00 in any calendar year; or
(b) there is only occasional entry into a Village by a non-resident
employee who performs the regular duties for which he is employed almost
entirely, or entirely outside of such municipality, but also enters such
municipality for the purpose of receiving instruction, reporting,
accounting, etc. incidental to his duties. This exclusion does not apply
to professional athletes or teams, or to entertainers as defined above.
9. Employee Reports
In apportioning the earnings of an employee, an employer may accept the
written reports of his employee as to any of the items set forth in 1(a),
1(b), 2, 3, and 10 hereof. However, the employer shall be responsible for
any material error in allocation as to employment within a Village.
10. Facts and Circumstances Allocation
If it is impossible to apportion the earnings as provided above,
because of (a) the peculiar nature of the services of the employee or (b)
the unusual basis of compensation, apportionment shall be made in
accordance with the facts and the tax deducted and withheld accordingly.
With respect to each such employee (or group of employees similarly or
identically circumstanced) the employer shall furnish the Administrator a
detailed statement of facts.
F. An employer shall withhold the tax on the full amount of any advances
made to an employee on account of commissions (but not then on the
G. An employer required to withhold the tax on compensation earned by an
employee shall, in determining the amount on which the tax is to be
withheld, ignore any expense 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 commission, and are not deducted as a business
expense by the employee (other than as an offset to an advance or
reimbursement) under Article 3:00 of these regulations.
H. Except as otherwise provided, an employer in the Village is required
to withhold the current tax rate from the compensation earned by
Village residents regardless of where the services compensated for were
performed, except as hereinafter set forth. Any Village employer who employs
a resident of said Village in another taxing municipality in which the
employer is subject to the withholding provisions of both ordinances, shall
withhold and remit tax as follows:
(a) If the rate of tax levied by the other taxing municipality
(employment) is the same as is imposed by the resident Village ordinance,
the employer shall withhold at the current rate of tax on the entire wage
earned and shall remit to such other taxing municipality the full amount
of the tax withheld on the wages earned by such employee. The place of
employment takes precedence over the place of residence.
(b) If the rate of tax levied by the other taxing municipality is less
than the rate imposed by the resident Village ordinance, such resident
Village employer shall withhold at the higher rate of tax on the entire
wage earned by such resident and shall remit to the other taxing
municipality only the tax imposed by this ordinance on the income earned
therein and shall remit the balance of the tax withheld to the resident
(c) If the rate of tax levied by the other taxing municipality is
higher than the rate imposed by the resident Village ordinance, such
resident Village employer shall withhold and remit to such other
municipality its full rate of tax on compensation earned therein by such
non-resident, and remit to the resident Village only the tax withheld on
wages earned other than in such higher taxing municipality.
In instances where the above provisions are applicable, the employer
must advise the respective municipalities in which the employer is subject
to the withholding provisions of the amount of salaries, wages, or other
compensation earned within such municipalities, such information to be
incorporated in a form approved by the Administrator.
I. An employer whose records show that an employee is a non-resident of
the employment Village and has no knowledge to the contrary shall be
relieved of the responsibility of withholding the tax on personal services
compensation paid to such employee for services rendered or work done
outside said Village by such employee, provided, however, that such employer
must withhold the tax on compensation paid such employee after the
Administrator notifies said employer in writing that such employee is a
resident of the employment Village. All employees are required to notify the
employer of any change of residence and the date thereof immediately.
J. No person shall be required to withhold tax on the following payments:
1. Wages or other compensation earned for domestic services
performed by an employee or an independent contractor, in or about
such person’s residence which is the fixed place or abode of an
individual or family or a local chapter of a college fraternity or
a. Domestic services within the exception include services
performed by cooks, waiters, butlers, housekeepers, governesses,
maids, valets, baby-sitters, janitors, laundresses, caretakers,
handymen, gardeners, grooms, and chauffeurs of automobiles for family
b. If a dwelling house is used primarily as a boarding or lodging
house for the purpose of supplying board or lodging to the public as a
business enterprise, it is not a private residence and the wages or
other compensation earned for services performed therein is not within
c. Wages or other compensation for domestic services are not within
the exception if performed in or about rooming, lodging or boarding
houses, clubs, hotels, hospitals, charities, or commercial offices or
2. Wages or other compensation earned for services performed by an
employee in any calendar quarter in which the cash reimbursement is
less than $20.00.
3. Wages or other compensation earned for services performed as an
employee of a foreign government or international organization as
defined by the International Organizations Immunities Act, 22 U.S.C.
4. Wages or other compensation for services in delivery or
distribution of newspapers, shopping news (including handbills and
other similar types of advertising material) or magazines by an
employee under the age of 18.
5. Wages and other compensation earned for services rendered to a
motion picture production company based outside the Village in
connection with the filming of a motion picture on location in the
a. If a motion picture production company based outside the Village
records events on film within the Village for less than 30 days during
a calendar year, such motion picture production company shall be
considered to be on location and within the exception.
b. Any motion picture production company which records events on
film for 30 days or more during the calendar year shall be considered
to be an employer within the Village and not within the exception.
Any employee whose wages or other compensation are exempt from
withholding under this section shall be subject to all of the requirements
of the ordinance and regulations.
8:03 Collection at Source - Return and Payment of Tax Withheld and Status of
A. Every employer is deemed to be a trustee of the Village 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. The
dissolution, bankruptcy, merger or spin-off or reorganization
of any such employer does not discharge an employer’s liability for a
prior failure of such business to file a return or pay taxes due.
An officer, agent or employee of an organization may be prosecuted for an
offense committed by such organization, and shall be jointly and severably
liable to the Village together with the organization for taxes of the
organization’s employees if he acts with the kind of culpability required
for the commission of the offense, and any of the following apply:
(1) in the name of the organization or on its behalf, he engages
in conduct constituting the offense, or causes another to engage in
such conduct, or tolerates such conduct when it is of a type for
which he has direct responsibility;
(2) he has primary responsibility to discharge a duty imposed on the
organization by law, and such duty is not discharged.
The liability of the officer, agent or employee described herein shall
not be discharged by the dissolution, bankruptcy, merger or spin-off or
reorganization of the organization or employer.
Except as otherwise provided, every such employer required to deduct and
withhold the tax at the source is liable directly to the Village for the
payment of such tax, whether actually collected by such employer or not.
Any tax deducted and withheld is to be considered paid to the
Village whether or not the employer actually remits the tax to the
Village, for purposes of determining employee payments or credits.
B. The deduction from salaries, wages and other compensation required to
be made by employers are to begin with compensation earned on and after the
effective dates of the income tax ordinance.
The first return and payment required to be made on account of such
deductions shall be made, filed and paid to the Administrator by the 20th
of the month following the close of the quarter, except as provided for in
subparagraph (a) and (b) hereof.
Monthly reporting and remittances are required by the Village ordinance
when the amount of tax withheld is.
(a) An employer who deducts the tax in the amount as specified in the
ordinance in the first or second month of a calendar quarter shall, on or
before the 20th day of the following month, pay to the
Administrator the amount of taxes so deducted.
(b) Such employer who makes payments on a monthly basis for the first
two months of a calendar quarter shall pay such tax deducted for the third
month of a calendar year on or before the 20th day of the
following month to the Administrator.
C. 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 Administrator, depending upon the circumstances and
the time when the over-withholding is determined as follows:
1. Current Employees
(a) 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 CCA-102
as withheld shall be the corrected amount.
(b) 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, Form CCA-102 for the quarter in which the
adjustment is made shall reflect the total amount actually withheld for
the quarter and the amount of the adjustment deducted therefrom.
(c) If the over-withholding is discovered in the following year, the
employer shall notify the Administrator of such over-withholding and the
circumstances thereof. Upon proper verification, the Administrator shall
refund to the employee the amount of such excess withholding.
2. Former Employees:
(a) In case too much has been withheld from an employee who is no
longer employed by the employer, the employer shall notify the
Administrator of the amount and circumstances of such over-withholding,
and the Administrator, after verification, shall then refund to the
employee the amount of such excess withholding.
(b) If the error is discovered by the employee, such employee shall
file a claim with the Administrator and, upon verification thereof by
the employer, the Administrator shall refund to the employee the amount
of such excess withholding.
D. Insufficient withholding. If less than the amount of tax required to
be deducted is withheld from an employee, such deficiency shall be withheld
from subsequent wages paid in the same calendar year. However, if the
employee-employer relationship has terminated, or if the deficiency was from
a prior year, the employer shall notify the Administrator of such
deficiency, the reason therefor, and in a separate return pay the
withholding deficiency. (Article 8:03 A, and Collection at Source
section of the ordinance).
E. On or before the last day of February following any calendar year in
which such deductions have been made by any employer, such employer shall
file with the Administrator, in the form prescribed by the Administrator, an
information return for each employee from whom municipal income tax has been
withheld, specifying the municipality for which the tax has been withheld
and all information required for Federal Income Tax reporting purposes on
Federal Form W-2 or its equivalent. Information returns must also be
submitted for each person receiving payments on a commission or fee basis as
F. The information returns from Subsection E above shall be filed with
the Agency in the following manner:
(1) Employers who must withhold Village tax for 250 or more employees are
required to file on magnetic media.
(2) Employers who must withhold Village tax for 100 or more employees and
are filing W-2 information on magnetic media with the SSA are required to
file on magnetic media with Village.
(3) All other employers who must withhold Village tax are required to
file a copy of the W-2 issued to the employee clearly showing all
information required on Federal Form W-2.
Employers required to file on magnetic media must obtain specifications
for filing from the CCA Information Systems Department.
G. In addition to such information returns, and at the time the same are
filed, such employer shall file with the Administrator Form W-3 to enable
the Administrator to reconcile the sum total of compensation earned and
taxes withheld as disclosed by the total of the Federal W-2 Forms. The W-3
shall also reconcile to prior remittances and returns filed by the employer
for such tax year with respect to taxes withheld.
H. 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 or more, in which case it
shall be increased to one cent.
8:04 Declaration of Estimated Tax (Tax on Income Not Collected at Source)
A. Requirement of Filing
1. A declaration of estimated tax shall be filed by every taxpayer who
anticipates receiving taxable income not subject to withholding.
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, or
he may use the same figures used for estimating the Federal Income Tax
adjusted to exclude any income or deductions not taxable or permissible under
the municipal income tax ordinance. 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. Those taxpayers reporting on a calendar year basis shall file a
declaration of estimated tax on or before April 30th of each year
or within four months of the date the taxpayer becomes subject to the tax
for the first time.
2. Those taxpayers reporting on a fiscal year basis shall file a
declaration of estimated tax within four months of the date the taxpayer
becomes subject to the tax for the first time.
C. Forms of Filing
1. (a) Such declaration of estimated tax shall be filed on a form
furnished by or obtainable from the Administrator or the Central
Collection Agency. (See Article 8:04 A 1 hereof)
(b) Should the declaration of estimated tax indicate an overpayment,
such overpayment shall not be refunded until the final return has been
filed. (See Article 10:02 hereof)
2. The original estimate of tax liability or any subsequent amendment
thereof may be increased or decreased by filing an amended declaration of
estimated tax on or before any quarterly payment dates as set forth in
Article 8:04 D hereof. Such amendment may be made on the quarterly billing
D. Date of Payments
1. The estimated tax may be paid in full with the first declaration of
estimated tax in each tax year or in equal installments on or before the
last day of the fourth, sixth, ninth and thirteenth months of the taxable
2. The declaration of estimated tax must be accompanied by at least
one-fourth of the estimated tax shown due thereon.
3. In the event an amended declaration of estimated tax has been filed,
the unpaid balance shown due thereon shall be paid in equal installments
over the remaining payment dates.
E. Final Returns Required
The filing of a declaration of estimated tax 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). (See Articles 8:01 B
and 10:02 hereof.)
Article 9:00 Interest and Penalties
Except as provided in Article 9:03 hereof, all taxes imposed and all
money withheld, or required to be withheld by employers under the provisions
of this ordinance and remaining unpaid after they have become due shall bear
1.5% interest rate, in addition to the amount of the unpaid tax or
A. In addition to interest as provided in Article 9:01 hereof, 1.5%
penalties based on the unpaid tax are hereby imposed as follows:
1. For failure to pay tax due, other than taxes withheld.
2. Underpaying estimated taxes. There is a charge for underpaying the
tax. When estimate tax payments are required the penalty will
attach when the amount actually paid and the amount that should have
been paid of the estimated tax paid was 80% or less of the amount shown
on the final return. Failure to pay 80% of tax due by January 31st of
the following year will result in a penalty and interest charge on the
entire remaining tax balance. In addition, no penalty or interest will
be charged if 100% of the previous year’s taxes owed are paid by
January 31st of the following year.
3. For failure to remit taxes withheld from.
4. For failure to file an annual return the minimum penalty is
B. In addition to any other charges for interest and/or penalties which
may be applicable, a charge of twenty-five dollars ($25.00) shall be
added to the tax due when any check in payment of taxes is returned unpaid
by the bank. This charge is to offset the cost of additional bookkeeping and
processing and is made irrespective of any charge which may be levied
against the maker by his bank. Notice by the Administrator to the taxpayer
that a check has been returned unpaid is not required nor is notice of the
above charge required. The tender of payment shall not be considered as
received as long as this charge has not been paid.
A. 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 thirty days of notification.
B. 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 months after final determination of the Federal tax liability.
C. A taxpayer or employer shall have thirty days after receipt of notice
of any proposed imposition of interest and penalties within which to file a
written protest or explanation with the Administrator. If no protest or
explanation is filed within the prescribed time, the proposed imposition of
interest and penalties shall become and be the final assessment. Upon filing
of a written protest or explanation, the Administrator shall determine the
assessment, which may or may not be the same as the proposed assessment.
9:04 Abatement of Interest and Penalty
A. The Income Tax Administrator may abate penalty and/or interest for
good cause shown up to $1,000.00. Penalty and/or interest over $1,000 may be
abated with the authorization of the Board of Review.
B. Upon recommendation of the Administrator, the Board of Review may
abate penalty or interest or both, or upon appeal from the refusal of the
Administrator to recommend abatement of penalty and interest, the Board may
nevertheless abate penalty or interest or both.
A. No person shall:
1. Fail, neglect, or refuse to make any return or declaration required
by the tax 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 employees or
remit such withholding to the Administrator; or
5. Refuse to permit the Administrator or any duly authorized agent or
employee to examine his books, records, papers and Federal Income Tax
returns relating to the income or net profits of the taxpayer; or
6. Fail to appear before the Administrator and to produce his books,
records, papers or Federal Income Tax returns relating to the income or
net profits of the taxpayer upon order or subpoena of the Administrator;
7. Refuse to disclose to the Administrator any information with respect
to the income or net profits of the taxpayer; or
8. Fail to comply with the provisions of the tax ordinance or any order
or subpoena of the Administrator authorized hereby; or
9. Give to an employer false information as to his true name, correct
social security number and residence address, or fail to promptly notify
an employer of any change in residence address and date thereof; or
10. Fail to use ordinary diligence in maintaining proper records of
employees’ residences and addresses, total wages earned and
municipal tax withheld, or to knowingly give the Administrator false
11. Attempt to do anything whatsoever to avoid the payment of the whole
or any part of the tax, penalties, or interest imposed by the ordinance.
Violations of this section are a first-degree misdemeanor punishable
by up to five hundred dollars ($500.00) and/or imprisonment of not more than
six months or both for each offense.
9:06 Limitations on Prosecution
A. Civil actions to recover municipal income taxes and penalties and
interest on municipal income taxes shall be brought within three years after
the tax was due or the return was filed, whichever is later. No return
will be considered filed until it is complete in all material respects.
B. Prosecutions under the ordinance shall be commenced within three years
after the commission of the offense provided that in the case of fraud,
failure to file a return, or the omission of 25% or more of income required
to be reported, prosecutions may be commenced within six years after the
commission of the offense.
C. When a taxpayer appeals from the final assessment of the
Administrator, the taxpayer shall either pay the disputed assessment or
waive the statute of limitations for prosecution of Section 890.12 Codified
Ordinances of the Village of Grand Rapids, and Ohio Revised Code Section
718.06 by signing the waiver of prosecution form provided by the
Administrator. No appeal will be perfected without the waiving of the
limitation on prosecution or paying the disputed assessment.
9:07 Failure to Receive Forms No Excuse
The failure of any employer or person to receive or procure a return,
declaration or other required form shall not excuse him from making any
information return, return or declaration, from filing a form, or from
paying the tax.
Article 10:00 Collection of Unpaid Taxes and Refunds of Overpayments
10:01 Unpaid Taxes Recoverable As Other Debts
A. All taxes imposed by the ordinance and not paid when due become,
together with interest and penalties thereon, a debt due the municipality
from the taxpayer and are recoverable as are other debts by civil suit.
Employers who are required, under Section 8:02 (Collection at Source) of
these Rules and Regulations, 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 Village in a civil action to enforce the payment of the debt created
by such failure.
B. No additional assessment shall be made by the Administrator after
three years from the time the return was due or dated, 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 the filing of 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 an omission of a substantial portion of income
subject to this tax.
C. In those cases in which the Commissioner of the Internal Revenue
Service and the taxpayer have executed a waiver of the Federal Statute of
Limitations, the period within which an assessment may be made by the
Administrator is extended to one year from the time of final determination
of Federal Income Tax liability.
10:02 Refunds of Taxes Erroneously Paid
A. Taxes erroneously paid shall not be refunded or credited unless a
claim for refund is made within three years from the time of payment
thereof, or within three months after final determination of a Federal
Income Tax audit.
A Federal adjustment must have a direct effect on items subject to city
tax to extend the statute.
Based on the three-year statute of limitations, taxpayers required to
file an annual return must use April 30th as the due date
of the return. Taxpayers not required to file a return other than a request
for refund must use January 20th as the due date of the
B. No refund or credit shall be made to any taxpayer until he has filed a
complete and final return, complied with all provisions of the ordinance,
and has furnished all information required by the Administrator.
C. Overpayments will be either refunded or credited to the taxpayer’s
current year liability at his option unless there is a prior outstanding
obligation. Where no election has been made by the taxpayer,
overpayments of the tax for any year shall be applied as follows:
1. To taxes, penalty and interest owed for any periods in the
order in which such become due.
2. To his current estimated tax liability.
If the taxpayer chooses to credit the current year’s tax overpayment to
the next tax year, and thereafter requests a refund of the credited amount,
no interest is due on the refunded amount until 90 days after the filing
date of the refund request.
Where the total amount due or refund claim for a tax year is less than
One Dollar ($1.00) such amount shall not be collected or refunded.
10:04 Erroneous Refund Recovery.
The Administrator may sue for recovery
of an erroneous refund provided such suit is brought within three years
after making such refund, except that the suit may be brought within six
years if any part of the refund was induced by fraud or misrepresentation of
Article 11:00 Taxpayer Relief11:01 Residents of Taxing Communities
When a resident of the Village is subject to a municipal income tax in
another municipality on the same income taxable under the ordinance, such
resident may claim a credit up to the 50% percent allowed by the ordinance
but the credit must not be calculated on a tax in excess of the rate in
effect in the resident community.
In the event a resident is entitled to credit for taxes paid another
municipality, such resident is required to file a return in such manner as
the Administrator may prescribe.
In the event such resident fails, neglects or refuses to file such return
or form as is prescribed by the Administrator, he shall not be entitled to
such credit and shall be considered in violation of the ordinance
for failure to file a return and make payment of taxes due thereunder.
The Administrator may require all residents of a member municipality
subject to this chapter to file an annual return or an annual exemption
Article 12:00 Disbursement of Receipts And Tax Collections
Disbursement of Funds Collected. Refer to Ordinance.
Article 13:00 Duties and Authority of the Tax Administrator13:01 Duty To Receive Tax Imposed
It shall be the duty of the Administrator to receive the tax imposed by
the ordinance in the manner prescribed herein from the taxpayers, to keep an
accurate record thereof, and report all money so received.
13:02 Duty to Enforce Collection
It shall be the duty of the Administrator to enforce payment of all taxes
owed to each employment and resident Village, to keep accurate records for a
minimum of five years showing the amount due from each taxpayer required to
file a declaration and make any return, or both, including taxes withheld,
and show the date and amounts of payments thereof.
13:03 Authority to Make and Enforce Regulations
A. The Administrator is charged with the administration and enforcement
of the provisions of the ordinance and is, subject to the approval of the
Board of Review, hereby empowered to adopt and promulgate and to enforce these
Rules and Regulations in relation to any matter or thing
pertaining to the administration and enforcement of the ordinance. The
Administrator has the authority to correct or adjust any return submitted,
when a correction or adjustment is necessary to accomplish the intent of the
B. Any taxpayer or employer desiring a special ruling on any matter
pertaining to the ordinance or these Rules and Regulations
should submit to the Administrator in writing all the facts involved and the
ruling sought. Promulgation of a special ruling shall be at the sole
discretion of the Administrator.
C. These regulations, together with all amendments and supplements hereto
and all charges herein, will be on file at the office of the Administrator
and will be open to public inspection. The Administrator’s office is
located in the Administrative Building at 17460 Sycamore Road, Grand
Rapids, Ohio 43522.
13:04 Authority to Arrange Installment Payments
A. Except as otherwise provided in these regulations, the Administrator
is authorized to arrange for the payment of unpaid taxes, interest and
penalties on a schedule of installment payments, when the taxpayer has
proved to the Administrator that, due to certain hardship conditions, he is
unable to pay the full amount of the tax due. Such authorization shall not
be granted until proper returns are filed by the taxpayer for all amounts
owed by him under the ordinance.
B. Failure to make deferred payment when due shall cause the total unpaid
amount, including penalty and interest, to become payable on demand, and the
provisions of the chapters pertaining to penalties and interest and
collections of unpaid taxes of the ordinance shall apply.
13:05 Authority to Determine Amount of Tax Due
A. Whenever the Administrator has been unable to secure information from
the taxpayer as to his taxable income from any year, or the taxpayer has
filed a return which does not show the proper amount of tax due, the
Administrator 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 the ordinance.
B. Such determination of tax may be adjusted upon submission by the
taxpayer of actual records from which his tax may be computed.
13:06 Authority to Make Investigations
A. The Administrator, or any authorized employee, is authorized to
examine the books, papers, records and Federal Income Tax returns of any
employer, taxpayer or person subject to, or whom the Administrator believes
is subject to the provisions of this chapter, 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.
B. An employer or taxpayer shall furnish within ten days following a
written request by the Administrator, or his duly authorized agent or
employee, the means, facilities and opportunity for making such examinations
and investigations as are hereby authorized by the ordinance.
13:07 Authority to Compel Production of Records
A. The Administrator, or any person acting in his capacity, is authorized
to examine any person under oath concerning income which was, or should have
been returned for taxation or any transaction tending to affect such income.
The Administrator may compel the production of books, papers, records and Federal
Income Tax returns and the attendance of all persons before him, whether
as parties or witnesses, whenever he believes such persons have knowledge of
the facts concerning any supposed income or supposed transaction of the
B. The Administrator’s order to examine any document mentioned in the
proceeding paragraph shall state whether the examination is to be at the
office of the taxpayer or at the office of the Administrator.
C. The Administrator may order the appearance before him, or before his
duly authorized agent, of any party whom he believes to have any
knowledge of a taxpayer’s income or withholdings, or any information
pertaining to the taxpayer under investigation, whether or not the
individual so ordered has actual custody of the records of the taxpayer
being investigated. The Administrator is specifically authorized to order
the appearance of the local manager or representative of any taxpayer.
D. Persons required to attend any hearing shall be notified not less than
ten days prior to the time of the hearing. The notice shall show the time
and place of the hearing and what books, paper or records the witness is to
make available at such hearing.
E. The notice shall be served by the Administrator, 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 first class mail addressed to his usual place of
business or residence.
13:08 Refusal to Produce Records
Refusal by any employer, supposed employer, taxpayer or supposed
taxpayer, or the refusal of any such person to appear before the
Administrator or his duly authorized agent, to submit to such examination or
to produce the records requested constitutes a misdemeanor punishable by
fine or imprisonment, or both, as prescribed by the violations provisions of
13:09 Confidential Nature of Information
A. Any information gained as the result of any returns, investigations,
verifications or hearings before the Administrator 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 One thousand Dollars ($1,000.00) or
imprisonment for not more than six months, or both.
B. In addition to the above penalty, any employee of the Central
Collection Agency or of the Village who violates the provisions of this
section relative to the disclosure of confidential information shall be
guilty of an offense punishable by immediate dismissal.
13:10 Taxpayer Required to Retain 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 years from the
date the final return is filed and paid or the withholding taxes are paid.
Article 14:00 Board of Review
14:01 Board of Review Established
A Board of Review consisting of the Solicitor, as chairperson, the
Chairperson of the Finance Committee as Secretary, and one other member of
Village Council to be selected by the Solicitor and Finance Committee
Chairperson 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 Article 13:09 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.
14:02 Duty to Approve Regulations and Hear Appeals
All Rules and Regulations and amendments or changes
thereto, which are adopted by the Administrator 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 Administrator, and, at the request of the
taxpayer or Administrator, is empowered to substitute alternate methods of
14:03 Right of Appeal
A. An appeal from a ruling of the Administrator by a taxpayer or employer
is effected by filing a notice of appeal with the Board at the Tax Review
Board, PO Box 309, Grand Rapids, Oh 43522 within thirty days after the
announcement of the Administrator’s ruling or decision from which the
appeal is taken. A copy of such appeal must be filed with the Administrator.
B. The Board, by majority vote, may affirm, modify or reverse,
in whole or part any such ruling or decision of the Administrator.
C. Hearings before the Board shall be private unless the taxpayer
requests, in writing, a public hearing.
Article 15:00 Other Provisions15:01 Declaration of Legislative Intent. Refer to Ordinance
15:02 Collection of Tax after Termination of Title Ten. Refer to Ordinance.
15:03 Instructions for Filing a Notice of Appeal (Issued by the Board of
1. An appeal from the ruling of the Administrator by a taxpayer or
employer is effected by filing a notice of appeal with the
Tax Review Board at PO Box 309, Grand Rapids, OH 43522 (or any
subsequent official mailing address) within thirty days after the
announcement of the Administrator’s ruling or decision from which the
appeal is taken. A copy of such appeal must be filed with the Administrator.
The Board has no power to hear an appeal not timely filed.
2. No particular form of notice of appeal is required, provided that the
notice contains the following information:
(a) A copy of the Administrator’s final ruling or determination;
(b) A statement that the taxpayer appeals from the final assessment of
the Tax Administrator;
(c) The tax year or years and the amount of tax involved in the final
(d) The date of receipt by the taxpayer of the final assessment
(e) The reason or reasons why the taxpayer believes the final
assessment is objectionable, incorrect or illegal;
(f) The name and address of the representative, if any, of the taxpayer
that is authorized to present the appeal before the Board of Review (Note: Section 890.09 of the Village of Grand Rapids Tax Ordinance
provides that all information pertaining to a taxpayer is confidential.
The Board of Review cannot recognize any attorney or other representative
unless he is so authorized by the taxpayer in the notice of appeal by
power of attorney, or by personally appearing with the taxpayer.);
(g) The name and address of the taxpayer.
3. The notice of appeal must be signed by the taxpayer and filed in
duplicate. The copy must be a true and accurate copy.
4. The notice of appeal should be filed in a sealed envelope plainly
marked ‘Appeal to the Board of Review’ and mailed or delivered to the
Tax Administrator who shall, within fifteen days, deliver such appeal to the
Chairman of the Board of Review, or if the Chairman is not available, to the
5. All papers filed with the Board of Review should be typewritten.
For information concerning the hearing and disposition of the appeal,
obtain a copy of the Rules of Procedure adopted by the Board of