- Introduced by: Rogoff
- 1st Reading (11/13/2023)
- Passed (11/13/2023)
Whereas, House Bill 33 was adopted in 2023 and made changes to the Ohio Municipal Income Tax law which necessitates changes to be made to Chapter 124 of the Codified Ordinances of the Village of Chagrin Falls; and
Now Therefore, Be It Ordained by the Council of the Village of Chagrin Falls, State of Ohio:
Section 1. Section 124.02(C)(12)(o) of the Codified Ordinance is hereby amended in its entirety to read as follows:
- (o) For tax years 2024 and after, the income of individuals under eighteen (18) years of age.
Existing Section 124.02(C)(12)(o) of the Codified Ordinance, the full text of which follows is hereby repealed:
- (o) All of the income of individuals under eighteen (18) years of age.
Section 2. Section 124.03(F)(1) of the Codified Ordinance, is hereby amended to read as follows:
- (1) Except as otherwise provided in divisions (F)(2) and (G) of this section, net profit from a business or profession conducted both within and without the boundaries of the Municipality shall be considered as having a taxable situs in the Municipality for purposes of municipal income taxation in the same proportion as the average ratio of the following:
Existing Section 124.03(F)(1) of the Codified Ordinance, full text of which follows is hereby repealed:
- (1) Except as otherwise provided in division (F)(2) of this section, net profit from a business or profession conducted both within and without the boundaries of the Municipality shall be considered as having a taxable situs in the Municipality for purposes of municipal income taxation in the same proportion as the average ratio of the following:
Section 3. Section 124.03(F)(4) of the Codified Ordinances, in the first paragraph, is hereby amended in its entirety to read as follows:
- (4) For the purposes of division (F)(1)(c) of this section, and except as provided in division (G) of this section, receipts from sales and rentals made and services performed shall be sitused to a municipal corporation as follows:
Existing Section 124.03(F)(4) of the Codified Ordinances, the full text of which follows, is hereby repealed:
- (4) For the purposes of division (F)(1)(c) of this section, receipts from sales and rentals made and services performed shall be sitused to a municipal corporation as follows:
Section 4. Section 124.03 of the Codified Ordinances is hereby amended to add Subsection G to read as follows:
(G)
(1) As used in this division:
(a) “Qualifying remote employee or owner” means an individual who is an employee of a taxpayer or who is a partner or member holding an ownership interest in a taxpayer that is treated as a partnership for federal income tax purposes, provided that the individual meets both of the following criteria:
(i) The taxpayer has assigned the individual to a qualifying reporting location.
(ii) The individual is permitted or required to perform services for the taxpayer at a qualifying remote work location.
(b) “Qualifying remote work location” means a permanent or temporary location at which an employee or owner chooses or is required to perform services for the taxpayer, other than a reporting location of the taxpayer or any other location owned or controlled by a customer or client of the taxpayer. “Qualifying remote work location” may include the residence of an employee or owner and may be located outside of a municipal corporation that imposes an income tax in accordance with this Chapter. An employee or owner may have more than one qualifying remote work location during a taxable year.
(c) “Reporting Location” means either of the following:
(i) A permanent or temporary place of doing business, such as an office, warehouse, storefront, construction site, or similar location, that is owned or controlled directly or indirectly by the taxpayer;
(ii) Any location in this state owned or controlled by a customer or client of the taxpayer, provided that the taxpayer is required to withhold taxes under Section 124.04 of this Chapter, on qualifying wages paid to an employee for the performance of personal services at that location.
(d) “Qualifying reporting location” means one of the following:
(i) The reporting location in this state at which an employee or owner performs services for the taxpayer on a regular or periodic basis during the taxable year;
(ii) If no reporting location exists in this state for an employee or owner under division (G)(1)(d)(i) of this section, the reporting location in this state at which the employee’s or owner’s supervisor regularly or periodically reports during the taxable year;
(iii) If no reporting location exists in this state for an employee or owner under division (G)(1)(d)(i) or (ii) of this section, the location that the taxpayer otherwise assigns as the employee’s or owner’s qualifying reporting location, provided the assignment is made in good faith and is recorded and maintained in the taxpayer’s business records. A taxpayer may change the qualifying reporting location designated for an employee or owner under this division at any time.
(2) For tax years ending on or after December 31, 2023, a taxpayer may elect to apply the provisions of this division to the apportionment of its net profit from a business or profession. For taxpayers that make this election, the provisions of division (F) of this section apply to such apportionment except as otherwise provided in this division.
A taxpayer shall make the election allowed under this division in writing on or with the taxpayer’s net profit return or, if applicable, a timely filed amended net profit return or a timely filed appeal of an assessment. The election applies to the taxable year for which that return or appeal is filed and for all subsequent taxable years, until the taxpayer revokes the election.
The taxpayer shall make the initial election with the tax administrator of each municipal corporation with which, after applying the apportionment provisions authorized in this division, the taxpayer is required to file a net profit tax return for that taxable year. A taxpayer shall not be required to notify the tax administrator of a municipal corporation in which a qualifying remote employee’s or owner’s qualifying remote work location is located, unless the taxpayer is otherwise required to file a net profit return with that municipal corporation due to business operations that are unrelated to the employee’s or owner’s activity at the qualifying remote work location.
After the taxpayer makes the initial election, the election applies to every municipal corporation in which the taxpayer conducts business. The taxpayer shall not be required to file a net profit return with a municipal corporation solely because a qualifying remote employee’s or owner’s qualifying remote work location is located in such municipal corporation.
Nothing in this division prohibits a taxpayer from making a new election under this division after properly revoking a prior election.
(3) For the purpose of calculating the ratios described in division (F)(1) of this section, all of the following apply to a taxpayer that has made the election described in division (G)(2):
(a) For the purpose of division (F)(1)(a) of this section, the average original cost of any tangible personal property used by a qualifying remote employee or owner at that individual’s qualifying remote work location shall be sitused to that individual’s qualifying reporting location.
(b) For the purpose of division (F)(1)(b) of this section, any wages, salaries, and other compensation paid during the taxable period to a qualifying remote employee or owner for services performed at that individual’s qualifying remote work location shall be sitused to that individual’s qualifying reporting location.
(c) For the purpose of division (F)(1)(c) of this section, and notwithstanding division (F)(4) of this section, any gross receipts of the business or profession from services performed during the taxable period by a qualifying remote employee or owner for services performed at that individual’s qualifying remote work location shall be sitused to that individual’s qualifying reporting location.
(4) Nothing in this division prevents a taxpayer from requesting, or a tax administrator from requiring, that the taxpayer use, with respect to all or a portion of the income of the taxpayer, an alternative apportionment method as described in division (F)(2) of this section. However, a tax administrator shall not require an alternative apportionment method in such a manner that it would require a taxpayer to file a net profit return with a municipal corporation solely because a qualifying remote employee’s or owner’s qualifying remote work location is located in that municipal corporation.
(5) Except as otherwise provided in this division, nothing in this division is intended to affect the withholding of taxes on qualifying wages pursuant to Section 124.04 of this Chapter.
Section 5. Section 124.05(A) of the Codified Ordinances is hereby amended by revising the first sentence to read as follows:
- (A) An annual Municipal income tax return shall be completed and filed by every taxpayer for each taxable year for which the taxpayer is subject to the tax, whether or not a tax is due thereon.
The existing first sentence of Section 124.05(A) of the Codified Ordinances, the full text of which follows is hereby repealed:
- (A) An annual Municipal income tax return shall be completed and filed by every individual taxpayer eighteen (18) years of age or older and any taxpayer that is not an individual for each taxable year for which the taxpayer is subject to the tax, whether or not a tax is due thereon.
Section 6. Section 124.05(G)(2) of the Codified Ordinances is hereby amended to add the following sentence after the existing second sentence in subsection (2) which reads as follows:
For tax years ending on or after January 1, 2023, the extended due date of the Municipal income tax return for a taxpayer that is not an individual shall be the fifteenth (15th) day of the eleventh (11th) month after the last day of the taxable year to which the return relates.
Section 7. Section 124.05(G)(5) of the Codified Ordinances is hereby renumbered to be known as Codified Ordinance Section 124.05(G)(6), and Section 124.05(G)(5) is hereby added to read in its entirety as follows:
(5) If a taxpayer receives an extension for the filing of a municipal income tax return under division (G)(2), (3), or (4) of this section, the tax administrator shall not make any inquiry or send any notice to the taxpayer with regard to the return on or before the date the taxpayer files the return or on or before the extended due date to file the return, whichever occurs first.
If a tax administrator violates division (G)(5) of this section, the municipal corporation shall reimburse the taxpayer for any reasonable costs incurred to respond to such inquiry or notice, up to $150.
Division (G)(5) of this section does not apply to an extension received under division (G)(2) of this section if the tax administrator has actual knowledge that the taxpayer failed to file for a federal extension as required to receive the extension under division (G)(2) of this section or failed to file for an extension under division (G)(2)(b) of this section.
Section 8. Section 124.18(C)(3) of the Codified Ordinances is hereby amended to create a new Subsection (a) and the first sentence thereof reads as follows:
- (a) For tax years ending on or before December 31, 2022, with respect to returns other than estimated income tax returns, the Municipality may impose a penalty of $25 for each failure to timely file each return, regardless of the liability shown thereon for each month, or any fraction thereof, during which the return remains unfiled regardless of the liability shown thereon.
Section 9. Section 124.18(C)(3) of the Codified Ordinances is hereby amended to create a new Subsection (b) which reads as follows:
- (b) For tax years ending on or after January 1, 2023, with respect to returns other than estimated income tax returns, the Municipality may impose a penalty not exceeding $25 for each failure to timely file each return, regardless of the liability shown thereon, except that the Municipality shall abate or refund the penalty assessed on a taxpayer’s first failure to timely file a return after the taxpayer files that return.
Section 10. The Subsections of Chapter 124 of the Codified Ordinances that are herein repealed shall be repealed immediately upon the new Subsection taking effect with the intent that it shall not cause those Subsections to be repealed without corrected replacement sections in effect at the moment and time when such repeal takes effect.
Section 11. Sections 124.02(C)(12)(o), 124.03(F) and (G), 124.05(A), 124.05(G)(2), 124.05(G)(5), 124.05(G)(6), and 124.18(C)(3)(a) and (b) of the Codified Ordinances as amended herein shall become effective January 1, 2024 and the Subsections repealed herein are hereby repealed effective January 1, 2024, provided, however, that no provision of this Ordinance, including the repeal of existing Sections 124.02(C)(12)(o), 124.03(F) and (G), 124.05(A), 124.05(G)(2), 124.05(G)(5), 124.05(G)(6), and 124.18(C)(3)(a) and (b) of the Codified Ordinances as they have heretofore existed shall in any way effect any rights or obligations of the Village, any taxpayer, or any other person, official or entity as they have heretofore existed and shall remain in effect until January 1, 2024.
Section 12. That actions of this Council concerning and relating to the passage of this legislation were adopted in lawful meetings of this Council and that all deliberations of this Council and of any of its committees that resulted in such formal action were in compliance with all legal requirements, including Chapter 114 of the Codified Ordinances of the Village of Chagrin Falls.
Section 13. That in accordance with Section 113.01 of the Codified Ordinances of the Village of Chagrin Falls, public notice of this Ordinance shall be given by posting a copy thereof for not less than fifteen (15) days in the Village Hall.
Section 14. That this Ordinance is declared to be an emergency measure necessary for the immediate preservation of the public peace, property, health and safety of the inhabitants of the Village and for the further reason that this Ordinance must be immediately effective in order to enable a timely collection of the Village’s income tax, for the Regional Income Tax Agency and taxpayers to be aware of the changes made to Chapter 124 before January 1, 2024; wherefore provided it receives the affirmative vote of at least two-thirds (⅔) of all members elected to Council, this Ordinance shall be in full force and effect from and immediately upon its passage by this Council and approval by the Mayor; otherwise, it shall take effect and be in force after the earliest period allowed by law.