Bill Text: OH HB50 | 2011-2012 | 129th General Assembly | Comm Sub
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: To exempt from municipal income tax the compensation paid to persons performing personal services for a political subdivision on its property when that property is annexed to a municipal corporation under the expedited type-II annexation proceeding unless the compensation is taxable because of the person's residency, and to permit a board of county commissioners to determine the times for and manner of holding elections for citizen members of the board of trustees of a new community organization.
Spectrum: Partisan Bill (Republican 19-0)
Status: (Passed) 2013-03-27 - Effective Date [HB50 Detail]
Download: Ohio-2011-HB50-Comm_Sub.html
As Reported by the House Local Government Committee
A BILL
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Bill Title: To exempt from municipal income tax the compensation paid to persons performing personal services for a political subdivision on its property when that property is annexed to a municipal corporation under the expedited type-II annexation proceeding unless the compensation is taxable because of the person's residency, and to permit a board of county commissioners to determine the times for and manner of holding elections for citizen members of the board of trustees of a new community organization.
Spectrum: Partisan Bill (Republican 19-0)
Status: (Passed) 2013-03-27 - Effective Date [HB50 Detail]
Download: Ohio-2011-HB50-Comm_Sub.html
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Representative Snitchler
Cosponsors:
Representatives Burke, Murray, Schuring, Blessing
To amend sections 709.023 and 718.01 of the Revised | 1 |
Code to exempt from municipal income tax the | 2 |
compensation paid to persons performing personal | 3 |
services for a political subdivision on its | 4 |
property when that property is annexed to a | 5 |
municipal corporation under the expedited type-II | 6 |
annexation proceeding unless the compensation is | 7 |
taxable because of the person's residency. | 8 |
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 709.023 and 718.01 of the Revised | 9 |
Code be amended to read as follows: | 10 |
Sec. 709.023. (A) A petition filed under section 709.021 of | 11 |
the Revised Code that requests to follow this section is for the | 12 |
special procedure of annexing land into a municipal corporation | 13 |
when, subject to division (H) of this section, the land also is | 14 |
not to be excluded from the township under section 503.07 of the | 15 |
Revised Code. The owners who sign this petition by their signature | 16 |
expressly waive their right to appeal in law or equity from the | 17 |
board of county commissioners' entry of any resolution under this | 18 |
section, waive any rights they may have to sue on any issue | 19 |
relating to a municipal corporation requiring a buffer as provided | 20 |
in this section, and waive any rights to seek a variance that | 21 |
would relieve or exempt them from that buffer requirement. | 22 |
The petition circulated to collect signatures for the special | 23 |
procedure in this section shall contain in boldface capital | 24 |
letters immediately above the heading of the place for signatures | 25 |
on each part of the petition the following: "WHOEVER SIGNS THIS | 26 |
PETITION EXPRESSLY WAIVES THEIR RIGHT TO APPEAL IN LAW OR EQUITY | 27 |
FROM THE BOARD OF COUNTY COMMISSIONERS' ENTRY OF ANY RESOLUTION | 28 |
PERTAINING TO THIS SPECIAL ANNEXATION PROCEDURE, ALTHOUGH A WRIT | 29 |
OF MANDAMUS MAY BE SOUGHT TO COMPEL THE BOARD TO PERFORM ITS | 30 |
DUTIES REQUIRED BY LAW FOR THIS SPECIAL ANNEXATION PROCEDURE." | 31 |
(B) Upon the filing of the petition in the office of the | 32 |
clerk of the board of county commissioners, the clerk shall cause | 33 |
the petition to be entered upon the board's journal at its next | 34 |
regular session. This entry shall be the first official act of the | 35 |
board on the petition. Within five days after the filing of the | 36 |
petition, the agent for the petitioners shall notify in the manner | 37 |
and form specified in this division the clerk of the legislative | 38 |
authority of the municipal corporation to which annexation is | 39 |
proposed, the fiscal officer of each township any portion of which | 40 |
is included within the territory proposed for annexation, the | 41 |
clerk of the board of county commissioners of each county in which | 42 |
the territory proposed for annexation is located other than the | 43 |
county in which the petition is filed, and the owners of property | 44 |
adjacent to the territory proposed for annexation or adjacent to a | 45 |
road that is adjacent to that territory and located directly | 46 |
across that road from that territory. The notice shall refer to | 47 |
the time and date when the petition was filed and the county in | 48 |
which it was filed and shall have attached or shall be accompanied | 49 |
by a copy of the petition and any attachments or documents | 50 |
accompanying the petition as filed. | 51 |
Notice to a property owner is sufficient if sent by regular | 52 |
United States mail to the tax mailing address listed on the county | 53 |
auditor's records. Notice to the appropriate government officer | 54 |
shall be given by certified mail, return receipt requested, or by | 55 |
causing the notice to be personally served on the officer, with | 56 |
proof of service by affidavit of the person who delivered the | 57 |
notice. Proof of service of the notice on each appropriate | 58 |
government officer shall be filed with the board of county | 59 |
commissioners with which the petition was filed. | 60 |
(C) Within twenty days after the date that the petition is | 61 |
filed, the legislative authority of the municipal corporation to | 62 |
which annexation is proposed shall adopt an ordinance or | 63 |
resolution stating what services the municipal corporation will | 64 |
provide, and an approximate date by which it will provide them, to | 65 |
the territory proposed for annexation, upon annexation. The | 66 |
municipal corporation is entitled in its sole discretion to | 67 |
provide to the territory proposed for annexation, upon annexation, | 68 |
services in addition to the services described in that ordinance | 69 |
or resolution. | 70 |
If the territory proposed for annexation is subject to zoning | 71 |
regulations adopted under either Chapter 303. or 519. of the | 72 |
Revised Code at the time the petition is filed, the legislative | 73 |
authority of the municipal corporation also shall adopt an | 74 |
ordinance or resolution stating that, if the territory is annexed | 75 |
and becomes subject to zoning by the municipal corporation and | 76 |
that municipal zoning permits uses in the annexed territory that | 77 |
the municipal corporation determines are clearly incompatible with | 78 |
the uses permitted under current county or township zoning | 79 |
regulations in the adjacent land remaining within the township | 80 |
from which the territory was annexed, the legislative authority of | 81 |
the municipal corporation will require, in the zoning ordinance | 82 |
permitting the incompatible uses, the owner of the annexed | 83 |
territory to provide a buffer separating the use of the annexed | 84 |
territory and the adjacent land remaining within the township. For | 85 |
the purposes of this section, "buffer" includes open space, | 86 |
landscaping, fences, walls, and other structured elements; streets | 87 |
and street rights-of-way; and bicycle and pedestrian paths and | 88 |
sidewalks. | 89 |
The clerk of the legislative authority of the municipal | 90 |
corporation to which annexation is proposed shall file the | 91 |
ordinances or resolutions adopted under this division with the | 92 |
board of county commissioners within twenty days following the | 93 |
date that the petition is filed. The board shall make these | 94 |
ordinances or resolutions available for public inspection. | 95 |
(D) Within twenty-five days after the date that the petition | 96 |
is filed, the legislative authority of the municipal corporation | 97 |
to which annexation is proposed and each township any portion of | 98 |
which is included within the territory proposed for annexation may | 99 |
adopt and file with the board of county commissioners an ordinance | 100 |
or resolution consenting or objecting to the proposed annexation. | 101 |
An objection to the proposed annexation shall be based solely upon | 102 |
the petition's failure to meet the conditions specified in | 103 |
division (E) of this section. | 104 |
If the municipal corporation and each of those townships | 105 |
timely files an ordinance or resolution consenting to the proposed | 106 |
annexation, the board at its next regular session shall enter upon | 107 |
its journal a resolution granting the proposed annexation. If, | 108 |
instead, the municipal corporation or any of those townships files | 109 |
an ordinance or resolution that objects to the proposed | 110 |
annexation, the board of county commissioners shall proceed as | 111 |
provided in division (E) of this section. Failure of the municipal | 112 |
corporation or any of those townships to timely file an ordinance | 113 |
or resolution consenting or objecting to the proposed annexation | 114 |
shall be deemed to constitute consent by that municipal | 115 |
corporation or township to the proposed annexation. | 116 |
(E) Unless the petition is granted under division (D) of this | 117 |
section, not less than thirty or more than forty-five days after | 118 |
the date that the petition is filed, the board of county | 119 |
commissioners shall review it to determine if each of the | 120 |
following conditions has been met: | 121 |
(1) The petition meets all the requirements set forth in, and | 122 |
was filed in the manner provided in, section 709.021 of the | 123 |
Revised Code. | 124 |
(2) The persons who signed the petition are owners of the | 125 |
real estate located in the territory proposed for annexation and | 126 |
constitute all of the owners of real estate in that territory. | 127 |
(3) The territory proposed for annexation does not exceed | 128 |
five hundred acres. | 129 |
(4) The territory proposed for annexation shares a contiguous | 130 |
boundary with the municipal corporation to which annexation is | 131 |
proposed for a continuous length of at least five per cent of the | 132 |
perimeter of the territory proposed for annexation. | 133 |
(5) The annexation will not create an unincorporated area of | 134 |
the township that is completely surrounded by the territory | 135 |
proposed for annexation. | 136 |
(6) The municipal corporation to which annexation is proposed | 137 |
has agreed to provide to the territory proposed for annexation the | 138 |
services specified in the relevant ordinance or resolution adopted | 139 |
under division (C) of this section. | 140 |
(7) If a street or highway will be divided or segmented by | 141 |
the boundary line between the township and the municipal | 142 |
corporation as to create a road maintenance problem, the municipal | 143 |
corporation to which annexation is proposed has agreed as a | 144 |
condition of the annexation to assume the maintenance of that | 145 |
street or highway or to otherwise correct the problem. As used in | 146 |
this section, "street" or "highway" has the same meaning as in | 147 |
section 4511.01 of the Revised Code. | 148 |
(F) Not less than thirty or more than forty-five days after | 149 |
the date that the petition is filed, if the petition is not | 150 |
granted under division (D) of this section, the board of county | 151 |
commissioners, if it finds that each of the conditions specified | 152 |
in division (E) of this section has been met, shall enter upon its | 153 |
journal a resolution granting the annexation. If the board of | 154 |
county commissioners finds that one or more of the conditions | 155 |
specified in division (E) of this section have not been met, it | 156 |
shall enter upon its journal a resolution that states which of | 157 |
those conditions the board finds have not been met and that denies | 158 |
the petition. | 159 |
(G) If a petition is granted under division (D) or (F) of | 160 |
this section, the clerk of the board of county commissioners shall | 161 |
proceed as provided in division (C)(1) of section 709.033 of the | 162 |
Revised Code, except that no recording or hearing exhibits would | 163 |
be involved. There is no appeal in law or equity from the board's | 164 |
entry of any resolution under this section, but any party may seek | 165 |
a writ of mandamus to compel the board of county commissioners to | 166 |
perform its duties under this section. | 167 |
(H) Notwithstanding anything to the contrary in section | 168 |
503.07 of the Revised Code, unless otherwise provided in an | 169 |
annexation agreement entered into pursuant to section 709.192 of | 170 |
the Revised Code or in a cooperative economic development | 171 |
agreement entered into pursuant to section 701.07 of the Revised | 172 |
Code, territory annexed into a municipal corporation pursuant to | 173 |
this section shall not at any time be excluded from the township | 174 |
under section 503.07 of the Revised Code and, thus, remains | 175 |
subject to the township's real property taxes. | 176 |
(I) Any owner of land that remains within a township and that | 177 |
is adjacent to territory annexed pursuant to this section who is | 178 |
directly affected by the failure of the annexing municipal | 179 |
corporation to enforce compliance with any zoning ordinance it | 180 |
adopts under division (C) of this section requiring the owner of | 181 |
the annexed territory to provide a buffer zone, may commence in | 182 |
the court of common pleas a civil action against that owner to | 183 |
enforce compliance with that buffer requirement whenever the | 184 |
required buffer is not in place before any development of the | 185 |
annexed territory begins. | 186 |
(J) Division (H)(12) of section 718.01 of the Revised Code | 187 |
applies to the compensation paid to persons performing personal | 188 |
services for a political subdivision on property owned by the | 189 |
political subdivision after that property is annexed to a | 190 |
municipal corporation under this section. | 191 |
Sec. 718.01. (A) As used in this chapter: | 192 |
(1) "Adjusted federal taxable income" means a C corporation's | 193 |
federal taxable income before net operating losses and special | 194 |
deductions as determined under the Internal Revenue Code, adjusted | 195 |
as follows: | 196 |
(a) Deduct intangible income to the extent included in | 197 |
federal taxable income. The deduction shall be allowed regardless | 198 |
of whether the intangible income relates to assets used in a trade | 199 |
or business or assets held for the production of income. | 200 |
(b) Add an amount equal to five per cent of intangible income | 201 |
deducted under division (A)(1)(a) of this section, but excluding | 202 |
that portion of intangible income directly related to the sale, | 203 |
exchange, or other disposition of property described in section | 204 |
1221 of the Internal Revenue Code; | 205 |
(c) Add any losses allowed as a deduction in the computation | 206 |
of federal taxable income if the losses directly relate to the | 207 |
sale, exchange, or other disposition of an asset described in | 208 |
section 1221 or 1231 of the Internal Revenue Code; | 209 |
(d)(i) Except as provided in division (A)(1)(d)(ii) of this | 210 |
section, deduct income and gain included in federal taxable income | 211 |
to the extent the income and gain directly relate to the sale, | 212 |
exchange, or other disposition of an asset described in section | 213 |
1221 or 1231 of the Internal Revenue Code; | 214 |
(ii) Division (A)(1)(d)(i) of this section does not apply to | 215 |
the extent the income or gain is income or gain described in | 216 |
section 1245 or 1250 of the Internal Revenue Code. | 217 |
(e) Add taxes on or measured by net income allowed as a | 218 |
deduction in the computation of federal taxable income; | 219 |
(f) In the case of a real estate investment trust and | 220 |
regulated investment company, add all amounts with respect to | 221 |
dividends to, distributions to, or amounts set aside for or | 222 |
credited to the benefit of investors and allowed as a deduction in | 223 |
the computation of federal taxable income; | 224 |
(g) Deduct, to the extent not otherwise deducted or excluded | 225 |
in computing federal taxable income, any income derived from | 226 |
providing public services under a contract through a project owned | 227 |
by the state, as described in section 126.604 of the Revised Code | 228 |
or derived from a transfer agreement or from the enterprise | 229 |
transferred under that agreement under section 4313.02 of the | 230 |
Revised Code. | 231 |
If the taxpayer is not a C corporation and is not an | 232 |
individual, the taxpayer shall compute adjusted federal taxable | 233 |
income as if the taxpayer were a C corporation, except guaranteed | 234 |
payments and other similar amounts paid or accrued to a partner, | 235 |
former partner, member, or former member shall not be allowed as a | 236 |
deductible expense; amounts paid or accrued to a qualified | 237 |
self-employed retirement plan with respect to an owner or | 238 |
owner-employee of the taxpayer, amounts paid or accrued to or for | 239 |
health insurance for an owner or owner-employee, and amounts paid | 240 |
or accrued to or for life insurance for an owner or owner-employee | 241 |
shall not be allowed as a deduction. | 242 |
Nothing in division (A)(1) of this section shall be construed | 243 |
as allowing the taxpayer to add or deduct any amount more than | 244 |
once or shall be construed as allowing any taxpayer to deduct any | 245 |
amount paid to or accrued for purposes of federal self-employment | 246 |
tax. | 247 |
Nothing in this chapter shall be construed as limiting or | 248 |
removing the ability of any municipal corporation to administer, | 249 |
audit, and enforce the provisions of its municipal income tax. | 250 |
(2) "Internal Revenue Code" means the Internal Revenue Code | 251 |
of 1986, 100 Stat. 2085, 26 U.S.C. 1, as amended. | 252 |
(3) "Schedule C" means internal revenue service schedule C | 253 |
filed by a taxpayer pursuant to the Internal Revenue Code. | 254 |
(4) "Form 2106" means internal revenue service form 2106 | 255 |
filed by a taxpayer pursuant to the Internal Revenue Code. | 256 |
(5) "Intangible income" means income of any of the following | 257 |
types: income yield, interest, capital gains, dividends, or other | 258 |
income arising from the ownership, sale, exchange, or other | 259 |
disposition of intangible property including, but not limited to, | 260 |
investments, deposits, money, or credits as those terms are | 261 |
defined in Chapter 5701. of the Revised Code, and patents, | 262 |
copyrights, trademarks, tradenames, investments in real estate | 263 |
investment trusts, investments in regulated investment companies, | 264 |
and appreciation on deferred compensation. "Intangible income" | 265 |
does not include prizes, awards, or other income associated with | 266 |
any lottery winnings or other similar games of chance. | 267 |
(6) "S corporation" means a corporation that has made an | 268 |
election under subchapter S of Chapter 1 of Subtitle A of the | 269 |
Internal Revenue Code for its taxable year. | 270 |
(7) For taxable years beginning on or after January 1, 2004, | 271 |
"net profit" for a taxpayer other than an individual means | 272 |
adjusted federal taxable income and "net profit" for a taxpayer | 273 |
who is an individual means the individual's profit required to be | 274 |
reported on schedule C, schedule E, or schedule F, other than any | 275 |
amount allowed as a deduction under division (E)(2) or (3) of this | 276 |
section or amounts described in division (H) of this section. | 277 |
(8) "Taxpayer" means a person subject to a tax on income | 278 |
levied by a municipal corporation. Except as provided in division | 279 |
(L) of this section, "taxpayer" does not include any person that | 280 |
is a disregarded entity or a qualifying subchapter S subsidiary | 281 |
for federal income tax purposes, but "taxpayer" includes any other | 282 |
person who owns the disregarded entity or qualifying subchapter S | 283 |
subsidiary. | 284 |
(9) "Taxable year" means the corresponding tax reporting | 285 |
period as prescribed for the taxpayer under the Internal Revenue | 286 |
Code. | 287 |
(10) "Tax administrator" means the individual charged with | 288 |
direct responsibility for administration of a tax on income levied | 289 |
by a municipal corporation and includes: | 290 |
(a) The central collection agency and the regional income tax | 291 |
agency and their successors in interest, and other entities | 292 |
organized to perform functions similar to those performed by the | 293 |
central collection agency and the regional income tax agency; | 294 |
(b) A municipal corporation acting as the agent of another | 295 |
municipal corporation; and | 296 |
(c) Persons retained by a municipal corporation to administer | 297 |
a tax levied by the municipal corporation, but only if the | 298 |
municipal corporation does not compensate the person in whole or | 299 |
in part on a contingency basis. | 300 |
(11) "Person" includes individuals, firms, companies, | 301 |
business trusts, estates, trusts, partnerships, limited liability | 302 |
companies, associations, corporations, governmental entities, and | 303 |
any other entity. | 304 |
(12) "Schedule E" means internal revenue service schedule E | 305 |
filed by a taxpayer pursuant to the Internal Revenue Code. | 306 |
(13) "Schedule F" means internal revenue service schedule F | 307 |
filed by a taxpayer pursuant to the Internal Revenue Code. | 308 |
(B) No municipal corporation shall tax income at other than a | 309 |
uniform rate. | 310 |
(C) No municipal corporation shall levy a tax on income at a | 311 |
rate in excess of one per cent without having obtained the | 312 |
approval of the excess by a majority of the electors of the | 313 |
municipality voting on the question at a general, primary, or | 314 |
special election. The legislative authority of the municipal | 315 |
corporation shall file with the board of elections at least ninety | 316 |
days before the day of the election a copy of the ordinance | 317 |
together with a resolution specifying the date the election is to | 318 |
be held and directing the board of elections to conduct the | 319 |
election. The ballot shall be in the following form: "Shall the | 320 |
Ordinance providing for a ... per cent levy on income for (Brief | 321 |
description of the purpose of the proposed levy) be passed? | 322 |
323 |
FOR THE INCOME TAX | 324 | ||||
AGAINST THE INCOME TAX | " | 325 |
326 |
In the event of an affirmative vote, the proceeds of the levy | 327 |
may be used only for the specified purpose. | 328 |
(D)(1) Except as otherwise provided in this section, no | 329 |
municipal corporation shall exempt from a tax on income | 330 |
compensation for personal services of individuals over eighteen | 331 |
years of age or the net profit from a business or profession. | 332 |
(2)(a) For taxable years beginning on or after January 1, | 333 |
2004, no municipal corporation shall tax the net profit from a | 334 |
business or profession using any base other than the taxpayer's | 335 |
adjusted federal taxable income. | 336 |
(b) Division (D)(2)(a) of this section does not apply to any | 337 |
taxpayer required to file a return under section 5745.03 of the | 338 |
Revised Code or to the net profit from a sole proprietorship. | 339 |
(E)(1) The legislative authority of a municipal corporation | 340 |
may, by ordinance or resolution, exempt from withholding and from | 341 |
a tax on income the following: | 342 |
(a) Compensation arising from the sale, exchange, or other | 343 |
disposition of a stock option, the exercise of a stock option, or | 344 |
the sale, exchange, or other disposition of stock purchased under | 345 |
a stock option; or | 346 |
(b) Compensation attributable to a nonqualified deferred | 347 |
compensation plan or program described in section 3121(v)(2)(C) of | 348 |
the Internal Revenue Code. | 349 |
(2) The legislative authority of a municipal corporation may | 350 |
adopt an ordinance or resolution that allows a taxpayer who is an | 351 |
individual to deduct, in computing the taxpayer's municipal income | 352 |
tax liability, an amount equal to the aggregate amount the | 353 |
taxpayer paid in cash during the taxable year to a health savings | 354 |
account of the taxpayer, to the extent the taxpayer is entitled to | 355 |
deduct that amount on internal revenue service form 1040. | 356 |
(3) The legislative authority of a municipal corporation may | 357 |
adopt an ordinance or resolution that allows a taxpayer who has a | 358 |
net profit from a business or profession that is operated as a | 359 |
sole proprietorship to deduct from that net profit the amount that | 360 |
the taxpayer paid during the taxable year for medical care | 361 |
insurance premiums for the taxpayer, the taxpayer's spouse, and | 362 |
dependents as defined in section 5747.01 of the Revised Code. The | 363 |
deduction shall be allowed to the same extent the taxpayer is | 364 |
entitled to deduct the premiums on internal revenue service form | 365 |
1040. The deduction allowed under this division shall be net of | 366 |
any related premium refunds, related premium reimbursements, or | 367 |
related insurance premium dividends received by the taxpayer | 368 |
during the taxable year. | 369 |
(F) If an individual's taxable income includes income against | 370 |
which the taxpayer has taken a deduction for federal income tax | 371 |
purposes as reportable on the taxpayer's form 2106, and against | 372 |
which a like deduction has not been allowed by the municipal | 373 |
corporation, the municipal corporation shall deduct from the | 374 |
taxpayer's taxable income an amount equal to the deduction shown | 375 |
on such form allowable against such income, to the extent not | 376 |
otherwise so allowed as a deduction by the municipal corporation. | 377 |
(G)(1) In the case of a taxpayer who has a net profit from a | 378 |
business or profession that is operated as a sole proprietorship, | 379 |
no municipal corporation may tax or use as the base for | 380 |
determining the amount of the net profit that shall be considered | 381 |
as having a taxable situs in the municipal corporation, an amount | 382 |
other than the net profit required to be reported by the taxpayer | 383 |
on schedule C or F from such sole proprietorship for the taxable | 384 |
year. | 385 |
(2) In the case of a taxpayer who has a net profit from | 386 |
rental activity required to be reported on schedule E, no | 387 |
municipal corporation may tax or use as the base for determining | 388 |
the amount of the net profit that shall be considered as having a | 389 |
taxable situs in the municipal corporation, an amount other than | 390 |
the net profit from rental activities required to be reported by | 391 |
the taxpayer on schedule E for the taxable year. | 392 |
(H) A municipal corporation shall not tax any of the | 393 |
following: | 394 |
(1) The military pay or allowances of members of the armed | 395 |
forces of the United States and of members of their reserve | 396 |
components, including the Ohio national guard; | 397 |
(2) The income of religious, fraternal, charitable, | 398 |
scientific, literary, or educational institutions to the extent | 399 |
that such income is derived from tax-exempt real estate, | 400 |
tax-exempt tangible or intangible property, or tax-exempt | 401 |
activities; | 402 |
(3) Except as otherwise provided in division (I) of this | 403 |
section, intangible income; | 404 |
(4) Compensation paid under section 3501.28 or 3501.36 of the | 405 |
Revised Code to a person serving as a precinct election official, | 406 |
to the extent that such compensation does not exceed one thousand | 407 |
dollars annually. Such compensation in excess of one thousand | 408 |
dollars may be subjected to taxation by a municipal corporation. A | 409 |
municipal corporation shall not require the payer of such | 410 |
compensation to withhold any tax from that compensation. | 411 |
(5) Compensation paid to an employee of a transit authority, | 412 |
regional transit authority, or regional transit commission created | 413 |
under Chapter 306. of the Revised Code for operating a transit bus | 414 |
or other motor vehicle for the authority or commission in or | 415 |
through the municipal corporation, unless the bus or vehicle is | 416 |
operated on a regularly scheduled route, the operator is subject | 417 |
to such a tax by reason of residence or domicile in the municipal | 418 |
corporation, or the headquarters of the authority or commission is | 419 |
located within the municipal corporation; | 420 |
(6) The income of a public utility, when that public utility | 421 |
is subject to the tax levied under section 5727.24 or 5727.30 of | 422 |
the Revised Code, except a municipal corporation may tax the | 423 |
following, subject to Chapter 5745. of the Revised Code: | 424 |
(a) Beginning January 1, 2002, the income of an electric | 425 |
company or combined company; | 426 |
(b) Beginning January 1, 2004, the income of a telephone | 427 |
company. | 428 |
As used in division (H)(6) of this section, "combined | 429 |
company," "electric company," and "telephone company" have the | 430 |
same meanings as in section 5727.01 of the Revised Code. | 431 |
(7) On and after January 1, 2003, items excluded from federal | 432 |
gross income pursuant to section 107 of the Internal Revenue Code; | 433 |
(8) On and after January 1, 2001, compensation paid to a | 434 |
nonresident individual to the extent prohibited under section | 435 |
718.011 of the Revised Code; | 436 |
(9)(a) Except as provided in division (H)(9)(b) and (c) of | 437 |
this section, an S corporation shareholder's distributive share of | 438 |
net profits of the S corporation, other than any part of the | 439 |
distributive share of net profits that represents wages as defined | 440 |
in section 3121(a) of the Internal Revenue Code or net earnings | 441 |
from self-employment as defined in section 1402(a) of the Internal | 442 |
Revenue Code. | 443 |
(b) If, pursuant to division (H) of former section 718.01 of | 444 |
the Revised Code as it existed before March 11, 2004, a majority | 445 |
of the electors of a municipal corporation voted in favor of the | 446 |
question at an election held on November 4, 2003, the municipal | 447 |
corporation may continue after 2002 to tax an S corporation | 448 |
shareholder's distributive share of net profits of an S | 449 |
corporation. | 450 |
(c) If, on December 6, 2002, a municipal corporation was | 451 |
imposing, assessing, and collecting a tax on an S corporation | 452 |
shareholder's distributive share of net profits of the S | 453 |
corporation to the extent the distributive share would be | 454 |
allocated or apportioned to this state under divisions (B)(1) and | 455 |
(2) of section 5733.05 of the Revised Code if the S corporation | 456 |
were a corporation subject to taxes imposed under Chapter 5733. of | 457 |
the Revised Code, the municipal corporation may continue to impose | 458 |
the tax on such distributive shares to the extent such shares | 459 |
would be so allocated or apportioned to this state only until | 460 |
December 31, 2004, unless a majority of the electors of the | 461 |
municipal corporation voting on the question of continuing to tax | 462 |
such shares after that date vote in favor of that question at an | 463 |
election held November 2, 2004. If a majority of those electors | 464 |
vote in favor of the question, the municipal corporation may | 465 |
continue after December 31, 2004, to impose the tax on such | 466 |
distributive shares only to the extent such shares would be so | 467 |
allocated or apportioned to this state. | 468 |
(d) For the purposes of division (D) of section 718.14 of the | 469 |
Revised Code, a municipal corporation shall be deemed to have | 470 |
elected to tax S corporation shareholders' distributive shares of | 471 |
net profits of the S corporation in the hands of the shareholders | 472 |
if a majority of the electors of a municipal corporation vote in | 473 |
favor of a question at an election held under division (H)(9)(b) | 474 |
or (c) of this section. The municipal corporation shall specify by | 475 |
ordinance or rule that the tax applies to the distributive share | 476 |
of a shareholder of an S corporation in the hands of the | 477 |
shareholder of the S corporation. | 478 |
(10) Employee compensation that is not "qualifying wages" as | 479 |
defined in section 718.03 of the Revised Code; | 480 |
(11) Beginning August 1, 2007, compensation paid to a person | 481 |
employed within the boundaries of a United States air force base | 482 |
under the jurisdiction of the United States air force that is used | 483 |
for the housing of members of the United States air force and is a | 484 |
center for air force operations, unless the person is subject to | 485 |
taxation because of residence or domicile. If the compensation is | 486 |
subject to taxation because of residence or domicile, municipal | 487 |
income tax shall be payable only to the municipal corporation of | 488 |
residence or domicile. | 489 |
(12) Compensation paid to a person for personal services | 490 |
performed for a political subdivision on property owned by the | 491 |
political subdivision, regardless of whether the compensation is | 492 |
received by an employee of the subdivision or another person | 493 |
performing services for the subdivision under a contract with the | 494 |
subdivision, if the property on which services are performed is | 495 |
annexed to a municipal corporation pursuant to section 709.023 of | 496 |
the Revised Code on or after the effective date of the amendment | 497 |
of this section, unless the person is subject to such taxation | 498 |
because of residence or domicile. If the compensation is subject | 499 |
to taxation because of residence or domicile, municipal income tax | 500 |
shall be payable only to the municipal corporation of residence or | 501 |
domicile. | 502 |
(I) Any municipal corporation that taxes any type of | 503 |
intangible income on March 29, 1988, pursuant to Section 3 of | 504 |
Amended Substitute Senate Bill No. 238 of the 116th general | 505 |
assembly, may continue to tax that type of income after 1988 if a | 506 |
majority of the electors of the municipal corporation voting on | 507 |
the question of whether to permit the taxation of that type of | 508 |
intangible income after 1988 vote in favor thereof at an election | 509 |
held on November 8, 1988. | 510 |
(J) Nothing in this section or section 718.02 of the Revised | 511 |
Code shall authorize the levy of any tax on income that a | 512 |
municipal corporation is not authorized to levy under existing | 513 |
laws or shall require a municipal corporation to allow a deduction | 514 |
from taxable income for losses incurred from a sole proprietorship | 515 |
or partnership. | 516 |
(K)(1) Nothing in this chapter prohibits a municipal | 517 |
corporation from allowing, by resolution or ordinance, a net | 518 |
operating loss carryforward. | 519 |
(2) Nothing in this chapter requires a municipal corporation | 520 |
to allow a net operating loss carryforward. | 521 |
(L)(1) A single member limited liability company that is a | 522 |
disregarded entity for federal tax purposes may elect to be a | 523 |
separate taxpayer from its single member in all Ohio municipal | 524 |
corporations in which it either filed as a separate taxpayer or | 525 |
did not file for its taxable year ending in 2003, if all of the | 526 |
following conditions are met: | 527 |
(a) The limited liability company's single member is also a | 528 |
limited liability company; | 529 |
(b) The limited liability company and its single member were | 530 |
formed and doing business in one or more Ohio municipal | 531 |
corporations for at least five years before January 1, 2004; | 532 |
(c) Not later than December 31, 2004, the limited liability | 533 |
company and its single member each make an election to be treated | 534 |
as a separate taxpayer under division (L) of this section; | 535 |
(d) The limited liability company was not formed for the | 536 |
purpose of evading or reducing Ohio municipal corporation income | 537 |
tax liability of the limited liability company or its single | 538 |
member; | 539 |
(e) The Ohio municipal corporation that is the primary place | 540 |
of business of the sole member of the limited liability company | 541 |
consents to the election. | 542 |
(2) For purposes of division (L)(1)(e) of this section, a | 543 |
municipal corporation is the primary place of business of a | 544 |
limited liability company if, for the limited liability company's | 545 |
taxable year ending in 2003, its income tax liability is greater | 546 |
in that municipal corporation than in any other municipal | 547 |
corporation in Ohio, and that tax liability to that municipal | 548 |
corporation for its taxable year ending in 2003 is at least four | 549 |
hundred thousand dollars. | 550 |
Section 2. That existing sections 709.023 and 718.01 of the | 551 |
Revised Code are hereby repealed. | 552 |