718.01.
Definitions
Any term used in this
chapter that is not otherwise defined in this chapter has the same meaning as
when used in a comparable context in laws of the United States relating to
federal income taxation or in Title LVII of the Revised Code, unless a
different meaning is clearly required. Except as provided in section
718.81 of the Revised Code, if a
term used in this chapter that is not otherwise defined in this chapter is used
in a comparable context in both the laws of the United States relating to
federal income tax and in Title LVII of the Revised Code and the use is not
consistent, then the use of the term in the laws of the United States relating
to federal income tax shall control over the use of the term in Title LVII of
the Revised Code.
Except as otherwise
provided in section 718.81 of the Revised Code, as
used in this chapter:
(A) |
(1) |
"Municipal taxable income" means the following:
(a) |
For
a person other than an individual, income apportioned or sitused to the
municipal corporation under section
718.02
of the Revised Code, as applicable, reduced by any pre-2017 net operating loss
carryforward available to the person for the municipal corporation. |
(b) |
(i) |
For
an individual who is a resident of a municipal corporation other than a
qualified municipal corporation, income reduced by exempt income to the extent
otherwise included in income, then reduced as provided in division (A)(2) of
this section, and further reduced by any pre-2017 net operating loss
carryforward available to the individual for the municipal
corporation. |
(ii) |
For an
individual who is a resident of a qualified municipal corporation, Ohio
adjusted gross income reduced by income exempted, and increased by deductions
excluded, by the qualified municipal corporation from the qualified municipal
corporation's tax. If a qualified municipal corporation, on or before December
31, 2013, exempts income earned by individuals who are not residents of the
qualified municipal corporation and net profit of persons that are not wholly
located within the qualified municipal corporation, such individual or person
shall have no municipal taxable income for the purposes of the tax levied by
the qualified municipal corporation and may be exempted by the qualified
municipal corporation from the requirements of section
718.03
of the Revised Code. |
|
(c) |
For
an individual who is a nonresident of a municipal corporation, income reduced
by exempt income to the extent otherwise included in income and then, as
applicable, apportioned or sitused to the municipal corporation under section
718.02
of the Revised Code, then reduced as provided in division (A)(2) of this
section, and further reduced by any pre-2017 net operating loss carryforward
available to the individual for the municipal corporation. |
|
(2) |
In
computing the municipal taxable income of a taxpayer who is an individual, the
taxpayer may subtract, as provided in division (A)(1)(b)(i) or (c) of this
section, the amount of the individual's employee business expenses reported on
the individual's form 2106 that the individual deducted for federal income tax
purposes for the taxable year, subject to the limitation imposed by section 67
of the Internal Revenue Code. For the municipal corporation in which the
taxpayer is a resident, the taxpayer may deduct all such expenses allowed for
federal income tax purposes. For a municipal corporation in which the taxpayer
is not a resident, the taxpayer may deduct such expenses only to the extent the
expenses are related to the taxpayer's performance of personal services in that
nonresident municipal corporation. |
|
(B) |
"Income" means the following:
(1) |
(a) |
For
residents, all income, salaries, qualifying wages, commissions, and other
compensation from whatever source earned or received by the resident, including
the resident's distributive share of the net profit of pass-through entities
owned directly or indirectly by the resident and any net profit of the
resident, except as provided in division (D)(5) of this section. |
(b) |
For
the purposes of division (B)(1)(a) of this section:
(i) |
Any
net operating loss of the resident incurred in the taxable year and the
resident's distributive share of any net operating loss generated in the same
taxable year and attributable to the resident's ownership interest in a
pass-through entity shall be allowed as a deduction, for that taxable year and
the following five taxable years, against any other net profit of the resident
or the resident's distributive share of any net profit attributable to the
resident's ownership interest in a pass-through entity until fully utilized,
subject to division (B)(1)(d) of this section; |
(ii) |
The resident's distributive share of the net profit of each pass-through entity
owned directly or indirectly by the resident shall be calculated without regard
to any net operating loss that is carried forward by that entity from a prior
taxable year and applied to reduce the entity's net profit for the current
taxable year. |
|
(c) |
Division (B)(1)(b) of this section does not apply with respect to any net
profit or net operating loss attributable to an ownership interest in an S
corporation unless shareholders' distributive shares of net profits from S
corporations are subject to tax in the municipal corporation as provided in
division (C)(14)(b) or (c) of this section. |
(d) |
Any
amount of a net operating loss used to reduce a taxpayer's net profit for a
taxable year shall reduce the amount of net operating loss that may be carried
forward to any subsequent year for use by that taxpayer. In no event shall the
cumulative deductions for all taxable years with respect to a taxpayer's net
operating loss exceed the original amount of that net operating loss available
to that taxpayer. |
|
(2) |
In
the case of nonresidents, all income, salaries, qualifying wages, commissions,
and other compensation from whatever source earned or received by the
nonresident for work done, services performed or rendered, or activities
conducted in the municipal corporation, including any net profit of the
nonresident, but excluding the nonresident's distributive share of the net
profit or loss of only pass-through entities owned directly or indirectly by
the nonresident. |
(3) |
For
taxpayers that are not individuals, net profit of the taxpayer; |
(4) |
Lottery, sweepstakes, gambling and sports winnings, winnings from games of
chance, and prizes and awards. If the taxpayer is a professional gambler for
federal income tax purposes, the taxpayer may deduct related wagering losses
and expenses to the extent authorized under the Internal Revenue Code and
claimed against such winnings. |
|
(C) |
"Exempt income" means all of the following:
(1) |
The
military pay or allowances of members of the armed forces of the United States
or members of their reserve components, including the national guard of any
state; |
(2) |
(a) |
Except as provided in division (C)(2)(b) of this section, intangible
income; |
(b) |
A municipal
corporation that taxed any type of intangible income on March 29, 1988,
pursuant to Section 3 of S.B. 238 of the 116th general assembly, may continue
to tax that type of income if a majority of the electors of the municipal
corporation voting on the question of whether to permit the taxation of that
type of intangible income after 1988 voted in favor thereof at an election held
on November 8, 1988. |
|
(3) |
Social security benefits, railroad retirement benefits, unemployment
compensation, pensions, retirement benefit payments, payments from annuities,
and similar payments made to an employee or to the beneficiary of an employee
under a retirement program or plan, disability payments received from private
industry or local, state, or federal governments or from charitable, religious
or educational organizations, and the proceeds of sickness, accident, or
liability insurance policies. As used in division (C)(3) of this section,
"unemployment compensation" does not include supplemental unemployment
compensation described in section 3402(o)(2) of the Internal Revenue
Code. |
(4) |
The income
of religious, fraternal, charitable, scientific, literary, or educational
institutions to the extent such income is derived from tax-exempt real estate,
tax-exempt tangible or intangible property, or tax-exempt activities. |
(5) |
Compensation paid under section
3501.28
or
3501.36
of the Revised Code to a person serving as a precinct election official to the
extent that such compensation does not exceed one thousand dollars for the
taxable year. Such compensation in excess of one thousand dollars for the
taxable year may be subject to taxation by a municipal corporation. A municipal
corporation shall not require the payer of such compensation to withhold any
tax from that compensation. |
(6) |
Dues, contributions, and similar payments received by charitable, religious,
educational, or literary organizations or labor unions, lodges, and similar
organizations; |
(7) |
Alimony and
child support received; |
(8) |
Compensation for personal injuries or for damages to property from insurance
proceeds or otherwise, excluding compensation paid for lost salaries or wages
or compensation from punitive damages; |
(9) |
Income of a public utility when that public utility is subject to the tax
levied under section
5727.24
or
5727.30
of the Revised Code. Division (C)(9) of this section does not apply for
purposes of Chapter 5745. of the Revised Code. |
(10) |
Gains from involuntary conversions, interest on federal obligations, items of
income subject to a tax levied by the state and that a municipal corporation is
specifically prohibited by law from taxing, and income of a decedent's estate
during the period of administration except such income from the operation of a
trade or business; |
(11) |
Compensation or allowances excluded from federal gross income under section 107
of the Internal Revenue Code; |
(12) |
Employee compensation that is not qualifying wages as defined in division (R)
of this section; |
(13) |
Compensation paid to a person employed within the boundaries of a United States
air force base under the jurisdiction of the United States air force that is
used for the housing of members of the United States air force and is a center
for air force operations, unless the person is subject to taxation because of
residence or domicile. If the compensation is subject to taxation because of
residence or domicile, tax on such income shall be payable only to the
municipal corporation of residence or domicile. |
(14) |
(a) |
Except as provided in division (C)(14)(b) or (c) of this section, an S
corporation shareholder's distributive share of net profits of the S
corporation, other than any part of the distributive share of net profits that
represents wages as defined in section 3121(a) of the Internal Revenue Code or
net earnings from self-employment as defined in section 1402(a) of the Internal
Revenue Code. |
(b) |
If, pursuant
to division (H) of former section
718.01
of the Revised Code as it existed before March 11, 2004, a majority of the
electors of a municipal corporation voted in favor of the question at an
election held on November 4, 2003, the municipal corporation may continue after
2002 to tax an S corporation shareholder's distributive share of net profits of
an S corporation. |
(c) |
If, on
December 6, 2002, a municipal corporation was imposing, assessing, and
collecting a tax on an S corporation shareholder's distributive share of net
profits of the S corporation to the extent the distributive share would be
allocated or apportioned to this state under divisions (B)(1) and (2) of
section
5733.05
of the Revised Code if the S corporation were a corporation subject to taxes
imposed under Chapter 5733. of the Revised Code, the municipal corporation may
continue to impose the tax on such distributive shares to the extent such
shares would be so allocated or apportioned to this state only until December
31, 2004, unless a majority of the electors of the municipal corporation voting
on the question of continuing to tax such shares after that date voted in favor
of that question at an election held November 2, 2004. If a majority of those
electors voted in favor of the question, the municipal corporation may continue
after December 31, 2004, to impose the tax on such distributive shares only to
the extent such shares would be so allocated or apportioned to this
state. |
(d) |
A municipal
corporation shall be deemed to have elected to tax S corporation shareholders'
distributive shares of net profits of the S corporation in the hands of the
shareholders if a majority of the electors of a municipal corporation voted in
favor of a question at an election held under division (C)(14)(b) or (c) of
this section. The municipal corporation shall specify by resolution or
ordinance that the tax applies to the distributive share of a shareholder of an
S corporation in the hands of the shareholder of the S corporation. |
|
(15) |
To the
extent authorized under a resolution or ordinance adopted by a municipal
corporation before January 1, 2016, all or a portion of the income of
individuals or a class of individuals under eighteen years of age. |
(16) |
(a) |
Except as provided in divisions (C)(16)(b), (c), and (d) of this section,
qualifying wages described in division (B)(1) or (E) of section
718.011
of the Revised Code to the extent the qualifying wages are not subject to
withholding for the municipal corporation under either of those
divisions. |
(b) |
The
exemption provided in division (C)(16)(a) of this section does not apply with
respect to the municipal corporation in which the employee resided at the time
the employee earned the qualifying wages. |
(c) |
The
exemption provided in division (C)(16)(a) of this section does not apply to
qualifying wages that an employer elects to withhold under division (D)(2) of
section
718.011
of the Revised Code. |
(d) |
The
exemption provided in division (C)(16)(a) of this section does not apply to
qualifying wages if both of the following conditions apply:
(i) |
For
qualifying wages described in division (B)(1) of section
718.011
of the Revised Code, the employee's employer withholds and remits tax on the
qualifying wages to the municipal corporation in which the employee's principal
place of work is situated, or, for qualifying wages described in division (E)
of section
718.011
of the Revised Code, the employee's employer withholds and remits tax on the
qualifying wages to the municipal corporation in which the employer's fixed
location is located; |
(ii) |
The
employee receives a refund of the tax described in division (C)(16)(d)(i) of
this section on the basis of the employee not performing services in that
municipal corporation. |
|
|
(17) |
(a) |
Except as provided in division (C)(17)(b) or (c) of this section, compensation
that is not qualifying wages paid to a nonresident individual for personal
services performed in the municipal corporation on not more than twenty days in
a taxable year. |
(b) |
The
exemption provided in division (C)(17)(a) of this section does not apply under
either of the following circumstances:
(i) |
The
individual's base of operation is located in the municipal
corporation. |
(ii) |
The
individual is a professional athlete, professional entertainer, or public
figure, and the compensation is paid for the performance of services in the
individual's capacity as a professional athlete, professional entertainer, or
public figure. For purposes of division (C)(17)(b)(ii) of this section,
"professional athlete," "professional entertainer," and "public figure" have
the same meanings as in section
718.011
of the Revised Code. |
|
(c) |
Compensation to which division (C)(17) of this section applies shall be treated
as earned or received at the individual's base of operation. If the individual
does not have a base of operation, the compensation shall be treated as earned
or received where the individual is domiciled. |
(d) |
For
purposes of division (C)(17) of this section, "base of operation" means the
location where an individual owns or rents an office, storefront, or similar
facility to which the individual regularly reports and at which the individual
regularly performs personal services for compensation. |
|
(18) |
Compensation paid to a person for personal services performed for a political
subdivision on property owned by the political subdivision, regardless of
whether the compensation is received by an employee of the subdivision or
another person performing services for the subdivision under a contract with
the subdivision, if the property on which services are performed is annexed to
a municipal corporation pursuant to section
709.023
of the Revised Code on or after March 27, 2013, unless the person is subject to
such taxation because of residence. If the compensation is subject to taxation
because of residence, municipal income tax shall be payable only to the
municipal corporation of residence. |
(19) |
In
the case of a tax administered, collected, and enforced by a municipal
corporation pursuant to an agreement with the board of directors of a joint
economic development district under section
715.72
of the Revised Code, the net profits of a business, and the income of the
employees of that business, exempted from the tax under division (Q) of that
section. |
(20) |
All of the
following:
(a) |
Income
derived from disaster work conducted in this state by an out-of-state disaster
business during a disaster response period pursuant to a qualifying
solicitation received by the business; |
(b) |
Income of a qualifying employee described in division (A)(14)(a) of section
5703.94 of the Revised Code, to
the extent such income is derived from disaster work conducted in this state by
the employee during a disaster response period pursuant to a qualifying
solicitation received by the employee's employer; |
(c) |
Income of a qualifying employee described in division (A)(14)(b) of section
5703.94 of the Revised Code, to
the extent such income is derived from disaster work conducted in this state by
the employee during a disaster response period on critical infrastructure owned
or used by the employee's employer. |
|
(21) |
Income the taxation of which is prohibited by the constitution or laws of the
United States.
Any item of income that
is exempt income of a pass-through entity under division (C) of this section is
exempt income of each owner of the pass-through entity to the extent of that
owner's distributive or proportionate share of that item of the entity's
income.
|
|
(D) |
(1) |
"Net profit" for a person who is an individual means the individual's net
profit required to be reported on schedule C, schedule E, or schedule F reduced
by any net operating loss carried forward. For the purposes of division (D)(1)
of this section, the net operating loss carried forward shall be calculated and
deducted in the same manner as provided in division (D)(3) of this
section. |
(2) |
"Net profit"
for a person other than an individual means adjusted federal taxable income
reduced by any net operating loss incurred by the person in a taxable year
beginning on or after January 1, 2017, subject to the limitations of division
(D)(3) of this section. |
(3) |
(a) |
The
amount of such net operating loss shall be deducted from net profit to the
extent necessary to reduce municipal taxable income to zero, with any remaining
unused portion of the net operating loss carried forward to not more than five
consecutive taxable years following the taxable year in which the loss was
incurred, but in no case for more years than necessary for the deduction to be
fully utilized. |
(b) |
No person
shall use the deduction allowed by division (D)(3) of this section to offset
qualifying wages. |
(c) |
(i) |
For
taxable years beginning in 2018, 2019, 2020, 2021, or 2022, a person may not
deduct, for purposes of an income tax levied by a municipal corporation that
levies an income tax before January 1, 2016, more than fifty per cent of the
amount of the deduction otherwise allowed by division (D)(3) of this
section. |
(ii) |
For taxable
years beginning in 2023 or thereafter, a person may deduct, for purposes of an
income tax levied by a municipal corporation that levies an income tax before
January 1, 2016, the full amount allowed by division (D)(3) of this section
without regard to the limitation of division (D)(3)(b)(i) of this
section. |
|
(d) |
Any pre-2017
net operating loss carryforward deduction that is available may be utilized
before a taxpayer may deduct any amount pursuant to division (D)(3) of this
section. |
(e) |
Nothing in
division (D)(3)(c)(i) of this section precludes a person from carrying forward,
for use with respect to any return filed for a taxable year beginning after
2018, any amount of net operating loss that was not fully utilized by operation
of division (D)(3)(c)(i) of this section. To the extent that an amount of net
operating loss that was not fully utilized in one or more taxable years by
operation of division (D)(3)(c)(i) of this section is carried forward for use
with respect to a return filed for a taxable year beginning in 2019, 2020,
2021, or 2022, the limitation described in division (D)(3)(c)(i) of this
section shall apply to the amount carried forward. |
|
(4) |
For
the purposes of this chapter, and notwithstanding division (D)(2) of this
section, net profit of a disregarded entity shall not be taxable as against
that disregarded entity, but shall instead be included in the net profit of the
owner of the disregarded entity. |
(5) |
For
the purposes of this chapter, and notwithstanding any other provision of this
chapter, the net profit of a publicly traded partnership that makes the
election described in division (D)(5) of this section shall be taxed as if the
partnership were a C corporation, and shall not be treated as the net profit or
income of any owner of the partnership.
A publicly traded
partnership that is treated as a partnership for federal income tax purposes
and that is subject to tax on its net profits in one or more municipal
corporations in this state may elect to be treated as a C corporation for
municipal income tax purposes. The publicly traded partnership shall make the
election in every municipal corporation in which the partnership is subject to
taxation on its net profits. The election shall be made on the annual tax
return filed in each such municipal corporation. The publicly traded
partnership shall not be required to file the election with any municipal
corporation in which the partnership is not subject to taxation on its net
profits, but division (D)(5) of this section applies to all municipal
corporations in which an individual owner of the partnership resides.
|
|
(E) |
"Adjusted
federal taxable income," for a person required to file as a C corporation, or
for a person that has elected to be taxed as a C corporation under division
(D)(5) of this section, means a C corporation's federal taxable income before
net operating losses and special deductions as determined under the Internal
Revenue Code, adjusted as follows:
(1) |
Deduct intangible income to the extent included in federal taxable income. The
deduction shall be allowed regardless of whether the intangible income relates
to assets used in a trade or business or assets held for the production of
income. |
(2) |
Add an
amount equal to five per cent of intangible income deducted under division
(E)(1) of this section, but excluding that portion of intangible income
directly related to the sale, exchange, or other disposition of property
described in section 1221 of the Internal Revenue Code; |
(3) |
Add
any losses allowed as a deduction in the computation of federal taxable income
if the losses directly relate to the sale, exchange, or other disposition of an
asset described in section 1221 or 1231 of the Internal Revenue Code; |
(4) |
(a) |
Except as provided in division (E)(4)(b) of this section, deduct income and
gain included in federal taxable income to the extent the income and gain
directly relate to the sale, exchange, or other disposition of an asset
described in section 1221 or 1231 of the Internal Revenue Code; |
(b) |
Division (E)(4)(a) of this section does not apply to the extent the income or
gain is income or gain described in section 1245 or 1250 of the Internal
Revenue Code. |
|
(5) |
Add
taxes on or measured by net income allowed as a deduction in the computation of
federal taxable income; |
(6) |
In
the case of a real estate investment trust or regulated investment company, add
all amounts with respect to dividends to, distributions to, or amounts set
aside for or credited to the benefit of investors and allowed as a deduction in
the computation of federal taxable income; |
(7) |
Deduct, to the extent not otherwise deducted or excluded in computing federal
taxable income, any income derived from a transfer agreement or from the
enterprise transferred under that agreement under section
4313.02
of the Revised Code; |
(8) |
Deduct
exempt income to the extent not otherwise deducted or excluded in computing
adjusted federal taxable income. |
(9) |
Deduct any net profit of a pass-through entity owned directly or indirectly by
the taxpayer and included in the taxpayer's federal taxable income unless an
affiliated group of corporations includes that net profit in the group's
federal taxable income in accordance with division (E)(3)(b) of section
718.06
of the Revised Code. |
(10) |
Add any
loss incurred by a pass-through entity owned directly or indirectly by the
taxpayer and included in the taxpayer's federal taxable income unless an
affiliated group of corporations includes that loss in the group's federal
taxable income in accordance with division (E)(3)(b) of section
718.06
of the Revised Code.
If the taxpayer is not a
C corporation, is not a disregarded entity that has made the election described
in division (L)(2) of this section, is not a publicly traded partnership that
has made the election described in division (D)(5) of this section, and is not
an individual, the taxpayer shall compute adjusted federal taxable income under
this section as if the taxpayer were a C corporation, except guaranteed
payments and other similar amounts paid or accrued to a partner, former
partner, shareholder, former shareholder, member, or former member shall not be
allowed as a deductible expense unless such payments are in consideration for
the use of capital and treated as payment of interest under section 469 of the
Internal Revenue Code or United States treasury regulations. Amounts paid or
accrued to a qualified self-employed retirement plan with respect to a partner,
former partner, shareholder, former shareholder, member, or former member of
the taxpayer, amounts paid or accrued to or for health insurance for a partner,
former partner, shareholder, former shareholder, member, or former member, and
amounts paid or accrued to or for life insurance for a partner, former partner,
shareholder, former shareholder, member, or former member shall not be allowed
as a deduction.
Nothing in division (E)
of this section shall be construed as allowing the taxpayer to add or deduct
any amount more than once or shall be construed as allowing any taxpayer to
deduct any amount paid to or accrued for purposes of federal self-employment
tax.
|
|
(F) |
"Schedule C" means internal revenue service schedule C (form 1040) filed by a
taxpayer pursuant to the Internal Revenue Code. |
(G) |
"Schedule E" means internal revenue service schedule E (form 1040) filed by a
taxpayer pursuant to the Internal Revenue Code. |
(H) |
"Schedule F" means internal revenue service schedule F (form 1040) filed by a
taxpayer pursuant to the Internal Revenue Code. |
(I) |
"Internal Revenue Code" has the same meaning as in section
5747.01 of
the Revised Code. |
(J) |
"Resident"
means an individual who is domiciled in the municipal corporation as determined
under section
718.012
of the Revised Code. |
(K) |
"Nonresident" means an individual that is not a resident. |
(L) |
(1) |
"Taxpayer" means a person subject to a tax levied on income by a municipal
corporation in accordance with this chapter. "Taxpayer" does not include a
grantor trust or, except as provided in division (L)(2)(a) of this section, a
disregarded entity. |
(2) |
(a) |
A
single member limited liability company that is a disregarded entity for
federal tax purposes may be a separate taxpayer from its single member in all
Ohio municipal corporations in which it either filed as a separate taxpayer or
did not file for its taxable year ending in 2003, if all of the following
conditions are met:
(i) |
The limited
liability company's single member is also a limited liability
company. |
(ii) |
The limited
liability company and its single member were formed and doing business in one
or more Ohio municipal corporations for at least five years before January 1,
2004. |
(iii) |
Not later
than December 31, 2004, the limited liability company and its single member
each made an election to be treated as a separate taxpayer under division (L)
of this section as this section existed on December 31, 2004. |
(iv) |
The limited liability company was not formed for the purpose of evading or
reducing Ohio municipal corporation income tax liability of the limited
liability company or its single member. |
(v) |
The
Ohio municipal corporation that was the primary place of business of the sole
member of the limited liability company consented to the election. |
|
(b) |
For purposes
of division (L)(2)(a)(v) of this section, a municipal corporation was the
primary place of business of a limited liability company if, for the limited
liability company's taxable year ending in 2003, its income tax liability was
greater in that municipal corporation than in any other municipal corporation
in Ohio, and that tax liability to that municipal corporation for its taxable
year ending in 2003 was at least four hundred thousand dollars. |
|
|
(M) |
"Person"
includes individuals, firms, companies, joint stock companies, business trusts,
estates, trusts, partnerships, limited liability partnerships, limited
liability companies, associations, C corporations, S corporations, governmental
entities, and any other entity. |
(N) |
"Pass-through entity" means a partnership not treated as an association taxable
as a C corporation for federal income tax purposes, a limited liability company
not treated as an association taxable as a C corporation for federal income tax
purposes, an S corporation, or any other class of entity from which the income
or profits of the entity are given pass-through treatment for federal income
tax purposes. "Pass-through entity" does not include a trust, estate, grantor
of a grantor trust, or disregarded entity. |
(O) |
"S
corporation" means a person that has made an election under subchapter S of
Chapter 1 of Subtitle A of the Internal Revenue Code for its taxable
year. |
(P) |
"Single
member limited liability company" means a limited liability company that has
one direct member. |
(Q) |
"Limited
liability company" means a limited liability company formed under Chapter 1705.
of the Revised Code or under the laws of another state. |
(R) |
"Qualifying wages" means wages, as defined in section 3121(a) of the Internal
Revenue Code, without regard to any wage limitations, adjusted as follows:
(1) |
Deduct the following amounts:
(a) |
Any amount
included in wages if the amount constitutes compensation attributable to a plan
or program described in section 125 of the Internal Revenue Code. |
(b) |
Any
amount included in wages if the amount constitutes payment on account of a
disability related to sickness or an accident paid by a party unrelated to the
employer, agent of an employer, or other payer. |
(c) |
Any
amount attributable to a nonqualified deferred compensation plan or program
described in section 3121(v)(2)(C) of the Internal Revenue Code if the
compensation is included in wages and the municipal corporation has, by
resolution or ordinance adopted before January 1, 2016, exempted the amount
from withholding and tax. |
(d) |
Any
amount included in wages if the amount arises from the sale, exchange, or other
disposition of a stock option, the exercise of a stock option, or the sale,
exchange, or other disposition of stock purchased under a stock option and the
municipal corporation has, by resolution or ordinance adopted before January 1,
2016, exempted the amount from withholding and tax. |
(e) |
Any
amount included in wages that is exempt income. |
|
(2) |
Add
the following amounts:
(a) |
Any amount
not included in wages solely because the employee was employed by the employer
before April 1, 1986. |
(b) |
Any amount
not included in wages because the amount arises from the sale, exchange, or
other disposition of a stock option, the exercise of a stock option, or the
sale, exchange, or other disposition of stock purchased under a stock option
and the municipal corporation has not, by resolution or ordinance, exempted the
amount from withholding and tax adopted before January 1, 2016. Division
(R)(2)(b) of this section applies only to those amounts constituting ordinary
income. |
(c) |
Any amount
not included in wages if the amount is an amount described in section 401(k),
403(b), or 457 of the Internal Revenue Code. Division (R)(2)(c) of this section
applies only to employee contributions and employee deferrals. |
(d) |
Any
amount that is supplemental unemployment compensation benefits described in
section 3402(o)(2) of the Internal Revenue Code and not included in
wages. |
(e) |
Any amount
received that is treated as self-employment income for federal tax purposes in
accordance with section 1402(a)(8) of the Internal Revenue Code. |
(f) |
Any
amount not included in wages if all of the following apply:
(i) |
For
the taxable year the amount is employee compensation that is earned outside of
the United States and that either is included in the taxpayer's gross income
for federal income tax purposes or would have been included in the taxpayer's
gross income for such purposes if the taxpayer did not elect to exclude the
income under section 911 of the Internal Revenue Code; |
(ii) |
For no preceding taxable year did the amount constitute wages as defined in
section 3121(a) of the Internal Revenue Code; |
(iii) |
For no succeeding taxable year will the amount constitute wages; and |
(iv) |
For any taxable year the amount has not otherwise been added to wages pursuant
to either division (R)(2) of this section or section
718.03
of the Revised Code, as that section existed before the effective date of H.B.
5 of the 130th general assembly, March 23, 2015. |
|
|
|
(S) |
"Intangible
income" means income of any of the following types: income yield, interest,
capital gains, dividends, or other income arising from the ownership, sale,
exchange, or other disposition of intangible property including, but not
limited to, investments, deposits, money, or credits as those terms are defined
in Chapter 5701. of the Revised Code, and patents, copyrights, trademarks,
tradenames, investments in real estate investment trusts, investments in
regulated investment companies, and appreciation on deferred compensation.
"Intangible income" does not include prizes, awards, or other income associated
with any lottery winnings, gambling winnings, or other similar games of
chance. |
(T) |
"Taxable
year" means the corresponding tax reporting period as prescribed for the
taxpayer under the Internal Revenue Code. |
(U) |
"Tax administrator" means the individual charged with direct responsibility for
administration of an income tax levied by a municipal corporation in accordance
with this chapter, and also includes the following:
(1) |
A
municipal corporation acting as the agent of another municipal
corporation; |
(2) |
A person
retained by a municipal corporation to administer a tax levied by the municipal
corporation, but only if the municipal corporation does not compensate the
person in whole or in part on a contingency basis; |
(3) |
The
central collection agency or the regional income tax agency or their successors
in interest, or another entity organized to perform functions similar to those
performed by the central collection agency and the regional income tax agency.
"Tax administrator" does
not include the tax commissioner.
|
|
(V) |
"Employer" means a person that is an employer for federal income tax
purposes. |
(W) |
"Employee"
means an individual who is an employee for federal income tax
purposes. |
(X) |
"Other
payer" means any person, other than an individual's employer or the employer's
agent, that pays an individual any amount included in the federal gross income
of the individual. "Other payer" includes casino operators and video lottery
terminal sales agents. |
(Y) |
"Calendar
quarter" means the three-month period ending on the last day of March, June,
September, or December. |
(Z) |
"Form 2106" means internal revenue service form 2106 filed by a taxpayer
pursuant to the Internal Revenue Code. |
(AA) |
"Municipal corporation" includes a joint economic development district or joint
economic development zone that levies an income tax under section
715.691,
715.70,
715.71,
or
715.72
of the Revised Code. |
(BB) |
"Disregarded entity" means a single member limited liability company, a
qualifying subchapter S subsidiary, or another entity if the company,
subsidiary, or entity is a disregarded entity for federal income tax
purposes. |
(CC) |
"Generic
form" means an electronic or paper form that is not prescribed by a particular
municipal corporation and that is designed for reporting taxes withheld by an
employer, agent of an employer, or other payer, estimated municipal income
taxes, or annual municipal income tax liability or for filing a refund
claim. |
(DD) |
"Tax return
preparer" means any individual described in section 7701(a)(36) of the Internal
Revenue Code and
26 C.F.R. 301.7701-15. |
(EE) |
"Ohio business gateway" means the online computer network system, created under
section
125.30 of the
Revised Code, that allows persons to electronically file business reply forms
with state agencies and includes any successor electronic filing and payment
system. |
(FF) |
"Local
board of tax review" and "board of tax review" mean the entity created under
section
718.11
of the Revised Code. |
(GG) |
"Net
operating loss" means a loss incurred by a person in the operation of a trade
or business. "Net operating loss" does not include unutilized losses resulting
from basis limitations, at-risk limitations, or passive activity loss
limitations. |
(HH) |
"Casino
operator" and "casino facility" have the same meanings as in section
3772.01 of the
Revised Code. |
(II) |
"Video
lottery terminal" has the same meaning as in section
3770.21
of the Revised Code. |
(JJ) |
"Video
lottery terminal sales agent" means a lottery sales agent licensed under
Chapter 3770. of the Revised Code to conduct video lottery terminals on behalf
of the state pursuant to section
3770.21
of the Revised Code. |
(KK) |
"Postal
service" means the United States postal service. |
(LL) |
"Certified mail," "express mail," "United States mail," "postal service," and
similar terms include any delivery service authorized pursuant to section
5703.056
of the Revised Code. |
(MM) |
"Postmark
date," "date of postmark," and similar terms include the date recorded and
marked in the manner described in division (B)(3) of section
5703.056
of the Revised Code. |
(NN) |
"Related
member" means a person that, with respect to the taxpayer during all or any
portion of the taxable year, is either a related entity, a component member as
defined in section 1563(b) of the Internal Revenue Code, or a person to or from
whom there is attribution of stock ownership in accordance with section 1563(e)
of the Internal Revenue Code except, for purposes of determining whether a
person is a related member under this division, "twenty per cent" shall be
substituted for "5 percent" wherever "5 percent" appears in section 1563(e) of
the Internal Revenue Code. |
(OO) |
"Related entity" means any of the following:
(1) |
An
individual stockholder, or a member of the stockholder's family enumerated in
section 318 of the Internal Revenue Code, if the stockholder and the members of
the stockholder's family own directly, indirectly, beneficially, or
constructively, in the aggregate, at least fifty per cent of the value of the
taxpayer's outstanding stock; |
(2) |
A
stockholder, or a stockholder's partnership, estate, trust, or corporation, if
the stockholder and the stockholder's partnerships, estates, trusts, or
corporations own directly, indirectly, beneficially, or constructively, in the
aggregate, at least fifty per cent of the value of the taxpayer's outstanding
stock; |
(3) |
A
corporation, or a party related to the corporation in a manner that would
require an attribution of stock from the corporation to the party or from the
party to the corporation under division (OO)(4) of this section, provided the
taxpayer owns directly, indirectly, beneficially, or constructively, at least
fifty per cent of the value of the corporation's outstanding stock; |
(4) |
The
attribution rules described in section 318 of the Internal Revenue Code apply
for the purpose of determining whether the ownership requirements in divisions
(OO)(1) to (3) of this section have been met. |
|
(PP) |
(1) |
"Assessment" means a written finding by the tax administrator that a person has
underpaid municipal income tax, or owes penalty and interest, or any
combination of tax, penalty, or interest, to the municipal corporation that
commences the person's time limitation for making an appeal to the local board
of tax review pursuant to section
718.11
of the Revised Code, and has "ASSESSMENT" written in all capital letters at the
top of such finding. |
(2) |
"Assessment"
does not include an informal notice denying a request for refund issued under
division (B)(3) of section
718.19
of the Revised Code, a billing statement notifying a taxpayer of current or
past-due balances owed to the municipal corporation, a tax administrator's
request for additional information, a notification to the taxpayer of
mathematical errors, or a tax administrator's other written correspondence to a
person or taxpayer that does not meet the
criteria prescribed by division (PP)(1) of this section. |
|
(QQ) |
"Taxpayers' rights and responsibilities" means the rights provided to taxpayers
in sections
718.11,
718.12,
718.19,
718.23,
718.36,
718.37,
718.38,
5717.011,
and
5717.03
of the Revised Code and the responsibilities of taxpayers to file, report,
withhold, remit, and pay municipal income tax and otherwise comply with Chapter
718. of the Revised Code and resolutions, ordinances, and rules adopted by a
municipal corporation for the imposition and administration of a municipal
income tax. |
(RR) |
"Qualified
municipal corporation" means a municipal corporation that, by resolution or
ordinance adopted on or before December 31, 2011, adopted Ohio adjusted gross
income, as defined by section
5747.01 of
the Revised Code, as the income subject to tax for the purposes of imposing a
municipal income tax. |
(SS) |
(1) |
"Pre-2017 net operating loss carryforward" means any net operating loss
incurred in a taxable year beginning before January 1, 2017, to the extent such
loss was permitted, by a resolution or ordinance of the municipal corporation
that was adopted by the municipal corporation before January 1, 2016, to be
carried forward and utilized to offset income or net profit generated in such
municipal corporation in future taxable years. |
(2) |
For
the purpose of calculating municipal taxable income, any pre-2017 net operating
loss carryforward may be carried forward to any taxable year, including taxable
years beginning in 2017 or thereafter, for the number of taxable years provided
in the resolution or ordinance or until fully utilized, whichever is
earlier. |
|
(TT) |
"Small
employer" means any employer that had total revenue of less than five hundred
thousand dollars during the preceding taxable year. For purposes of this
division, "total revenue" means receipts of any type or kind, including, but
not limited to, sales receipts; payments; rents; profits; gains, dividends, and
other investment income; compensation; commissions; premiums; money; property;
grants; contributions; donations; gifts; program service revenue; patient
service revenue; premiums; fees, including premium fees and service fees;
tuition payments; unrelated business revenue; reimbursements; any type of
payment from a governmental unit, including grants and other allocations; and
any other similar receipts reported for federal income tax purposes or under
generally accepted accounting principles. "Small employer" does not include the
federal government; any state government, including any state agency or
instrumentality; any political subdivision; or any entity treated as a
government for financial accounting and reporting purposes. |
(UU) |
"Audit" means the examination of a person or the inspection of the books,
records, memoranda, or accounts of a person for the purpose of determining
liability for a municipal income tax. |
(VV) |
"Publicly traded partnership" means any partnership, an interest in which is
regularly traded on an established securities market. A "publicly traded
partnership" may have any number of partners. |
(WW) |
"Tax commissioner" means the tax commissioner appointed under section
121.03
of the Revised Code. |
(XX) |
"Out-of-state disaster business," "qualifying solicitation," "qualifying
employee," "disaster work," "critical infrastructure," and "disaster response
period" have the same meanings as in section
5703.94 of the Revised
Code. |
(YY) |
"Pension"
means a retirement benefit plan, regardless of whether the plan satisfies the
qualifications described under section 401(a) of the Internal Revenue Code,
including amounts that are taxable under the "Federal Insurance Contributions
Act," Chapter 21 of the Internal Revenue Code, excluding employee contributions
and elective deferrals, and regardless of whether such amounts are paid in the
same taxable year in which the amounts are included in the employee's wages, as
defined by section 3121(a) of the Internal Revenue Code. |
(ZZ) |
"Retirement benefit plan" means an arrangement whereby an entity provides
benefits to individuals either on or after their termination of service because
of retirement or disability. "Retirement benefit plan" does not include wage
continuation payments, severance payments, or payments made for accrued
personal or vacation time. |
Cite as (Casemaker) R.C. § 718.01
History. Amended by
133rd General Assembly File No. TBD, HB 197, §1,
eff. 3/27/2020.
Amended by
133rd General Assembly File No. TBD, HB 166, §101.01, eff.
10/17/2019, op. for municipal
taxable years beginning on or after 1/1/2020.
Amended by
132nd General Assembly File No. TBD, HB 133, §1,
eff. 9/28/2018.
Amended by
132nd General Assembly File No. TBD, HB 49, §101.01, eff.
9/29/2017, applicable for tax years beginning on
or after 1/1/2018.
Amended by
131st General Assembly File No. TBD, HB 182, §1,
eff. 9/13/2016.
Amended by
131st General Assembly File No. TBD, HB 64, §101.01, eff.
9/29/2015,
applicable to municipal taxable years beginning on or after
1/1/2016.
Added by
130th General Assembly File No. TBD, HB 5, §1,
eff. 3/23/2015,
applicable to municipal taxable years beginning on or after
1/1/2016.
Related Legislative Provision: See
132nd General Assembly File No. TBD, HB 49,
§803.100.
See
131st General Assembly File No. TBD, HB 64,
§803.160.
See
131st General Assembly File No. TBD, HB 64,
§803.01.