§ 104.32. Applicability; taxable situs; apportionment.
This section applies to any taxpayer that is engaged in a business or profession in the municipality and that has made the election under Section 104.30 of this chapter.
(A)
Except as otherwise provided in subsection (B) 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:
(1)
The average original cost of the real property and tangible personal property owned or used by the taxpayer in the business or profession in the municipality during the taxable period to the average original cost of all of the real and tangible personal property owned or used by the taxpayer in the business or profession during the same period, wherever situated.
As used in the preceding paragraph, tangible personal or real property shall include property rented or leased by the taxpayer and the value of such property shall be determined by multiplying the annual rental thereon by eight;
(2)
Wages, salaries, and other compensation paid during the taxable period to individuals employed in the business or profession for services performed in the municipality to wages, salaries, and other compensation paid during the same period to individuals employed in the business or profession, wherever the individual's services are performed, excluding compensation from which taxes are not required to be withheld under Section 104.092 of this chapter;
(3)
Total gross receipts of the business or profession from sales and rentals made and services performed during the taxable period in the municipality to total gross receipts of the business or profession during the same period from sales, rentals, and services, wherever made or performed.
(B)
(1)
If the apportionment factors described in subsection (A) of this section do not fairly represent the extent of a taxpayer's business activity in the municipality, the taxpayer may request, or the tax commissioner may require, that the taxpayer use, with respect to all or any portion of the income of the taxpayer, an alternative apportionment method involving one or more of the following:
(a)
Separate accounting;
(b)
The exclusion of one or more of the factors;
(c)
The inclusion of one or more additional factors that would provide for a more fair apportionment of the income of the taxpayer to the municipality;
(d)
A modification of one or more of the factors.
(2)
A taxpayer request to use an alternative apportionment method shall be in writing and shall accompany a tax return, timely filed appeal of an assessment, or timely filed amended tax return. The taxpayer may use the requested alternative method unless the tax commissioner denies the request in an assessment issued within the period prescribed by subsection (A) of 104.41 of this chapter.
(3)
The Tax Commissioner may require a taxpayer to use an alternative apportionment method as described in subsection (B)(1) of this section only by issuing an assessment to the taxpayer within the period prescribed by subsection (A) of Section 104.41 of this chapter.
(C)
As used in subsection (A)(2) of this section, "wages, salaries, and other compensation" includes only wages, salaries, or other compensation paid to an employee for services performed at any of the following locations:
(1)
A location that is owned, controlled, or used by, rented to, or under the possession of one of the following:
(a)
The employer;
(b)
A vendor, customer, client, or patient of the employer, or a related member of such a vendor, customer, client, or patient;
(c)
A vendor, customer, client, or patient of a person described in subsection (C)(1)(b) of this section, or a related member of such a vendor, customer, client, or patient.
(2)
Any location at which a trial, appeal, hearing, investigation, inquiry, review, court-martial, or similar administrative, judicial, or legislative matter or proceeding is being conducted, provided that the compensation is paid for services performed for, or on behalf of, the employer or that the employee's presence at the location directly or indirectly benefits the employer;
(3)
Any other location, if the Tax Commissioner determines that the employer directed the employee to perform the services at the other location in lieu of a location described in subsection (C)(1) or (2) of this section solely in order to avoid or reduce the employer's municipal income tax liability. If the Tax Commissioner makes such a determination, the employer may dispute the determination by establishing, by a preponderance of the evidence, that the Tax Commissioner's determination was unreasonable.
(D)
For the purposes of subsection (A)(3) of this section, receipts from sales and rentals made and services performed shall be sitused to the municipality as follows:
(1)
Gross receipts from the sale of tangible personal property shall be sitused to the municipality only if, regardless of where title passes, the property meets either of the following criteria:
(a)
The property is shipped to or delivered within the municipality from a stock of goods located within the municipality.
(b)
The property is delivered within the municipality from a location outside the municipality, provided the taxpayer is regularly engaged through its own employees in the solicitation or promotion of sales within the municipality and the sales result from such solicitation or promotion.
(2)
Gross receipts from the sale of services shall be sitused to the municipality to the extent that such services are performed in the municipality.
(3)
To the extent included in income, gross receipts from the sale of real property located in the municipality shall be sitused to the municipality.
(4)
To the extent included in income, gross receipts from rents and royalties from real property located in the municipality shall be sitused to the municipality.
(5)
Gross receipts from rents and royalties from tangible personal property shall be sitused to the municipality based upon the extent to which the tangible personal property is used in the municipality.
(E)
Commissions received by a real estate agent or broker relating to the sale, purchase, or lease of real estate shall be sitused to the city in which the real estate is located. Net profit reported by the real estate agent or broker shall be allocated to the municipality based upon the ratio of the commissions the agent or broker received from the sale, purchase, or lease of real estate located in the municipality to the commissions received from the sale, purchase, or lease of real estate everywhere in the taxable year.
(F)
If, in computing a taxpayer's adjusted federal taxable income, the taxpayer deducted any amount with respect to a stock option granted to an employee, and if the employee is not required to include in the employee's income any such amount or a portion thereof because it is exempted from taxation under Section 104.064 or subsection (33)(A)(iv) of Section 104.02 of this chapter by the municipality, the taxpayer shall add the amount that is exempt from taxation to the taxpayer's net profit that was apportioned the municipality. In no case shall a taxpayer be required to add to its net profit that was apportioned to the municipality any amount other than the amount upon which the employee would be required to pay tax were the amount related to the stock option not exempted from taxation.
This subsection applies solely for the purpose of making an adjustment to the amount of a taxpayer's net profit that was apportioned to the municipality under this section.
(G)
When calculating the ratios described in subsection (A) of this section for the purposes of that subsection or subsection (B) of this section, the owner of a disregarded entity shall include in the owner's ratios the property, payroll, and gross receipts of such disregarded entity.
(Ord. 83-2018)