TITLE: A RESOLUTION ADOPTING RULES AND REGULATIONS UNDER THE AUTHORITY OF SECTION 2, OF VILLAGE OF SCIO INCOME TAX ORDINANCE NO. 90-785.

BE IT RESOLVED BY THE COUNCIL OF THE VILLAGE OF SCIO, OHIO:

ARTICLE I-1
Definitions

For the purpose of these Regulations the following terms shall have the definitions hereafter given:

1. The definitions of the terms "Taxpayer", "Association", "Business", "Corporation", "Employee", "Net Profits", "Employer", "Non-Resident", "Person", "Resident", "Other Entity" shall be the same as set forth in Section 1 of the Village of Scio Ordinance No. 90-785.

2. The term "Place of Business" means any bona fide office (other than a mere statutory office) factory, warehouse, or other space which is occupied and used by the taxpayer in carrying on any business activity individually or through one or more of his regular employees regularly in attendance.

A taxpayer does not have a regular place of business outside Scio solely by cosigning goods to an independent factor or contractor outside the Village for sale.

3. The term "Business Allocation Percentage", as used in these Regulations, means the average percentage arrived at by applying the formula set forth in Section 2, subsection H of the Ordinance. The "Business Allocation Percentage" is the percentage which may be applied to determine that portion of the entire net profits of a taxpayer to be allocated as having been made within the Village of Scio within the meaning of the provisions of said Section 2.

4. The term "The Ordinance" means Ordinance No. 90-785 enacted by the Council of the Village of Scio on November 14, 1990, and any amendments or supplements thereto.

The singular shall include the plural and the masculine shall include the feminine and the neuter.

ARTICLE I-2
Commencement and Duration of the Tax

The tax imposed by the Ordinance is effective as to income and profits earned or accruing on and after January 1, 1991, and payroll deductions must be made against all salaries wages, commissions, bonuses and other compensation earned or accruing on and after that date.

The Ordinance continues in effect until repealed or amended.

ARTICLE II-1
Imposition of Tax - Resident Employees

In the case of the residents of the Village of Scio an annual tax of one percent (1%) is imposed on all salaries, wages, commissions and other compensation earned or accrued on and after January 1, 1991. For the purpose of determining the tax on the earnings of the resident taxpayers, taxed under sub-section A of Section 2 of the Ordinance, the source of the earnings and the place or places in or at which the services were rendered are immaterial. All such earnings, wherever earned or paid, are taxable.

The following are items which are subject to the tax:

A. Salaries, wages, bonuses or incentive payments received by an individual, whether directly or through an agent and whether in cash or in property, for services rendered on and after January 1, 1991.

1. As an offices, director or employee of a corporation (including charitable and other non-profit corporations), joint stock association or joint stock company;

2. As an employee (as distinguished from a partner or member) of a partnership, limited partnership, or any other form of unincorporated enterprise owned by one or more persons;

3. As an employee (as distinguished from the proprietor) of a business, trade or profession conducted by an individual owner;

4. As an officer or employee (whether elected, appointed or commissioned) of a governmental administration, agency, arm, authority, board, body, branch, bureau, department, division, subdivision, section or unit of the State of Ohio or any of the political subdivisions thereof;

5. As an officer or employee (whether elected, appointed or commissioned) of a governmental administration, agency, arm, authority, board, body, branch bureau, department, division, subdivision, section or unit of the United State Government or a corporation created and owned or controlled by the United State Government or any of its agencies;

6. As an employee of any other entity or person.

B. Wages, bonuses, or incentive payments received by an individual, whether directly or through an agent and whether in cash or in property, for services rendered on and after January 1, 1991.

1. Whether based upon hourly, daily, weekly, semi-monthly, monthly, annual, unit of production or piece-work rates; and 2. Whether paid by an individual, limited partnership, partnership, association, corporation (including charitable and other non-profit corporations), governmental administration, agency subdivision, section or unit, or any other entity.

C. Commissions received by a taxpayer whether directly or through an agent and whether in cash or in property, for services rendered on and after March 15, 1991, regardless of how computed, by whom or wheresoever paid.

If amounts received as drawing account exceed the commissions earned, the tax is payable on the gross amounts received.

Amounts received from an employer by way of expense and not by way of compensation, and used as such by the individual receiving them, are not deemed to be compensation if the employer deducts such expense advances as such from his gross income for the purpose of determining his net profits taxable under the Ordinance.

If such, commissions are included in the net earnings of a trade, business, profession, enterprise or activity regularly carried on by such individual and therefore subject to tax under Sub-section C of Section 2 of the Ordinance, they shall not again be separately taxed. In such case, such net earnings shall be taxed as provided in Article II-9 of the Regulations.

D. The receipt of fees and other compensation for personal services rendered shall be deemed to be subject to taxation under the Ordinance.

E. Domestic servants are subject to Scio tax under this Ordinance but are not subject to withholding provisions. That is to say, the domestic will report earnings and pay the tax directly to the Scio Income Tax Department.

ARTICLE II-2
Imposition of Tax - Non-Residents

In the case of individuals who are non-residents of Scio, there is imposed under the Ordinance an annual tax of one percent (1%) on all salaries, wages, commissions and other compensation, earned or accruing on and after January 1, 1991, for work done or services performed or rendered within the Village of Scio, whether such compensation or remuneration is received or earned directly or through an agent and whether paid in cash or in property.

The items subject to tax under this section are the same as those listed and defined in Article II-1. For methods of computing the extent of such work or services performed within the Village of Scio, and cases involving compensation for personal services partly within and partly outside the Village of Scio, see Article IV-1.

ARTICLE II-3 Imposition of Tax New Business Profits-Residents

1. In the case of trades, businesses, professions, other activities, enterprises or undertakings conducted, operated, engaged in, prosecuted or accrued on by residents of Scio there is imposed an annual tax of one percent (1%) on the net profits earned or accruing on and after January 1, 1991.

2. For the purpose of construing Sub-section (C.) and (D) of Section 2 of the Ordinance, the term "Residents" in the phrase "conducted by residents of the Village of Scio" will ordinarily be construed to have reference to the business entity itself, as distinguished from the partners, proprietors or other participants in its profits.

3. Generally, a partnership, association or other unincorporated enterprise owned by two or more persons will be taxed as an entity. However, in the case of a non-resident partnership, association or unincorporated enterprise which cannot be reached or taxed directly by the Village of Scio, or if only part of its earnings may be directly taxed, then in either such case, resident partners, co-owners, proprietors or other participants in the profits thereof must include in their declaration and tax return or returns their distributive shares of such profits, or portion thereof not taxed to the business enterprise as an entity, and must pay the tax thereon.

4. The tax imposed under Section 2 (C.) of the Ordinance is levied upon the entire net profits of the resident trade, business, profession, other activity, enterprise, or undertaking, wherever earned, paid or accrued and regardless of the fact that any part of such business or professional activity may have been conducted at or through a place or places of business located outside the Village of Scio.

ARTICLE II-4
Imposition of Tax Net Business Profits - Non-Residents

1. In the case of a non-resident individual, partnership, association, fiduciary or other entity (other than a corporation) engaged in the conduct, operation or prosecution of any trade, business, profession, enterprise, undertaking or other activity, there is imposed an annual tax of one percent (1%) on the net profits (earned or accruing on and after January 1, 1991) of such trade, business, profession, enterprise, undertaking, or other activity if, and to the extent, conducted in or derived from activity in Scio.

2. A non-resident entity within the meaning of Sub-Section (E) of Section 2 of the Ordinance which has a branch or branched, office of offices and/or store or stores, warehouse, or other place or places in which the entity's business is transacted, located in the Village of Scio, shall be considered to be conducting, operating, prosecuting, or carrying on a trade, business, profession, enterprise, undertaking or other activity to the full extend of the sum total of all.

3. In the case of the partnership, association, or other unincorporated business owned by one or more persons the tax, generally, shall be upon said partnership, association, or business enterprise as an entity and not ordinarily upon the partners or member thereof. However, the provisions of Article II-3 are applicable to render taxable against such resident partners or members their distributive share of any profits of such non-resident entity not taxable under this Ordinance.

4. In determining the proportion or amount of the taxable net profits of a non-resident business entity having a place or places of business within and outside Scio, such business entity may at its option use and apply the Business Allocation Percentage Formula set forth in Section 2, Sub-Section H of the Ordinance. For explanation of Formula, see Article II-6.

ARTICLE II-5
Imposition of Tax New Business Profits - Corporations

1. In the case of a corporation doing business in Scio, whether domestic or foreign, and whether domiciled in Scio, or elsewhere, there is imposed an annual tax of one percent (1%) on that part of the net profits (earned or accruing on and after January 1, 1991) of such corporations, which is earned by such corporations as a result of work done or services performed or rendered and business or other activities conducted in the Village of Scio.

2. The provisions of Paragraph 2 of Article II-4 of these Regulations are applicable to such corporations. 3. A corporation doing business both within and outside the Village of Scio may, in determining the part of the net profits which are taxable under the Ordinance, at its option:

(1) Use the usual accounting system of the taxpayer corporation, so long as said usual accounting system shall be one acceptable to the Federal Internal Revenue Department as evidenced by acceptance and the approval of income tax returns filed therein; or

(2) Use the Business Allocation Percentage Formula set forth in Section 2 Sub-Section H of the Ordinance.

ARTICLE II-6
Business Allocation Percentage

1. At the option of a corporate taxpayer or of a non-resident business entity, such taxpayers may, but are not obliged to, use the formula set forth in Section 2 of the Ordinance to compute the percentage of their entire net profits (derived from activities under the Ordinance, and to determine the tax payable to the Village of Scio.

If the taxpayer did not have a place of business outside Scio during the period covered by any declaration and/or return required under the Ordinance, its business allocation percentage is 100 percent; in other words the taxpayer is required to pay a tax of one percent (1%) on the entire net profit of the business.

If the taxpayer had a place or places of business outside Scio and was doing business in Scio during such a period, the business allocation percentage shall be computed on the basis as set forth in Section 2, Sub-Section H of the Ordinance.

The business allocation percentage is computed by determining the percentages

(a) which Scio real and tangible personal property bears to all real and tangible personal property (including that situated in Scio) of taxpayer wheresoever situated;

(b) which Scio business sales bear to taxpayer's entire business sales wheresoever derived (including those derived from Scio); and

(c)which payrolls paid by taxpayer within Scio bear to taxpayer's entire payroll wheresoever paid (including Scio payrolls) adding together the three percentages so arrived at, and dividing the total by three.

However, if one of the factors (property, sales or payrolls) is missing, the other two percentages are added and the sum is divided by two, and if two of the factors are missing, the remaining percentage is the business allocation percentage.

EXAMPLE 1: Corporation having places of business in Scio, Detroit, Cleveland. Scio real and tangible personal property $10,000. All real and personal property (Scio, Detroit and Cleveland) $100,000. Percentage 10% Scio sales $15,000. All sales $75,000. Percentage: 20%. Scio payroll $6,000. All payroll $20,000. Percentage 30% Business Allocation Percentage: 10% plus 20% plus 30% 3 = 20%

EXAMPLE 2: Same corporation owning no real or tangible personal property anywhere Scio sales $15,000. All sales $75,000. Percentage: 20% Scio payroll $6,000. All payroll $20,000. Percentage 30% Business Allocation Percentage: 20% plus 30% 2 = 25%

EXAMPLE 3: Same corporation owning real and tangible personal property in Scio valued at $10,000 and owning no real or tangible personal property outside Scio. Other factors same as in Examples 1 and 2. 100% plus 20% plus 30% 3 = 50%

After determining such business allocation percentage, the tax shall be determined by applying that percentage to the entire net profits of the taxpayer, wherever derived (thus arriving at the taxable net profit), and computing one percent (1%) of the resultant taxable net profit.

In case it shall appear to the Village Tax Administrator that any income or capital of the taxpayer is improperly or inaccurately reflected, the Village Tax Administrator may adjust items of income, expense, deductions and capital, and disregard assets in computing any allocation percentage, provided any income directly traceable thereto is also excluded from entire net income, so as equitable to determine the tax.

2. EXPLANATION OF "PROPERTY FACTOR". The percentage of the taxpayer's real and tangible personal property within Scio is determined by dividing the net book value (during the period covered by the report) of such property within Scio, without deduction of any encumbrances, by the average net book value similarly computed, of all such property within and without Scio. Only property owned by the taxpayer is considered in determining such percentage.

3. EXPLANATION OF "SALES FACTOR". Receipts from the following are allocable to Scio.

(a) Work done and performed or services rendered in Scio.

(b) rentals from property situated in Scio, where the rental of such property is a usual or normal part of the taxpayer's business activity.

(c) For the purpose of determining the business allocation percentage, no account shall be given to receipts, within or without Scio, of income derived from intangibles (including stocks, bonds, royalties and the like) the income of which is taxable under the statutes of the State of Ohio. (d) Compensation and other receipts for work done or services performed within Scio are allocable to Scio and taxable under the Ordinance. All amounts so received, credited or charged by taxpayer in payment for such work or services are so allocable, irrespective of whether done or performed by employees or agents of taxpayer or by any other person. It is immaterial where such amounts were payable or where they were received.

Commission of fees received by the taxpayer are allocated to Scio if the services for which the commissions were paid were performed in Scio. If the taxpayer's services for which commissions or fees were paid were performed for the taxpayer by salesmen or other agents or employees attached to or working out to a Scio place of business of the taxpayer, the taxpayer's services will be deemed to have been performed in Scio.

Where a lump sun is received by the taxpayer in payment for services within and without Scio, the amount attributable to services within Scio is to be determined on the basis of the relative values of, or amounts of time spent in the performance of, such services within and without Scio.

(e) Receipts from sale of capital assets (property no held by the taxpayer for sale to customers in the regular course of business) are not business receipts. Receipts from the sale of real property held by the taxpayer as a dealer for sale to customers in the regular course of business are business receipts and are allocable to Scio if the real property was situated in Scio. Receipts from sale of intangibles included in business capital, held by the taxpayer as a dealer for sale to customers in the regular course of business, are business receipts and are allocable to Scio if the sales were made in Scio or through a regular place of business of the taxpayer in Scio. 4. PAYROLL FACTOR. The percentage of the taxpayer's payroll allocable to Scio is determined by dividing the wages, salaries and other personal service compensation of the taxpayer's employees within Scio during the period covered by the report, by the total amount of compensation of all taxpayer's employees during such period.

Wages, salaries and other compensation are computed on the cash or accrual basis in accordance with the method of accounting used in the computation of the entire net income of the taxpayer.

Employees within Scio usually includes all employees regularly connected with or working out of a place of business maintained by the taxpayer in Scio.

However, where an employee performed services both within and without Scio, the amount treated as compensation for services performed with Scio shall be deemed to be (a) in the case of an employee whose compensation depends directly on the volume of business secured by him, such as a salesman on a commission basis, the amount received by him for the business attributable to his efforts within Scio; (b) in the case of an employee whose compensation depends on the other result achieved, the proportion of the total compensation which the value of his services within Scio bears to the value of all his services; and © in the case of an employee compensated on a time basis, the proportion of the total amount received by him which the working time employed in Scio bears to the total working time.

5. ADJUSTMENT OF BUSINESS ALLOCATION PERCENTAGE FORMULA. Generally, the Business Allocation Percentage Formula will result in a fair apportionment of the taxpayer's net profits within and without Scio. However, due to the peculiar circumstances of certain businesses, the formula may work a hardship in some cases or result in a tax evasion in other, thus not do justice to the taxpayer or the Village. Accordingly, in such cases, the Village Tax Administrator may substitute factors calculated to bring about a fair and proper allocation in any case where the taxpayer has adopted the optional use of the business allocation percentage formula.

ARTICLE II-7
On What Earnings or Net Profits Tax First Levied

The tax referred to in Article II-1 and II-2 shall first be levied, collected and paid with respect to the salaries, wages, bonuses, incentive payments, commissions, fees and/or other compensations earned on of after January 1, 1991.

The tax referred to in Article II-3, II-4, and II-5 with respect to net profits of trades, businesses, professions, enterprises, undertakings, and other activities shall first be levied, collected and paid with respect to such net profits earned or accrued (in accordance with the regular accounting system of taxpayer as approved by the Director of Internal Revenue) from and after January 1, 1991.

But see Article II-8 for fiscal year returns.

ARTICLE II-8
Fiscal Years

Where the fiscal year of a trade, business, profession, enterprise, undertaking, and/or other activity differs from the calendar year, the tax shall be applicable to the net profits of the fiscal year, but for the first fiscal year with respect only to such portion thereof as was earned on and after January 1, 1991.

A fiscal year will be recognized only if it has been or may be recognized as such by the Director of Internal Revenue for the purpose of Federal Income Tax.

ARTICLE II-9
Net Business Profits

In amplification of the definition of the term "Net Profits" as set forth in Section, Sub-Section G of the Ordinance, but not in limitation thereof, the following additional information and requirements respecting net business profits are furnished:

(1) Where necessary to properly reflect income, inventories must be used. The basis of pricing used for the purpose of the Federal Income Tax must in each instance be used.

(2) Where the books and records are kept on an "accrual basis", "long-term contract basis", or "installment basis", and said basis is used in the filing of Federal Income Tax Returns, the same basis must be used for the purpose of this tax.

(3) If the return is made on a "cash basis", the gross profit shall include (1) commissions, fees and interest earned, plus (2) the gross profit or loss from sales of merchandise, chattels, goods, wares, securities, notes, chosen-in-action and services, except as hereinafter provided.

(4) If the return is made on an "accrual basis", Gross Profit shall include (1) commissions, fees and interest earned, plus (2) the gross profit or loss from sales of merchandise, chattels, goods, wares, securities, notes, choses-in action and services, except as hereinafter provided.

(5) From Gross Profits there shall be subtracted allowable expense to arrive at the net profits subject to tax.

(6) All ordinary and necessary expense of doing business, including reasonable compensation pair employees, shall be allowed (but no deduction may be claimed for "salary" or withdrawals of a proprietor or the partners, members or other co-owners of an unincorporated business or enterprise).

(7) If not claimed as part of the Costs of Goods Sold or elsewhere in the return filed, there may be claimed and allowed a reasonable deduction for depreciation..depletion..obsolescence, losses resulting from theft or casualty not compensated for by insurance or otherwise, of property used in the trade or business, but the amount may not exceed that recognized for the purpose of the Federal Income Tax.

(8) Bad debts in a reasonable amount may be allowed in the year ascertained worthless and charged off, but in no event shall the amount allowed exceed the amount recognized as a deduction for the purpose of the Federal Income Tax.

(9) Only taxes directly connected with the taxpayer's business may be claimed as a deduction. If for any reason the income from property is not subject to tax, then the tax on and other expenses of said property are not deductible. In any event, the following taxes are not deductible from income:

(a) The tax under the Ordinance;

(b) Any Federal taxes based upon income;

(c) Gifts, estate or inheritance taxes, and

(d) Taxes and/or special assessments for local benefits or improvements to property which tend to appreciate the value thereof.

(10) Capital gains and losses (including gains or losses from the sale, exchange, or other disposition of depreciable business property, and real property used in the taxpayer's trade or business) shall not be taken into consideration in arriving at New Profits Earned.

(11) If the taxpayer is a non-resident, only the amount of net profits applicable to the activities of the business in Scio shall be subjected to tax. If the non-resident taxpayer's records do not disclose the actual net profits for the Scio branch, office store, or activity, separately, then the basis of allocation shall be disclosed in the return. If such basis of allocation is not deemed correct, in view of all the known circumstances, the Village Tax Administrator will make reallocation based upon gross receipts or any other basis which shall, under the circumstances of the case, more accurately reflect the net profits.

(12) In general, all business expense recognized and to the extent allowed as such for the purpose of determining Federal Income Tax will be recognized and allowed for ...determining ... However, all expense connected with the acquisition or carrying of securities, the income from which is not recognized as taxable under this Ordinance, may not be deducted in determining taxable net profits hereunder.

(13) In general, unearned income is not to be included in computing the tax levied hereunder. Income from tangibles...by way of dividends, interest and the like, should not be included if the property from which such income is derived is subject to taxation under the Intangible Personal Property Tax Laws of the State of Ohio, or is specifically exempted from taxation under said laws.

(14) Rentals received by the taxpayer are to be included only if and to the extent that the rental, ownership, management or operation of the real estate from which such rentals are derived (whether so rented, managed or operated by taxpayer individually or through agents or other representatives) constitutes a business activity of the taxpayer in whole or in part.

Following are the circumstances under which, in any instance, the rental of any real property shall or shall not be deemed to be a "Business Activity":

(a) Where the gross monthly rental of any and all real properties, regardless of number and value, aggregates in excess of $100 per month, it shall be prima facie evidence that the rental, ownership, management, or operation of such properties is a business activity of such taxpayer, and the net income of such rental property shall be subject to tax; provided that in case of commercial property, the owner shall be considered engaged in a business activity when the rental is based on a fixed or fluctuating percentage of gross or net sales, receipts or profits of the lessee, whether or not such rental exceeds $100 per month; provided further that in the case of farm property, the owner shall be considered engaged in a business activity when he shares in the crops or when the rental is based on a percentage of the gross or net receipts derived from the farm, whether or not the gross income exceeds $100 per month; and provided further that the person who operates a rooming house shall be considered in business whether or not the gross income exceeds $100 per month.

(b) In determining the amount of gross monthly rental of any real property, periods during which (by reason of vacancy or any other cause) rentals are not received shall not be taken into consideration by the taxpayer.

(c) Rentals received by a taxpayer engaged in the business of buying and selling real estate shall be considered as part of business income.

(d) Real property, as the term is used in this Resolution, shall include commercial property, residential property, farm property, and any and all other types of real estate.

(e) In determining the taxable net income from rentals, the deductible expense shall be of the same nature, extent and amount as are allowed by the Internal Revenue Department for Federal Income Tax purposes.

(f) Residents of Scio are subject to taxation upon net income from rentals (to the extent above specified) on all properties located in Scio, and on all properties located outside Scio, the net income of which is not subject to village income tax in said other community. In the case of residents of Scio, if the net income of properties located outside Scio is subject to village income tax in another community, then said net income will not be subject to village income tax in Scio.

Non-residents of Scio are subject to such taxation only if the real property is situated within the Village of Scio. Non-residents, in determining whether gross monthly rentals exceed $100, shall take into consideration only real estate situated within Scio.

(15) Income ... from royalties or copyrights is not to be included.

ARTICLE II-10
Reconciliation With Federal Return

In a form satisfactory to the Village Tax Administrator, there shall be submitted with each return filed by a taxpayer subject to the Federal Income Tax. A reconciliation between the amount shown in the return filed with the Village Tax Administrator and the business income reported to the Federal Internal Revenue Department.

If, as a result of a change made in business income by the Federal Internal Revenue Department, or by a judicial decision as additional amount will result as owing to the Village of Scio, a report of such change shall be filed by the taxpayer within 30 days after receipt of the final notice of such change from the Federal Authorities or after final decision of a Court adjudicating any such Federal Income Tax liability.

ARTICLE III
Return and Payment of Tax

1. On or before April 15, 1991, every taxpayer engaged in any business, the net profits of which are subject in whole or in part to the tax imposed by the Ordinance, shall make and file with the Village Tax Administrator a final return on a form furnished by or obtainable from the Village Tax Administrator. Thereafter, each such taxpayer shall, on or before April 15 of each subsequent year, make and file a final return withe the Village Tax Administrator. Like returns shall be filed at the same time and in the same manner by all persons whose wages, salaries, bonuses, incentive payments, commissions, fees and other compensation received during the preceding taxable year are subject to the tax imposed by the Ordinance. However, where an employee's entire earnings for the year are paid by a employer and the Scio tax thereon has in each instance been withheld and deducted by the employer from the gross amount of the entire earnings of such employee-taxpayer, and where the employer of such employee has filed a report or return in which such employee's entire and only earnings are reported to the Village Tax Administrator, and where such employee has no taxable income other than such earnings, it shall not be necessary for such employee to file a return for any taxable year in which such conditions prevailed.

Any person who received both compensation for services performed for an employer, in whatsoever form, and in addition receives income from any business activity or occupation not subject to withholding under the Ordinance must file a declaration and a final return.

2. In all returns filed hereunder there shall be set forth the aggregate amount of salaries, wages, bonuses, incentive payments, commissions, fees and other compensation received and/or net profits earned (all as hereinbefore defined) by and during the preceding year and subject to said tax, together with such pertinent information as the Village Tax Administrator may require.

3. If the return is made for a fiscal year or for any period other than a calendar year, the said return shall be made within three and one-half months from the end of said fiscal year.

4. The return shall also show the amount of the tax imposed by the Ordinance on such earnings, or net profits, or both.

5. The taxpayer making the return shall at the time of filing thereof, pay to the Village Treasurer the amount of tax shown to be due and unpaid by the return. If, pursuant to the provisions of Article V-2, the taxpayer has at the time of making such final return overpaid his tax, such taxpayer shall show the amount overpayment and may in said return either (a) request a refund thereof, or (b) request that the amount thereof be credited against the amount which will be required to be paid by taxpayer on the next succeeding installment of tax which may become due.

6. Where any portion of the tax otherwise due shall have been paid by the taxpayer pursuant to the provisions of Article IV-1 and Article V-1 of this Resolution, or where an income tax has been paid to another municipality, pursuant to Section 4 of the Ordinance, credit for the amount so paid shall be deducted from the amount shown to be due and only the balance, if any, shall be due and payable at the time of filing said final return.

7. Upon written request of the taxpayer, the Village Tax Administrator may extend the time for filing the annual return for a period of not more than six (6) months or not more than thirty (30) days beyond any extension requested of and granted by the Federal Income Tax return.

For payments in installments, see Article V-2.

ARTICLE IV-1
Collection at Source

1. It is the duty of each employer (as hereinbefore defined) who employs one or more persons on a salary, wage commission, or other compensation basis, to deduct from compensation paid to any employee subject to the Ordinance, the tax of one percent (1%) of such salary, wage, bonus, incentive payment, commission or other compensation due by said employer to said employee. The tax shall be deducted by the employer from:

(a) All compensation paid to employees who are non-residents of the Village of Scio for services rendered, work performed, or other activities engaged in to earn such compensation, within the Village of Scio; and

(b) From the gross amount of all salaries, wages, bonuses, incentive payments, commissions or other form of compensation paid to employees who are residents of the Village of Scio, regardless of the place where the services are rendered.

2. All employers who or which maintain an office or other place of business in Scio are required to make the collections and deductions in this article specified, regardless of the fact that the services on account of which any particular deduction is required as to residents of the Village of Scio, were performed at a place of business of such employer situated outside the Village of Scio.

3. The mere fact that the tax is not withheld will not relieve the employee of the responsibility of filing a return and paying the tax on the compensation received.

4. Commissions and fees paid to professional men, brokers, and others who are independent contractors and not employees of the payer, are not subject to withholding or collections at the source. Such taxpayers must in all instances file returns and pay the tax pursuant to the provisions of Section 2 of the Ordinance. (See Article II-3 and II-4.)

5. In the case of employees who are non-residents of Scio, the amount to be deducted is one percent (1%) of the compensation paid with respect to personal services rendered in Scio.

Where a non-resident receives compensation for personal services rendered or performed partly within and partly outside Scio, the withholding employer shall deduct, withhold and remit that portion of the compensation which is earned within Scio in accordance with the following rules apportionment.

(a) If the non-resident is a salesman, agent, or other employee whose compensation on the basis of commissions depends directly on the volume of business transacted by him, the deducting and withholding shall attach to the portion of the entire compensation which the volume of business transacted by the employee within the Village of Scio bears to volume of business transacted by him within and outside the Village of Scio.

(b) The deducting and withholding of personal service compensation of all other employees (including officers of corporations) shall attach to the portion of the personal service compensation of such employee which the total number of working days employed within the Village of Scio bears to the total number of working days employed within and outside the Village of Scio.

(c) If it is impossible to apportion the earnings as provided above, because of (1) the peculiar nature of the service of the employee, or (2) the unusual basis of compensation, apportionment shall be made in accordance with the facts and the tax deducted and withheld accordingly.

(d) The occasional entry into the Village of Scio of non-resident employee who performs the duties for which he is employed entirely outside the Village, but enters the Village for the purpose of reporting, receiving instructions, accounting, etc., incidental to his duties outside the Village, shall not be deemed to take such employee out of the class of those rendering their services entirely outside the Village.

6. An employer shall withhold the tax on the full amount of any advances made to an employee on account of commissions, (whether by way of drawing account or otherwise - but see paragraph 7 below) where such advances are in excess of commission earned.

7. An employer required to withhold the tax on compensation paid to an employee shall, in determining the amount on which the tax is to be withheld, ignore any amount allowed and paid by the employer to the employee in the actual performance of his services, provided, that such expense must be of the kind and in the amount recognized and allowed as deductible expense for Federal Income Tax purposes.

ARTICLE IV-2
Returns of Tax Withheld and Payment

The deduction from salaries, wages and other compensation required to be made by employers are to begin with compensation earned on and after January 1, 1991. The first return and payment required to be made on account of such deductions shall be made, filed and paid to the Village Treasurer between June 30, 1991, and July 31, 1991.

Each employer within the Village of Scio who employs one or more persons on a salary, wage commission or other compensation basis shall deduct monthly, or more often than monthly, and at the time of the payment of such salary, wage, commission, or other compensation, the tax of one (1%) of salaries, wages, commissions or other compensation due by the said employer to the said employee and deducted as follows:

For the three (3) months ending March 31st, on or before April 30th;

For the three (3) months ending June 30th, on or before July 31st;

For the three (3) months ending September 30th, on or before October 31st;

For the three (3) months ending December 31st, on or before January 31st.

The reporting periods referred to in the preceding paragraphs are elastic to this extent: the employer will use the same quarterly accounting period for the reporting taxes withheld under the Scio Income Tax Ordinance as he used in reporting quarterly taxes withheld to the Federal Government.

Said return shall be on a form prescribed by and obtainable from the Village Tax Administrator and shall be subject to the rules and regulations prescribed therefor by the Village Tax Administrator.

For adjustment of errors in returns of tax withheld by employers see Article VI-2 of these regulations.

ARTICLE IV-3
Limitation on Credit for Tax Paid at Source

The failure of any employer, residing either within or outside the Village of Scio, to collect the tax and to make any return prescribed herein, shall not relieve the employee from the payment of such tax in compliance with these Regulations respecting the making of returns and the payment of taxes.

ARTICLE IV-4
Status and Liability of Employers

Every employer is deemed to be a trustee of the Village of Scio in collecting and holding the tax required under the Ordinance to be withheld, and the funds so collected by such withholding are deemed to be trust funds until the same is paid to the Village of Scio.

Every such employer required to deduct and withhold the tax at the source is liable directly to the Village of Scio for the payment of such tax, whether actually collected by such employer or not.

ARTICLE V-1
Declarations

1. An employee whose entire wages, salaries, or other compensation for any taxable year will be subjected to the withholding provisions under Article IV-1 of these Regulations, whose tax will accordingly be withheld as to his entire earnings for such year by his employer, and who during such taxable year expects to derive no other compensation or other income which is subject to tax under the Ordinance, need not file a declaration as provided in this Article.

2. All other taxpayers (as defined in the Ordinance and in these Regulations) subject to the taxes imposed in Section 2 of the Ordinance, and every taxpayer who anticipates any income or net profits not subject to total withholding as provided in the next preceding paragraph, shall file with the Village Tax Administrator a declaration of his estimated tax as follows:

(a) On or before April 15, 1991, every such calendar year taxpayer shall file a declaration of his estimated tax for the taxable period beginning January 1, 1991, and ending December 31, 1991.

(b) A similar declaration shall be filed by each such calendar year taxpayer on or before the 15th day of April of each subsequent year during the life of the Ordinance, and each such declaration shall contain a statement of the taxpayer's estimated tax for the full taxable year in which such declaration is filed.

3. Taxpayers who or which are permitted, pursuant to the provisions of Article II-8, to return and pay their tax upon a fiscal year basis, shall file their first declaration within three and one-half months after the beginning of the first fiscal year beginning on or after January 1, 1991, and the subsequent declaration for each year thereafter on or before the 15th day of the fourth month and on or before the last day of the sixth, ninth, and twelfth month following the beginning of such fiscal year. The first installment, equal to at least one-fourth of the estimated tax, must accompany the declaration.

4. The estimated tax for a calendar year taxpayer may be paid in full with the filing of the declaration or in equal installments on or before April 15, June 30, September 30 and December 31.

5. The declarations so required shall be filed upon a form furnished by or obtainable from the Village Tax Administrator. Any taxpayer who has filed an estimate for Federal Income Tax purposed may, in making the declaration, required hereunder, simply state therein that the figures therein contained are the same figures used by the taxpayer in making the declaration of his estimate for the Federal Income Tax. However, in addition to such statement, any such taxpayer may, in such declaration, modify and adjust such declared income so as to exclude therefrom income which in not subject to tax under the Ordinance.

6. Any estimate filed hereunder may be amended by the filing of an amended estimate at the time prescribed for the payment of any installment of tax paid in accordance with Article V-2 of these Regulations.

ARTICLE V-2
Payment of Tax Installments

1. At the time of filing each declaration (required by Article V-1) each taxpayer shall pay to the Village Treasurer one-fourth (1/4) of the amount of his estimated annual tax. Thereafter, on or before the 30th day of June, September and December 31st of each year during the life of the Ordinance, such taxpayer shall pay at least a similar amount. However, if any such taxpayer shall, on or before any such payment date, file and an amended declaration showing an increase or decrease of the estimated tax, the installments then and thereafter due shall be increased or diminished (as the case may be) in such manner that the balance of the estimated tax shall be fully paid on or before December 31st of the taxable year involved through the payment to quarterly installments in equal amounts during the quarterly periods remaining from and after the filing of such amended declaration.

2. Taxpayers who or which are permitted to make returns and pay their tax on a fiscal year basis (see Article II-8), may make the quarterly payments on their declaration of estimated tax pursuant to Article V-1 (5) of these Regulations.

3. For final Returns and final adjustment of tax due, see Article III.

ARTICLE VI-1
Records to be Kept by Employers and Taxpayers

Employers and others subject to the tax under the Ordinance are required to keep such records as will enable the filing of true and accurate returns, whether of taxes withheld at source or of taxes payable upon earnings or net profits, or both, and such records are to be preserved to enable the Village Tax Administrator, or any agent or employee of the Village Tax Administrator, to verify the correctness of the returns filed.

ARTICLE VI-2
Collection of Deficiencies Allowance of Credit for Overpayment

If, as a result of investigation conducted by the Village Tax Administrator, a return is found to be incorrect, the Village Tax Administrator is authorized to assess and collect any underpayment of tax withheld at source or any underlayment of tax owing by any taxpayer with respect to earning or net profits, or both. If no return has been filed and a tax is found to be owing, the tax actually owing may be assessed and collected with or without the formality of obtaining a delinquent return from the employer or taxpayer.

Should it be disclosed, either as a result of an investigation by the Village Tax Administrator or through the medium of the filing of a claim or petition for refund or credit, that an overpayment has been made, the Village Treasurer will refund such overpayment.

The employer will in every instance be required to pay the full tax which should have been withheld, even though he may fail to withhold from the employees. If too much has been withheld the excess shall be refunded by the employer to the employee. While the withholding agent (employer) will be expected to maintain complete records of such adjustments with the employees, any such adjustment made during any month will not need to be reflected in the withholding return or disclosed by schedules or statements hereto attached.

In those cases in which too much has been withheld by an employer from an employee and remitted to the Village Treasurer and there has been a termination of the employee-employer relationship, the taxpayer (employee) may obtain an adjustment by application to the Village Treasurer.

ARTICLE VII
Collection of Unpaid Taxes

All taxes imposed by the Ordinance remaining unpaid when the same have become due, together with all interest and penalties thereon, become a debt due the city from the taxpayer, and are recoverable as other debts by suit instituted by the Village Solicitor.

Employers who or which, although obliged under the Ordinance to withhold and remit to the Village Treasurer the taxes required to be withheld at the source (Article IV-1), shall fail to so withhold and/or remit, become liable to the Village in a civil action to enforce the payment of the debt created by such failure.

When a final return is filed as prescribed in Article III hereof and a deficiency is determined to be due to the Village of Scio, action to collect the same must be brought within three (3) years after the tax as due or the return was filed, whichever is later. However, in the case of fraud, failure to file a return, or the omission of twenty-five percent (25%) or more of income required to be reported, prosecution may be commenced within six (6) years after the commission of the offense.

ARTICLE VIII
Identification Required

Agents and employees charged with the duty of inspection or auditing of reports of employers and taxpayers will carry proper identification, which shall be subject to examination by any person whose records are sought to be examined.

ARTICLE IX
Applicability

This resolution is inapplicable to any person or corporation upon who or which it is beyond the legal power of Council to impose the tax; it is likewise inapplicable as to any property, income or profits (or part thereof) as to which it is beyond the legal poser of Council to levy the tax.

ARTICLE X
Savings Clause

If any sentence, clause, section or part of this Resolution, or any tax against any individual or any of the several groups specified herein, is found to be unconstitutional, illegal, or invalid, such unconstitutionality, illegality or invalidity shall affect only such sentence, clause, section or part of this Resolution and shall not affect or impair any of the remaining provisions, sentences, clauses, sections or other parts of this Resolution. It is hereby declared to be the intention of the Council of the Village of Scio that this Resolution would have been adopted has such unconstitutional, illegal or invalid sentence, clause, section or part thereof not been included herein.

ARTICLE XI
Split-Payrolls

In the case of hourly employees, where a payroll continues past January 1, 1991, and said payroll does not end until a period in April, 1991, said payroll shall be considered a split-payroll and as such said payroll will not be subject to withholding tax under Scio Village Income Tax Ordinance effective January 1, 1991. That is to say - only the first full pay for hourly employees earned after January 1, 1991, and all payrolls thereafter, will become subject to withholding under Scio Village Income Tax Ordinance.

All salaried employees paid on a calendar month will be subject to withholding under Scio Village Income Tax Ordinance as of January 1, 1991.

ARTICLE XII
Withholding Statements

The Village Tax Administrator will not require the filing of employee earning reports, resembling Federal Form W-2, as of December 31, 1991, however, said reports may be required to filed in the future.

ARTICLE XIII
Vacation Pay

Vacation pay paid in 1991 will not be subject to withholding deductions under the Ordinance. Vacation pay paid in 1991, and in all subsequent years, will be subject to withholding deductions under the Ordinance.

ARTICLE XIV

In the case of an individual having salary or wages subject to withholding under the Village Income Tax, if said individual has a business, including farm and rental property, which reflects a loss for some account period, said individual may not off-set the business loss against income earned on salary or wages for the purpose of securing a cash refund from the income tax department.

If an individual operated more than one business, the profits of which were subject to Scio Village Income Tax, said individual may off-set profits from one business with the net loss from another business, and report the resulting net profit or loss for Village Income Tax purposes.

In any event, the net loss on a business used to off-set net income from another business must exactly agree with the net loss as reported on Federal Income Tax return form 1040, as filed with the Federal Government.

ARTICLE XV

This Resolution is hereby declared to be an emergency measure necessary for the immediate preservation of the public peace, welfare and safety, the emergency being the necessity of immediately raising additional funds for the operation of necessary governmental functions imposed by law, including proper police and fire protection, but not limited thereto, and as such, this Resolution shall take effect and be in force immediately upon passage by Council and approval by the Mayor.