Imposition of Income Tax Rate and Income Taxable

2:01 Resident Individuals

A. In the case of residents of the Village of Cadiz, an annual tax is imposed on all salaries, wages, commissions and other compensation earned and received, or earned and accrued, during the effective period of the Ordinance.

For the purpose of determining the tax on earnings of resident taxpayers, the source of earnings and the place or places in or at which the services were rendered are immaterial. All such earnings, wherever earned, are taxable. The location of the place from which payment is made or where payment is received is immaterial.

 B. The following are items which are subject to the tax imposed by the Income Tax Ordinance: 1.Salaries, wages, bonuses and incentive payment earned by an individual whether directly or through an agent and whether in cash or in property for services rendered during the tax period as:

a. An officer or employee of a corporation (including charitable and other non-profit organizations). b. An employee (as distinguished from a partner or member) of a partnership, limited partnership, fiduciary or any form of unincorporated enterprise owned by two or more persons.

c. An employee (as distinguished from a proprietor) of a business, trade or profession conducted by an individual owner.

d. An officer or employee (whether elected, appointed or commissioned) of the United States Government or of a corporation created and owned or controlled by the United States Government, or any of its agencies, or any foreign country or dependency, except military pay exempted as stated in Section 4:01 of these Regulations.

e. An employee of any other entity or person, whether based on hourly, daily, weekly, semi-monthly, monthly, annual, unit of production or piece-work rates.

2. Commissions earned by a taxpayer whether directly or through an agent and whether in cash or in property for services rendered during the effective period of the Ordinance, regardless of how computed or by whom or wheresoever paid.

a. If amounts received as a drawing account exceed the commissions earned and the excess is not subject to the demand of the employer for repayment, the tax is payable on the amounts received as a drawing account (but not then on the commissions also).

b. Amounts received from an employer for expenses and used as such by the individual receiving them are not deemed to be compensation if the employer 8 deducts such expenses or advances as such from his gross income for the purposes of determining his net profits taxable under federal law and the employee is not required to include such receipts as income (or has directly offsetting business expenses) on his federal income tax return.

c. If commissions are included in the net earnings of the trade, business, profession, enterprise or activity, carried on by an unincorporated entity of which the individual receiving such commission is owner or part owner and, therefore, subject to the tax on the net profits provisions of the Ordinance, they shall not be taxed under the provisions relating to salaries, wages or commissions earned.

3. Fees, including Director's fees, unless fees are properly includable as part of the net profits of a trade, business, profession or enterprise regularly carried by an unincorporated entity owned or partly owned by said individual and such net profits are subject to the tax under the net profits provision of the Ordinance.

4. Other compensation shall include:

a. Tips received by waiters and others

b. Bonuses

c. Gifts or gratuities in connection with employment

d. Compensation paid to domestic servants, casual employees and other types of employees.

e. Benefits resulting from employers assuming a tax imposed on employees

f. Dismissal or severance pay.

g. Incentive payments.

h. Retirement and Other Plans- Employees contributions to retirement plans are neither excludable nor deductible by the employee. Withholding applies to the employee's full compensation unreduced by an employee's contribution to a retirement plan. The same rules apply with respect to other amounts withheld from employees and contributed to other types of plans.

i. Contributions made by, or on behalf of employees to "cafeteria" plans and other similar employee benefit plans.

j. Stock options given as compensation and when exercised. The tax is due to the municipality of residence at the time of the purchase. The amount of taxable income is the difference between the price paid for the stock and the fair market value of purchase.

k. A distribution from a Subchapter S Corporation will be treated as earned income (wages) if it was for services performed. If the taxpayer does not claim such compensation as wages, the Administrator will determine the "fair" wage for those services and treat that income as earned.

l. Royalty Income-Income earned by a taxpayer from a royalty interest in the production of an oil or gas well, whether managed, extracted or operated by the taxpayer individually or through an agent or other representative, shall be included in the computation of net profits from a business activity to the extent that such royalty interest constitutes a business activity of the taxpayer.

Where the gross income received by a taxpayer from royalty interest in the production of an oil or gas well in a taxable year exceeds $3000.00, it shall be prima facie evidence that the income was derived from a business activity of such taxpayer and the net income from such royalty interest shall be subject to tax.

m. The treatment of a Limited Liability Corp. (LLC) for municipal purposes will be in accordance with treatment of LLC's by the Internal Revenue Service.

n. Deferred Compensation

o. Profit-Sharing plans.

p. Supplemental unemployment benefit pay. 

 q. If the income appears on Form W-2 and is not defined in Chapter 4:00 as non-taxable income, it shall be considered other compensation and, therefore, taxable to a resident individual.

r. The employer's income derived from finance and carrying charges associated with their consumers' accounts receivable.

s. Lottery winnings.

t. Third-party sick pay.

5. Vacations, Holidays, Sickness, etc.- Payments made to employees as vacation or holiday wages are taxable. Payments made to an employee by an employer directly under a wage continuation plan during periods of disability or sickness are taxable. Such vacation, holiday, disability or sickness payments shall be apportioned in the same ratio as regular wages if the employee works in more than one municipality.

6. Where compensation is paid or received in property, its fair market value, at the time of receipt, shall be subject to the tax and to withholding. Board, lodging and similar items received by an employee in lieu of additional cash compensation shall be included in earnings at their fair market value; except that in the case of domestics and other employees whose duties require them to live at their place of employment or assignment, board and lodging shall not be considered as wages or compensation earned.

2:02 Non-resident Individuals

A. In the case of individuals who are not residents of the Village of Cadiz, there is imposed under the Ordinance a tax on all salaries, wages, commissions and other compensation earned and received and accrued on and after the effective date of the Ordinance for work done or services rendered or performed within the Village of Cadiz, whether such compensation or remuneration is received or earned directly or through an agent and whether paid in cash or in property. The location of the place from which payment is made or where payment is received is immaterial.

11 The items subject to tax under the Rate and Income Taxable Section of the Ordinance are the same as those listed and defined in Section 2:01.B. hereof. For the methods of computing the extent of such work or services performed within a taxing community in cases involving compensation for personal services partly within and partly without this municipality, see Section 6:02 E hereof.

2:03 Resident Unincorporated Businesses

A. In the case of resident unincorporated businesses, professions, enterprises, undertakings or other activities conducted, operated, engaged in, prosecuted or carried on in the Village of Cadiz, there is imposed an annual tax on the net profits earned and received or earned and accrued during the effective period of the Ordinance, determined by a method of allocation provided in Chapter 3:00 hereof, derived from sales made, work done or services performed or rendered and business or other activities conducted within the municipality.

B. The tax imposed on resident unincorporated entities is upon the entities rather than the individual members or owners thereof. (For tax on that part of a resident owner's distributive share of net profits not taxed against the entity by the Village of Cadiz, see Section 2:03.E hereof).

C. The tax imposed by the Ordinance is imposed on all resident unincorporated entities having net profits attributable to the Village of Cadiz determined by a method of allocation provided in Chapter 3:00 hereof, regardless of where the owner or owners of such resident unincorporated business entity reside.

D. Resident unincorporated entities owned by one or more persons, all of whom are residents of the Village of Cadiz, having all income allocable to this municipality or having income allocable to other municipalities not levying a similar tax, shall disregard the method of apportionment  provided for in the Ordinance and pay the Village of Cadiz the tax on the entire net profits thereof. Payment of the tax by the entity on the entire adjusted federal taxable income thereof shall constitute payment of all tax due the Village of Cadiz from the owner or members thereof on their distributive shares of the entity net profits.  The owners or members of the entity still must file separate individual returns and Declarations of Estimated Tax even though these persons have no other taxable income.

E. In the case of an individual who is a resident, partner or owner of a resident unincorporated entity, there is imposed an annual tax on such individual's distributive share of net profits earned and received or earned and accrued, not taxed against the entity by the Village of Cadiz.

2:04 Non-resident Unincorporated Businesses

A. In the case of non-resident unincorporated businesses, professions, enterprises, undertakings or other activities conducted, operated, engaged in, prosecuted or carried on the this municipality, there is imposed an annual tax on the net profits earned and received or earned and accrued during the effective period of the Ordinance determined by a method of apportionment in Chapter 3:00 hereof, derived from sales made, work done or services performed or rendered and business or other activities conducted in this municipality.

B. The tax imposed on non-resident unincorporated entities is upon the entities rather than the individual members or owners thereof. (For tax on that part of a resident owner's distributive share of net profits not taxed against the entity, see Section 2:04 hereof.)

C. The tax imposed by the Ordinance is imposed on all non-resident unincorporated entities having adjusted federal taxable income attributable to this municipality determined by a method of allocation provided in Chapter 3:00 hereof, regardless of where the owner or owners of such non-resident unincorporated business reside.

D. In the case of an individual who is a resident, partner or owner of a non-resident unincorporated entity, there is imposed an annual tax on such individual's distributive share of net profits earned and received or earned and accrued, and not taxed against the entity by this municipality.

2:05 Corporations.

A. In the case of corporations, whether domestic or foreign and whether or not such corporations have an office or place of business in the Village of Cadiz, there is imposed an annual tax on the net profits earned and received or earned and accrued during the effective period of the Ordinance determined by a method of apportionment provided in Chapter 3:00 hereof, derived from sales made, work done, services performed or rendered and business or other activities conducted within the Village of Cadiz.

2:06 Effective Period

A. Said tax shall be levied, collected and paid with respect to the salaries, wages, commissions and other compensation, and with respect to the adjusted federal taxable income of businesses, professions or other activities earned on and after January 1, 2001.