The tax is levied to provide funds for the purposes of permanent improvements, new equipment, extension and enlargement of municipal services and facilities, capital improvements and operating expense of the City of Piqua.

(Return to Rules & Regulations Index - Top of Page)

ARTICLE II - Definitions

As used in this ordinance, the following words shall have the meaning ascribed to them in this article, except as and if the context clearly indicates or requires a different meaning.

ADJUSTED FEDERAL TAXABLE INCOME - A C Corporation's federal taxable income before net operating losses and special deductions as determined under the Internal Revenue Code, adjusted as follows:

a. 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.

b. Add an amount equal to five percent (5%) of intangible income deducted under Section (2)(a), 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;

c. 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;

d. (1) Except as provided in Section (2)(d)(2) 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;

(2) Section (2)(d)(1) does not apply to the extent the income or gain is income or gain described in Section 1245 of 1250 of the internal Revenue Code.

e. Add taxes on or measured by net income allowed as a deduction in the computation of federal taxable income;

f. In the case of a real estate investment trust and 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;

g. If the taxpayer is not a C corporation and is not an individual, the taxpayer shall compute adjusted federal taxable income as if the taxpayer were a C corporation, except;

(1) Guaranteed payments and other similar amounts paid or accrued to a partner, former partner, member, or former member shall not be allowed as a deductible expense; and

(2) Amounts paid or accrued to a qualified self-employed retirement plan with respect to an owner or owner-employee of the taxpayer, amounts paid or accrued to or for health insurance for an owner or owner-employee, and amounts paid or accrued to or for life insurance for an owner or owner-employee shall not be allowed as a deduction.

Nothing in Section (2) 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.

Nothing in this ordinance shall be construed as limiting or removing the ability of any municipal corporation to administer, audit, and enforce the provisions of its municipal income tax.

ADMINISTRATOR - The individual designated by the Director of Finance, with the approval of the City Manager, to administer and enforce the provisions of the ordinance.

ASSIGNMENT - The assignment made by a resident of the City of Piqua of claim for refund due from another taxing municipality granting credit to non-residents thereof.

ASSOCIATION - A partnership, limited partnership, limited liability company (including a single owner LLC), Chapter S corporation as defined in the federal tax code, 26 U.S.C. 1361, or any other form of unincorporated enterprise owned by two or more persons.

BOARD OF REVIEW - The Board created by and constituted as provided in Section 13 of this ordinance.

BUSINESS - An enterprise, activity, profession or undertaking of any nature conducted for profit or ordinarily conducted for profit, whether by an individual, partnership, association, corporation or any other entity, including but not limited to the renting or leasing of property, real, personal or mixed.

CORPORATION - A corporation or joint stock association organized under the laws of the United States, the State of Ohio or any other state, territory or foreign country or dependency, but not including Chapter S corporations.

THE DIRECTOR OF FINANCE - The Director of Finance of the City of Piqua, Ohio.

DOMICILE - The permanent legal residence of a taxpayer. A taxpayer may have more than one residence, but not more than one domicile.

EMPLOYEE - One who works for wages, salary, commission or other type of compensation in the service of an employer.

EMPLOYER - An individual, partnership, association, corporation, governmental body, unit or agency or any other entity, whether or not organized for profit, who or that employs one or more persons on a salary, wage, commission or other compensation basis.

FISCAL YEAR - An accounting period of twelve (12) months or less ending on any day other than December 31, and used by the taxpayer for Federal Income Tax purposes.

GROSS RECEIPTS - The total revenue derived from sales, work done, or service rendered before any deductions, exceptions or credits are claimed.

INCOME - Shall include all monies derived from any source whatsoever, including but not limited to:

a. All salaries, wages, commissions, other compensation and other income from whatever source received by residents of Piqua.

b. All salaries, wages, commission, other compensation and other income from whatsoever source received by nonresidents for work done or services performed or rendered or activities conducted in Piqua.

c. The portion attributable to the city of the net profits of all unincorporated businesses, associations, professions, corporations or other entities from sales made, work done, services performed or rendered, and business or other activities conducted in Piqua.

INTANGIBLE INCOME - 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 Ohio Revised Code, and patents, copyrights, trademarks, trade names, 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 or other similar games of chance.

NET PROFITS - A net gain from the operation of a business, profession, enterprise or other activity after provision for all ordinary and necessary expenses either paid or accrued in accordance with the accounting system used by the taxpayer for Federal Income Tax purposes, without deduction of taxes imposed by this ordinance, federal, state, and other taxes based on income; and in the case of an association, without deduction of salaries paid to partners, and other owners; and otherwise adjusted to the requirements of this ordinance.

Net profits shall include any amount or value received, realized or recognized in a sale or other disposition of tangible personal property or real property used in business, in excess of book value.

NONQUALIFIED DEFERRED COMPENSATION PLAN - A compensation plan described in Section 3121(v)(2)(C) of the Internal Revenue Code.

NON-RESIDENT - An individual domiciled outside the City of Piqua.

NON-RESIDENT UNINCORPORATED BUSINESS ENTITY - An unincorporated business entity not having an office or place of business within the City of Piqua.

PERSON - Every natural person, partnership, fiduciary, association or corporation. Whenever used in any clause prescribing and imposing a penalty, the term "person" as applied to any unincorporated entity, shall mean the partners or members thereof, and as applied to corporations, the officers thereof.

PLACE OF BUSINESS - 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.

QUALIFIED PLAN - A retirement plan satisfying the requirements under Section 401 of the Internal Revenue Code as amended.

QUALIFYING WAGES - Wages, as defined in Section 3121(a) of the Internal Revenue Code, without regard to any wage limitations, adjusted in accordance with Section 718.03(A) of the Ohio Revised Code.

RECIPROCITY CREDIT - The credit granted by a municipality to its residents, and to non-residents whose city or residence grants a similar credit to non-residents thereof, based on fifty percent (50%) of the lesser of the two rates.

RESIDENT - An individual domiciled in the City of Piqua.

RESIDENT UNINCORPORATED BUSINESS ENTITY - An unincorporated business entity having an office or place of business within the City of Piqua.

RULES AND REGULATIONS - Administrative directives promulgated by the Administrator and approved by the Board of Review for the purpose of administering this ordinance.

TAXABLE INCOME - Qualifying wages, and other compensation paid by an employer or employers before any deductions and/or the net profits from the operation of a business, profession or other enterprise or activity adjusted in accordance with the provisions of the ordinance. Please refer to INCOME.

TAXABLE YEAR - The calendar year, or the fiscal year upon the basis of which the net profits are to be computed under the ordinance and, in the case of a return for a fractional part of a year, the period for which such return is required to be made.

TAXING MUNICIPALITY - Any municipal corporation levying a municipal income tax on income, qualifying wages, commissions and other compensation earned by individuals, and on the net profits and other taxable income earned from the operation of a business, profession or other activity.

TAXPAYER - A person, whether an individual, partnership, association or any corporation or other entity, required under this ordinance to file a return or pay a tax.

(Return to Rules & Regulations Index - Top of Page)

ARTICLE III - Imposition of Tax

A. Bases

1. Resident Employee:

a. In the case of residents of the City of Piqua, an annual tax of one and three-fourths percent (1.75%) is imposed on all qualifying wages, commissions, other compensation and other income earned or received during the effective period of the ordinance. For the purpose of determining the tax on the earnings of resident taxpayers taxed under Section 3, Paragraph A-1 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.

b. The following are items, which are subject to the tax imposed by Section 3, Paragraph A-1 of the ordinance:

.1 Qualifying wages, bonuses and incentive payments earned or received by an individual, whether directly or through an agent and whether in cash or in property for services rendered during the tax period as:

.01 An officer, director or employee of a corporation (including charitable and other non-profit organizations), joint stock association, or joint stock company;

.02 An employee (as distinguished from a partner or member) of a partnership, limited partnership, or any form of unincorporated enterprise owned by two or more persons;

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

.04 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 of the State of Ohio or any of its political subdivisions or agencies thereof; or any foreign country or dependency except as provided in Section 3 of the ordinance;

.05 An employee of any other entity or person, whether based upon hourly, daily, weekly, semi-monthly, monthly, annual, unit of production or piece work rates; and whether paid by an individual, partnership, association, corporation (including charitable and other non-profit corporations), governmental administration, agency, authority, board, body, branch, bureau, department, division, subdivision, section or unit, or any other entity.

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

.01 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 amount received as a drawing account.

.02 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 deducts such expenses or advances as such from his gross income for the purpose of determining his net profits taxable under federal law, and the employee is not required to include such receipts as income on his federal tax return.

.03 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 under paragraphs A-3 or A-4 of Section 3 of the ordinance, they shall not be taxed under Section 3, paragraph A-1.

.3 Fees, unless such fees are properly includible as part of the net profits of a trade, business, profession or enterprise regularly carried on by an unincorporated entity owned or partly owned by said individual and such net profits are subject to the tax under Section 3, paragraph A-3 of this ordinance.

.4 Other compensation and income including but not limited to tips, bonuses or gifts of any type, lottery and other prize winnings, covenant not to compete, and including compensation paid to domestic servants, casual employees, and other types of employees. Non-compensatory gifts are not taxable.

.5 Payments made to employees by an employer as vacation wages are taxable. Payments made to an employee by an employer or under an employer-paid insurance plan during periods of disability or sickness, are taxable.

c. 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 unless not taxable under federal income taxes.

.1 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. Non-Resident Employee:

a. In the case of individuals who are not residents of the City of Piqua, there is imposed under Section 3, paragraph A-2 of the ordinance, a tax of one and three-fourths percent (1.75%) on all qualifying wages, commissions, other compensation and other income earned or received during the effective period of the ordinance for work done or services performed or rendered within the City of Piqua, whether such compensation or remuneration is received or earned directly or through an agent or whether paid in cash or in property. The location of the place from which payment is made is immaterial.

b. Occasional entry provision:

.1 A non-resident individual who works in Piqua twelve (12) or fewer days per year shall be considered an occasional entrant, and shall not be subject to Piqua municipal income tax for those 12 days. For purposes of the 12-day calculation, any portion of a day worked in Piqua shall be counted as one day worked in Piqua.

.2 Beginning with the thirteenth day, the employer of said individual shall begin withholding Piqua income tax from remuneration paid by the employer to the individual, and shall remit the withheld income tax to the City of Piqua in accordance with Article VI. Since the individual can no longer be considered to have been an occasional entrant, the employer is further required to remit taxes on income earned in Piqua by the individual for the first twelve days.

.3 If the individual is self-employed, it shall be the responsibility of the individual to remit the appropriate income tax to Piqua.

.4 The 12-day occasional entry rule does not apply to entertainers or professional athletes, their employees or individuals who perform services on their behalf, or to promoters and booking agents of such entertainment events and sporting events.

c. The items subject to tax under Section 3, paragraph A-2 of the ordinance are the same as those listed and defined in Article III-A. For the methods of computing the extent of such work or services performed within the City of Piqua, in cases involving compensation for personal services partly within and partly without the City of Piqua, see Article VI-A.6.

3. Non-Resident City Employees:

All employees of the City of Piqua, Ohio who are not otherwise subject to this ordinance shall have deducted from their qualifying wages, commissions or other personal service compensation the applicable Piqua city income tax. The non-resident employee shall be subject to or beneficiary of the same provisions allowed non-residents working within the City of Piqua.

4. a. Resident Unincorporated Businesses:

.1 In the case of resident unincorporated businesses, professions, enterprises, undertakings or other entities conducted, operated, engaged in, prosecuted or carried on, irrespective of whether such taxpayer has an office or place of business in the City of Piqua, there is imposed an annual tax of one and three-fourths percent (1.75%) on the net profits earned, accrued or received during the effective period of the ordinance attributable to the City of Piqua, under the formula or separate accounting method provided for in Section 3 of the ordinance, derived from sales made, work done or services performed or rendered and business or other activities conducted in the City of Piqua.

.2 The tax imposed on resident associations or other unincorporated entities owned by two or more persons is upon the individual members or owners thereof.

.3 The tax imposed by Section 3, paragraph A-3a of the ordinance is imposed on all individual owners or members of such businesses having net profits attributable to the City of Piqua under the method of allocation provided for in the ordinance, regardless of where the owner or owners of such resident unincorporated business entity reside.

b. Imposition of Tax on Residents Distributive Share of Profits of a Resident Unincorporated Business Entity, Not Attributable to the City of Piqua:

.1 A resident individual who is sole owner of a resident unincorporated entity shall disregard the business allocation formula and pay the tax on the entire net profits of his resident unincorporated business entity.

.2 In the case of a resident individual partner or part owner of a resident unincorporated entity, there is imposed an annual tax of one and three-fourths percent (1.75%) on such individual's distributive share of net profits earned, accrued or received under the method of allocation provided for in Section 3 of the ordinance, and not taxed against the entity.

5. a. Non-Resident Unincorporated Businesses:

.1 In the case of non-resident unincorporated businesses, professions, enterprises, undertakings or other activities conducted, operated, engaged in, prosecuted or carried on, there is imposed an annual tax of one and three-fourths percent (1.75%) on the net profits earned, accrued or received during the effective period of the ordinance attributable to the City of Piqua, under the formula or separate accounting method provided for in the ordinance.

.2 The tax imposed on non-resident unincorporated entities owned by two or more persons 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 Article III-A.4b).

.3 Non-resident unincorporated entities owned by two or more persons, all of whom are residents of the City of Piqua, may elect to disregard the method of allocation provided for in the ordinance and pay the tax on the entire net profits. In such case, the tax paid by the entity shall constitute all tax due from the owners or members of the entity for their distributive share of the net profits; however, a return shall be required from such owner or member having taxable income other than the distributive share of the net profit from the entity.

b. Imposition of Tax on Resident's Share of Profits of a Non-Resident Unincorporated Business Entity Not Attributable to the City of Piqua:

.1 A resident individual who is sole owner of a non-resident unincorporated business entity shall disregard the business allocation formula and pay the tax on the entire net profits of his unincorporated entity.

.2 In the case of a resident individual partner or part owner of a non-resident unincorporated entity, there is imposed an annual tax of one and three-fourths percent (1.75%) on such individual's distributive share of net profits earned, accrued or received during the effective period of the ordinance not attributable to the city under the method of allocation provided for in Section 3 of the ordinance and not taxed against the entity.

6. Imposition of Tax on Net Profits of 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 City of Piqua, there is imposed an annual tax of one and three-fourths percent (1.75%) on the net profits earned, received or accrued during the effective period of the ordinance attributable to the City of Piqua under the formula or separate accounting method provided for in the ordinance.

b. In determining whether a corporation is conducting a business or other activity in the City of Piqua, the provisions of Article III-B of these regulations shall be applicable.

c. Corporations, which are required by the provisions of Section 5727.38 to 5727.41 inclusive, of the Revised Code of Ohio, to pay an excise tax in any taxable year as defined by the ordinance, may exclude that part of their gross receipts upon which the excise tax is paid. In such case, expenses incurred in the production of such gross receipts shall not be deducted in computing net profits subject to the tax imposed by the ordinance.

7. Amplification:

In amplification of the definition contained in Article II of these regulations, but not in limitation thereof, the following additional information respecting net business profits is furnished.

a. NET PROFITS:

.1 Net profits as used in the ordinance and these regulations means net profits derived from any business, profession or other activity or undertaking carried on for profit or normally carried on for profit.

.2 Net profits as disclosed on any return filed pursuant to the provisions of the ordinance shall be computed by the same accounting method used in reporting net income to the federal Internal Revenue Service (providing such method does not conflict with any provisions of the ordinance). Net profits, shown on returns filed pursuant to the ordinance, must be reconciled with the income reported to the federal Internal Revenue Service.

b. GROSS RECEIPTS:

.1 Gross receipts shall include, but not be limited to, income in the form of commissions, fees, rentals from real and tangible personal property, and other compensation for work or services performed or rendered as well as income from sales of stock in trade.

.2 From gross receipts there shall be deducted allowable expenses to arrive at the net profit subject to tax.

c. EXPENSES

.1 In determining taxable business income, the deductible expenses shall be of the same nature, extent and amount as allowed by the Internal Revenue Service for federal income tax purposes.

.2 All ordinary and necessary expenses of doing business, including reasonable compensation paid employees, shall be allowed but no deduction may be claimed for salary or withdrawal of a proprietor or of the partners, members, or other owners of an unincorporated business or enterprise.

.01 If not claimed as part of the cost 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. Provided, however, that loss on the sale, exchange or other disposition of depreciable property or real estate used in the taxpayer's business shall not be allowed as a deductible expense.

.02 Current amortization of emergency facilities under the provisions of the Internal Revenue Code, if recognized as such for federal income tax purposes, may be included as an expense deduction hereunder.

.03 Where depreciable property is voluntarily destroyed only the cost of such demolition and the undepreciated balance thereof will be allowed as an expense in the year of such demolition, to the extent allowable for federal income tax purposes.

.04 Bad debts in a reasonable amount may be allowed in the year ascertained worthless and charged off, or at the discretion of the Administrator (if the reserve method is used), a reasonable addition to the reserve may be claimed, but in no event shall the amount exceed the amount allowable for federal income tax purposes.

.05 Only taxes directly connected with the business may be claimed as a deduction. If, for any reason, the income from property is not subject to the tax, then taxes on and other expenses of said property are not deductible. In any event, the following taxes are not deductible from income; (1) the tax under the ordinance; (2) federal or other taxes based upon income; (3) gifts, estate or inheritance taxes; and (4) taxes for local benefits or improvements to property which tend to appreciate the value thereof.

.06 In general, non-taxable income and expenses incurred in connection therewith are not to be considered in determining net profits. Income from intangibles, by way of dividends, interest and the like, shall not be included if such income is subject to taxation under the intangible personal property laws of the State of Ohio or is specifically exempt from taxation under said law.

.07 If the taxpayer reports income that is non-taxable under the ordinance and such amounts are deducted in order to reconcile to the City of Piqua return with the taxpayer's federal income tax return, expenses attributable to this non-taxable income shall not be allowed. The taxpayer may submit to the Administrator satisfactory evidence of the actual amount of expense attributable to the non-taxable income. In the absence of records showing the actual expenses attributable to such non-taxable income, and upon approval of the Administrator, such amount shall be deemed to equal five percent (5%) of such non-taxable income.

.08 Capital gains and losses, as defined by the IRS for federal tax purposes, from sale, exchange or other disposition of property shall not be taken into consideration in arriving at net profits earned. Any amount received on a sale or other disposition of tangible personal property used in business, in excess of book value, shall be treated as taxable income under the ordinance to the extent of depreciation allowed or allowable after January 1, 1967. The balance shall be treated as a capital gain.

.001 Definition of Property Used in the Trade or Business:

For purpose of this Article, the term "property used in the trade or business" means property used in the trade or business of a character which is subject to the allowance for depreciation and real property used in the trade or business, which is not:

(a) Property of a kind, which would properly be includable in the inventory of a taxpayer if on hand at the close of the taxable year;

(b) Property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business; or

(c) A copyright, a literary, musical or artistic composition, or similar property held by the taxpayer.

8. Rentals from Real Property:

a. All rentals received by the taxpayer for the rental of real estate constitutes a business activity and are to be included in the city tax return.

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

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

d. In determining the taxable income from rentals, the deductible expenses shall be of the same nature, extent and amount as are allowed by the Internal Revenue Service for federal income tax purposes.

e. Residents of the City of Piqua are subject to taxation upon the net income from rentals, regardless of the location of the real property owned.

f. Non-residents of the City of Piqua are subject to such taxation only if the real property is situated within the City of Piqua.

g. Corporations owning or managing real estate are taxable only on that portion of income derived from property located in the City of Piqua.

9. Patents and Copyrights:

Income from patents or copyrights is not to be included in net profits subject to the tax if the income from such patents or copyrights is subject to the state intangible tax. Conversely, such a state intangible tax is not deductible in determining city tax. Such items shall be clearly disclosed on an attachment to be filed with the city tax return.

B. Allocations of Business Profits

A request to change the method of allocation must be made in writing before the end of the taxable year.

1. Separate Accounting Method:

a. Net profits allocable to the City of Piqua from business, professional or other activities conducted in the City of Piqua by corporations or unincorporated entities (whether resident or non-resident) may be determined from the records of the taxpayer if the taxpayer has bona fide records which disclose with reasonable accuracy what portion of his net profits is attributable to that part of his activities conducted within the City of Piqua.

b. If the books and records of the taxpayer are used as the basis for apportioning net profits rather than the business allocation formula, a statement must accompany the return explaining the manner in which such apportionment is made in sufficient detail to enable the Administrator to determine whether the net profits attributable to the City of Piqua are apportioned with reasonable accuracy.

c. In determining the income allocable to the City of Piqua from the books and records of a taxpayer, an adjustment may be made for the contributions made to the production of such income by headquarters activities of the taxpayer, whether such headquarters is within or without the City of Piqua.

2. Business Allocation Percentage Method:

a. STEP1: Ascertain the percentage which the average original cost of real and tangible personal property, including leasehold improvements, owned or used in the business and situated within the City of Piqua, is of the average original cost of all real and tangible personal property, including leasehold improvements, owned or used in the business wherever situated, during the period covered by the return.

.1 The percentage of taxpayer's real and tangible personal property within the City of Piqua is determined by dividing the average original cost of such property within the City of Piqua (without deduction of any encumbrances) by the average original cost of all such property within and without the City of Piqua. In determining such percentage, property rented to the taxpayer as well as real and tangible personal property owned by the taxpayer, must be considered.

.01 The original cost of real and tangible personal property rented by the taxpayer shall be determined by multiplying gross annual rents payable by eight (8).

.02 Gross rents means the actual sum of money or other consideration payable, directly or indirectly, by the taxpayer for the use or possession of property and includes:

.001 Any amount payable for the use or possession of real and tangible personal property or any part thereof, whether designated as a fixed sum of money or as a percentage of sales profits or otherwise;

.002 Any amount payable as additional rent or in lieu of rent, such as interest, taxes, insurance, repairs or other amounts required to be paid by the terms of a lease or other arrangement.

b. STEP 2: Ascertain the percentage which the gross receipts of the taxpayer derived from sales made and services rendered in the City of Piqua is of the total gross receipts wherever derived during the period covered by the return.

.1 The following sales shall be considered Piqua sales:

.01 All sales made through retail stores located within the City of Piqua to purchasers within or without the City of Piqua, except such of said sales to purchasers outside the City of Piqua that are directly attributable to regular solicitations made outside the City of Piqua personally by taxpayer's employees.

.02 All sales of tangible personal property delivered to purchasers within the City of Piqua if shipped or delivered from an office, store, warehouse, factory or place of storage located within the City of Piqua.

.03 All sales of tangible personal property delivered to purchasers within the City of Piqua, even though transported from a point outside the City of Piqua, if the taxpayer is regularly engaged through its own employees in the solicitation or promotion of sales within the City of Piqua and the sale is directly or indirectly the result of such solicitation.

.04 All sales of tangible personal property shipped from an office, store, warehouse, factory or place of storage within the City of Piqua to purchasers outside the City of Piqua, if the taxpayer is not, through its own employees, regularly engaged in the solicitation or promotion of sales at the place of delivery.

.05 Charges for work done or services performed incident to a sale, whether or not included in the price of the property, shall be considered gross receipts from such sale.

.2 In the application of the foregoing subparagraphs, a carrier shall be considered the agent of the seller regardless of the FOB point or other conditions of the sale; and the place at which orders are accepted or contracts legally consummated shall be immaterial. Solicitation of customers outside the City of Piqua by mail or phone from an office, or place of business within the City of Piqua, shall not be considered a solicitation of sales outside the City of Piqua.

c. STEP 3: Ascertain the percentage which the total qualifying wages, commissions and other compensation of employees within the City of Piqua is of the total qualifying wages, commissions, and other compensation of all the taxpayer's employees within and without the City of Piqua during the period covered by the return.

.1 Salaries and reasonable compensation paid owners or credited to the account of owners or partners during the period covered by the return are considered wages for the purpose of this computation.

.2 Qualifying wages and other compensation shall be 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.

.3 In the case of an employee who performs services both within and without the City of Piqua, the amount treated as compensation for services performed within the city shall be deemed to be:

.01 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 the City of Piqua.

.02 In the case of an employee whose compensation depends on other results achieved, the proportion of the total compensation received which the value of his services within the City of Piqua bears to the value of all his services; and

.03 In the case of an employee compensated on a time basis, the proportion of the total amount received by him which his working time within the City of Piqua is of his total working time.

d. STEP 4: Add the percentage determined in accordance with Steps 1, 2 and 3 or such of the aforesaid percentages as may be applicable to the particular taxpayer's business and divide the total so obtained by the number of percentages used in ascertaining said total. The result so obtained is the business allocation percentage. In determining the average percentage, a factor shall not be excluded from the computation merely because said factor is found to be allocable entirely outside the City of Piqua. A factor is excluded only when it does not exist anywhere.

e. STEP 5: The business allocation percentage determined in Step 4 above shall be applied to the entire taxable net profits of the taxpayer wherever derived to determine the net profits allocable to the City of Piqua.

3. Substitute Method:

a. In the event a just and equitable result cannot be obtained under the formula, the Board, upon application of the taxpayer or the Administrator, may substitute other factors in the formula or prescribe other methods of allocating net income calculated to effect a fair and proper allocation.

b. Application to the Board to substitute other factors in the formula, or to use a different method to allocate net profits, must be made in writing before the end of the taxable year and shall state the specific grounds on which the substitution of factors or use of a different method is requested and the relief sought to be obtained. A copy thereof shall be served at the time of filing upon the taxpayer or Administrator as the case may be. No specific form need to be followed in making such application. Once a taxpayer has filed under a substitute method, he must continue to so file until given permission to change by the Board of Review.

C. Operating Loss Carry Forward

1. The portion of a net operating loss, based on income taxable under the ordinance, sustained in any taxable year allocable to the City of Piqua may be applied against the portion of the profit of the succeeding year(s) allocable to the City of Piqua, until exhausted but in no event for more than five (5) taxable years. No portion of a net operating loss shall be carried back against net profits of any prior year.

2. In the event net profits are allocated both within and without the City of Piqua, the portion of a net operating loss sustained shall be allocated to the City of Piqua in the same manner as provided herein for allocating net profits to the City of Piqua. The portion of a net operating loss to be carried forward shall be determined in the year the net operating loss was sustained, on the basis of the allocation factors applicable to that year. The same method of accounting and allocation must be used in the year to which an operating loss is carried as was used in the year in which the operating loss was sustained.

3. In the case of fiscal years beginning prior to the effective date of the ordinance, the net operating loss deduction will be that portion of the operating loss that the number of months of the fiscal year after the effective date of the ordinance bears to the total number of months in such fiscal year.

4. A short fiscal year (a fiscal year of less than twelve (12) months) in cases where there has been a change in accounting period, where a new taxpayer selects a short fiscal year, or where a new taxpayer operates in the City of Piqua for less than his full accounting period, shall be considered as a full taxable fiscal year.

5. In any return in which a net operating loss deduction is claimed, a schedule should be attached showing:

a. Year in which net operating loss was sustained,

b. Method of accounting and allocation used to determine portion of net operating loss allocable to the City of Piqua,

c. Amount of net operating loss used as a deduction in prior years, and

d. Amount of net operating loss claimed as a deduction in current year.

6. The net operating loss sustained by a business before the adoption of this ordinance and which business loses its identity through merger, consolidation, etc. shall not be allowed as a carry-forward loss deduction to the surviving business entity. However, operating loss sustained after the adoption of the ordinance shall be allowed to the surviving business entity.

7. In the case of a net operating loss in the filing of consolidated returns, see Article III, paragraph D.

D. Consolidated Returns

1. Any affiliated group, which files a consolidated return for federal income tax purposes pursuant to Section 1501 of the Internal Revenue Code, may file a consolidated return with the City of Piqua. However, once the affiliated group has elected to file a consolidated return or a separate return with Piqua, the affiliated group may not change its method of filing in any subsequent tax year without written approval from Piqua.

2. Once a consolidated return has been filed for any taxable year, the consolidated group must continue to file consolidated returns in subsequent years unless:

a. Permission in writing is granted by the Administrator to file separate returns,

b. A new corporation other than a corporation created or organized by a member of the group has become a member of the group during the taxable year, and

c. A corporation member of the group is sold or exchanged. Liquidating a corporation or merging one of the corporations of the group into another will not qualify the group for filing separate returns.

3. If a corporation becomes a member of the group during the taxable year, the consolidated return must include the income for the entire taxable year of the common parent corporation and any subsidiaries, which were members of the group for the entire year, plus the income of each subsidiary, which becomes a member of the group during the year for the period beginning with the date it became a member of the affiliated group. For the period prior to the time any subsidiary became a member of the group, separate returns must be filed for that subsidiary. When a subsidiary ceases to be a member of the affiliated group, the consolidated return must include the income of such subsidiary for the period during which it was a member of the group, but for the period after it ceases to be a member, separate returns must be filed. If a corporation has been a member of the affiliated group for less than one month of the taxable year of the group, it may be considered as not being part of the group. Similarly, a subsidiary may be considered as being a member of affiliated group during the entire taxable year of the group if the period during which it was not a member of the group does not exceed one month. If a subsidiary is a member of the consolidated group for only part of a taxable year, the income considered to be earned in such fractional part of the year shall be that portion of the net income for the entire year, which the number of days it was a member of the group bears to the total number of days in the taxable year.

4. In determining the allocation fraction where a corporation becomes a member of the group or ceases to be a member of the group during the taxable year, the property fraction (Step 1 of the formula) shall be determined on the basis of the average net book value of the property during the period such corporation was a member of the group. The rental portion of the fraction, however, shall be computed at eight (8) times the annual rent. The gross receipts and wage fractions shall be based on the actual figures.

5. The net operating loss carryover of a corporation, which filed a separate return in a prior year, may be carried over to the consolidated return but will be limited in amount to the amount of that same corporation's net income included in the consolidation. The net operating loss carryover from a separate year shall be deducted first before application of the allocation fraction. After application of the allocation fraction and consolidated net operating loss, carryover allocated to the City of Piqua shall be allowed.

6. In consolidating the net income, the taxable income of each corporation shall be computed in accordance with the provisions governing the taxable income of separate corporations, except that there shall be eliminated unrealized profits and losses in transactions between members of the affiliated group.

7. In determining expenses that are not allowable because they are allocable to non-taxable income, such calculations shall be based on the consolidated net income. As an example, inter-company dividends, which are eliminated in the consolidation, will not be taken into consideration in determining non-taxable income.

E. Exclusions from Taxation

The following shall not be considered taxable:

1. Military pay or allowances of members of the Armed Forces of the United States and of members of their reserve components, including the National Guard.

2. Poor relief, pensions, including Social Security benefits, unemployment compensation or similar payments, including disability benefits received from private industry or local, state or federal governments, or from charitable, religious or educational organizations.

3. Alimony received.

4. Dues, contributions and similar payments received by charitable, religious, educational or literary organizations or labor unions, lodges and similar organizations.

5. Any charitable, educational, fraternal or other type of non-profit association or organization enumerated in Section 718.01 of the Revised Code of Ohio, which is exempt from payment of real estate taxes, is exempt from payment of the tax.

a. Any association or organization falling in the category listed in the preceding paragraph not exempt from the payment of real estate taxes is required to file declarations and final returns and remit the taxes levied on all business activities of a type ordinarily conducted for profit by taxpayers operating for profit.

b. Where such non-profit association or organization conducts income-producing business, both within and without the corporate limits, it shall calculate its profits allocable to the City of Piqua under the method or methods provided above.

6. Any association, organization, corporation, club or trust, which is exempt from federal taxes on income by reason of its charitable, religious, educational, literary, scientific, etc., purposes.

7. Gains from involuntary conversion and capital gains, cancellation of indebtedness, interest on federal obligations, items of income already taxed by the State of Ohio, as of the date of enactment of Ordinance 33-66 (being 7/5/66), and income of a decedent's estate during the period of administration (except such income from the operation of a business).

8. Earnings and income of all persons 18 years of age and under. Earnings and income will be taxable for the portion of the year after which they become 19.

9. Parsonage allowance, to the extent of the rental allowance or rental value of a house provided as a part of an ordained minister's compensation. The minister must be duly ordained, commissioned or licensed by a religious body constituting a church or church denomination.

10. 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 ($1,000) annually.

11. Intangible income.

12. The income of a public utility, when that public utility is subject to the tax levied under Section 5727.24 or 5727.30 of the Ohio Revised Code, except a municipal corporation may tax the following, subject to Chapter 5745 of the Ohio Revised Code:

a. The income of an electric company or combined company;

b. The income of a telephone company.

As used in Section 17 (L) of this ordinance, "combined company", "electric company", and "telephone company" have the same meanings as in Section 5727.01 of the Ohio Revised Code.

13. The City of Piqua shall not tax the compensation paid to a nonresident individual for personal services performed by the individual in the City of Piqua on twelve (12) or fewer days in a calendar year unless one of the following applies:

a. The individual is an employee of another person, the principal place of business of the individual's employer is located in another municipality in Ohio that imposes a tax applying to compensation paid to the individual for services paid on those days; and the individual is not liable to that other municipality for tax on the compensation paid for such services.

b. The individual is a professional entertainer or professional athlete, the promoter of a professional entertainment or sports event, or an employee of such promoter, all as may be reasonably defined by the City of Piqua.

(Return to Rules & Regulations Index - Top of Page)

ARTICLE IV - Effective Period of Tax

A. The tax imposed by Section 3, paragraphs A-1 and A-2 of the ordinance shall be levied, collected and paid with respect to salaries, wages, bonuses, incentive payments, commissions, fees and other compensation.

B. The tax imposed by Section 3, paragraphs A-3, A-4 and A-5 of the ordinance, with respect to net profits of trades, businesses, professions, enterprises, undertakings and other activities is on the net profits.

(Return to Rules & Regulations Index - Top of Page)

ARTICLE V - Return and Payment of the Tax

A. Date and Requirements for Filing

1. On or before April 15th of the year following the effective date of the ordinance and each year thereafter, every person subject to the provisions of Section 3, paragraphs A-1 to A-5 inclusive, of the ordinance shall, except as hereinafter provided, make and file with the Administrator, a return on a form prescribed by and obtainable upon request from the Administrator, whether or not a tax be due. "Generic or alternate", meaning electronic or paper form, is acceptable if it contains the prescribed information required by this ordinance and the taxpayer or return preparer otherwise complies with the City of Piqua rules or ordinances governing the filing of returns, reports or documents.

2. If the return is made for a fiscal year or any period less than a year, said return shall be made within 15 days of the fourth month from the end of each fiscal year or other period.

3. Every person subject to the provisions of Section 3 of the ordinance shall, except as hereinafter provided, file a return setting forth the aggregate amount of qualifying wages, commissions and other personal service compensation, net profits from business or other activities, including the rental from use of real and personal property, and other income taxable under the ordinance, received for the period covered by the return and such other pertinent facts and information in detail as the Administrator may require.

4. Where an employee's entire earnings for the tax period are paid by an employer or employers, and the one and three-fourths percent (1.75%) tax thereon has in each instance been withheld and deducted by the employer or employers 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 Administrator, and where such employee has no taxable income other than such earnings and the tax so withheld has been paid to the Administrator, such employee need not file a return.

5. An employee who is permitted to deduct business expenses from gross wages or commissions must file a return in order to claim such deductions even though all or part of such wages or commissions are subject to withholding.

6. Any taxpayer who received taxable income not subject to withholding under the ordinance must file a return.

7. Any taxpayer having income, wages or other compensation for which a return must be filed, and also having net profits from a business covering the same or a different period, is required to file only one return.

8. Trustees of trusts are required to file returns and pay the tax on the taxable income thereof.

9. Except as provided herein, the tax imposed on resident or non-resident associations or other unincorporated entities owned by two or more persons is upon the individual member or owners thereof.

10. A husband and wife may, in any tax year, elect to file separate or joint returns.

11. Operating losses from business or professional activities, the profits of which would be taxable under the ordinance, may be offset against qualifying wages, commissions and other personal service compensation or against net profits from other business or professional activities. To the extent that such losses are offset, they shall not be allowable as an operating loss carry forward under Section 3-C of the ordinance or Article III-C of the regulations.

B. Information Required and Reconciliation with Federal Returns

1. In returns filed hereunder, there shall be set forth the aggregate amount of qualifying wages, bonuses, incentive payments, commissions, fees and other compensation subject to the tax earned from each employer, taxable net profits and other pertinent information as the Administrator may require.

2. Where figures of total income, total deductions and net profits are included, as shown by a federal return, any items of income as are not subject to the City of Piqua tax and unallowable expenses shall be eliminated in determining net income subject to the City of Piqua tax. In the absence of records showing the actual unallowable expenses, such expenses shall be determined in accordance with Article III A-6.c.1.08 of these regulations. The fact that any taxpayer is not required to file a federal tax return does not relieve him from filing a City of Piqua tax return.

3. If a change in federal income tax liability, made by the federal Internal Revenue Service, or by a judicial decision, results in an additional amount of tax payable to the City of Piqua, a report of such change shall be filed by the taxpayer within three (3) months after receipt of the final notice from the federal Internal Revenue Service or final court decision, see Article XI-B.

4. If a change in federal income tax liability results in a reduction of taxes owed and paid to the City of Piqua, a claim for refund shall be filed with the Administrator as prescribed in Section II of the ordinance and Article XI-C of these regulations.

C. Extensions

1. Beginning January 1, 2001, any taxpayer who has requested an extension for filing a federal income tax return may request an extension for the filing of a City of Piqua income tax return. The taxpayer shall make the request by filing a copy of the taxpayer's request for a federal filing extension with the City of Piqua income tax department. The request for extension shall be filed not later than the last day for filing the City of Piqua income tax return as prescribed by the City of Piqua Income Tax Rules and Regulations. The City of Piqua shall grant such a request for extension for a period not less than the period of the federal extension request. The City of Piqua may deny a taxpayer's request for extension only if the taxpayer fails to timely file the request, fails to file a copy of the request for the federal extension, owes the City of Piqua any delinquent income tax or any penalty, interest, assessment, or other charge for the late payment or nonpayment of income tax, or has failed to file any required income tax return, report, or other related document for prior tax period. The granting of an extension for filing a City of Piqua income tax return does not extend the last date for paying the tax without penalty unless the Tax Administrator grants an extension of that date.

2. Information returns, schedules and statements needed to support tax returns are to be filed within the time limits set forth for filing tax returns.

D. Payment With Return

1. The taxpayer making a return shall, at the time of the filing thereof, pay to the Administrator the amount of taxes shown as due thereon; provided, however, that where any portion of the tax so due shall have been deducted at the source pursuant to the provisions of Section 6 of the ordinance, or where any portion of said tax shall have been paid by the taxpayer pursuant to the provisions of Section 7 of the ordinance, or where an income tax has been paid to another municipality, credit for the amount so paid in accordance with Section 15 hereof, 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 return.

2 A taxpayer who has overpaid the amount of tax to which the City of Piqua is entitled under the provisions of the ordinance may have such overpayment applied against any subsequent liability hereunder or, at his election indicated on the return, such overpayment (or part thereof) shall be refunded, provided that no additional taxes or refunds of less than one dollar ($1.00) shall be collected or refunded.

E. Amended Returns

1. Where necessary, an amended return must be filed in order to report additional income and pay any additional tax due, or claim a refund of tax overpaid, subject to the requirements and/or limitations contained in Sections 11 and 12. Such amended return shall be on a form obtainable on request from the Administrator. A taxpayer may not change the method of accounting or apportionment of net profits after the due date for filing the original return.

2. Within three (3) months from the final determination of any federal tax liability affecting the taxpayer's City of Piqua tax liability, such taxpayer shall make and file an amended City of Piqua return showing income subject to the tax based upon such final determination of federal tax liability, and pay any additional tax shown due thereon or make claim for refund of any overpayment.

(Return to Rules & Regulations Index - Top of Page)

ARTICLE VI -  Collection of Tax at the Source

A. Duty of Withholding

1. Except as otherwise provided herein, it is the duty of each employer within or doing business within the City of Piqua, who employs one or more persons, whether as an employee, officer, director or otherwise, to deduct each time any compensation is paid, the tax of one and three- fourths percent (1.75%) from:

a. The total of all qualifying wages, bonuses, incentive payments, fees, commissions or other forms of compensation paid to residents of the City of Piqua, regardless of the place where the services are rendered; and

b. All compensation paid non-residents for services rendered, work performed or other activities engaged in within the City of Piqua.

2. All employers within, or doing business within, the City of Piqua are required to make the collections and deductions specified in this article, regardless of the fact that the services on account of which any particular deduction is required, as to residents of the City of Piqua, were performed outside the City of Piqua.

3. Employers who do not maintain a permanent office or place of business in the City of Piqua, but who are subject to tax on net profits attributable to the City of Piqua, under the method of allocation provided for in the ordinance, are considered to be employers within the City of Piqua and subject to the requirements of withholding.

a. Beginning January 1, 2001, the City of Piqua shall not require any non-resident employer, agent of such an employer, or other payer who is not situated in the City of Piqua to deduct and withhold taxes from the taxable income of an individual unless the total amount of tax required to be deducted and withheld for the City of Piqua on account of all of the employer's employees or all the other payer's payees exceeds one hundred fifty dollars ($150) for a calendar year beginning on or after that date.

If the total amount of tax required to be deducted and withheld on account of all of the non- resident employer's employees or all of the other payer's payees exceeds one hundred fifty dollars ($150) for a calendar year beginning on or after January 1, 2001, the City of Piqua may require the employer, agent, or other payer to deduct and withhold taxes in each ensuing year even if the amount required to be deducted and withheld in each of those ensuing years is one hundred fifty dollars ($150) or less, except as otherwise provided in (3b), of this section.

b. If a non-resident employer, agent of such an employer, or other payer who is not situated in the City of Piqua is required to deduct and withhold taxes for an ensuing year under (3a) of this section, and the total amount of tax required to be deducted and withheld under (3a) in each of three consecutive ensuing years is one hundred fifty dollars ($150) or less, the City of Piqua shall not require the employer, agent, or other payer to deduct and withhold taxes in any year following the last of those consecutive years unless the amount required to be deducted and withheld in any such following year exceeds one hundred fifty dollars ($150), at which time the employer must withhold for an additional three consecutive ensuing years as required elsewhere in this provision.

4. 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 paid. If the employer has withheld the tax and failed to pay the tax withheld to the Administrator, the employee is not liable for the tax so withheld.

5. Commissions and fees paid to professional persons, brokers and others who are independent contractors, and not employees of the payor, are not subject to withholding or collection of the tax at the source. Such taxpayers must, in all instances, file a declaration and return and pay the tax pursuant to the provisions of the ordinance and Articles V and VII of the regulations.

6. Where a non-resident receives compensation for personal services rendered or performed partly within and partly without the City of Piqua, the withholding employer shall deduct, withhold and remit the tax on that portion of the compensation which is earned within the City of Piqua in accordance with the following rules of apportionment:

a. If the non-resident is a salesperson, agent or other employee whose compensation depends directly on the volume of business that is transacted or chiefly effected by him, the deducting and withholding shall attach to the portion of the entire compensation which the volume of business transacted or chiefly effected by the employee within the City of Piqua bears to the total volume of business transacted by him within and outside the City of Piqua;

b. The deducting and withholding of personal service compensation of other non-resident employees, including officers of corporations, shall attach to the proportion of the personal service compensation of such employee which the total number of his working hours within the City of Piqua is of the total number of working hours;

c. The fact that non-resident employees are subject to call at any time does not permit the allocation of pay for time worked within the City of Piqua on a seven-day-per-week basis. The percentage of time worked in the City of Piqua will be computed on the basis of a forty-hour week, unless the employer notifies the Administrator that a greater or lesser number of hours per week is worked.

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 to the employee for expenses necessarily and actually incurred by the employee in the actual performance of his services, provided such expenses are incurred in earning compensation, and are not deducted as a business expense by the employee under Article III of these regulations.

8. A Piqua employer whose records show that an employee is a non-resident of the City of Piqua and has no knowledge to the contrary, shall be relieved of the responsibility of withholding the tax on personal service compensation paid to such employee for services rendered or work done outside the City of Piqua by such employee, provided, however, that such employer must withhold the tax on all personal service compensation paid such employee after the Administrator notified said employer in writing that such employee is a resident of the City of Piqua. All employees are required to notify the employer of any change of residence and the date thereof.

9. A Piqua employer required to withhold the tax from a City of Piqua resident for work done or services performed in another municipality, and who does so withhold and remit to such other municipality, shall be relieved from the requirement of withholding the City of Piqua tax from such Piqua resident, except where the rate of tax for such other municipality is less than the rate of tax imposed by this ordinance. In such case the employer shall withhold and remit the difference to the City of Piqua.

10. Subject to approval by the Board of Review, the Administrator shall have authority to permit the filing of individual returns and payment thereon of employers of less than four (4) employees and to enter into agreements with other taxing municipalities permitting an employer to withhold the entire tax on the wages of a taxpayer working in more than one taxing municipality, either for the taxing municipality in which the employer has his principal place of business or the taxing municipality in which the employee resides.

B. Return and Payment of Tax Withheld and Status of Employers

1. The deduction from qualifying wages and other compensation required to be made by employers is to begin with the compensation paid on and after the effective date of the ordinance.

2. If more than the amount of tax required to be deducted by the ordinance is withheld from an employee's pay, such excess may be refunded by the employer or the Administrator, depending upon the circumstances and the time when the over-withholding is determined as follows:

a. Current Employees:

.1 If the over-withholding is discovered in the same quarterly period the employer shall make the necessary adjustment directly with the employee and the amount to be reported on the quarterly form PW-1, as withheld, shall be the corrected amount;

.2 If the over-withholding is discovered in a subsequent quarter of the same calendar year, the employer may make proper adjustment with the employee. In such case the PW-1 for the quarter in which the adjustment is made shall indicate the total amount actually withheld, the amount of adjustment deducted therefrom, and the corrected amount reported on the PW-1;

.3 If the over-withholding is discovered in the following year, the employer should notify the Administrator of such over-withholding and the circumstances thereof. Upon proper verification the Administrator shall refund to the employee the amount of such excess withholding;

b. Former Employees:

.1 In the case too much has been withheld from an employee who is no longer employed by the employer, the employer shall notify the