Policies & Procedures Prior to 1-1-16

Policies & Procedures

Prior to 1-1-16

 

MISSION STATEMENT


As employees of the City of Ashland Income Tax Division, our purpose is to “ Provide Professional, Impartial and Courteous Service to all Taxpayers.”

By:

• Collecting tax payments
• Educating and assisting taxpayers in complying with the Income Tax Ordinance
• Enforcing the Income Tax Ordinance in a fair and equitable manner
• Maintain all tax documents on file as required by law

 


EMPLOYEE BUSINESS EXPENSE-FORM 2106

According to Codified Ordinance chapter 229.06:
The Finance Director shall make all rules, regulations and decisions or changes thereto, regarding the administration of the Ashland Municipal Income Tax.

The Ashland Income Tax Office will accept the same Federal 2% AGI (adjusted gross income) 2106 deduction only when complete and accurate documentation is provided.

2106 deductions must be accepted according to H.B. 95 effective date; 9/24/2003

12-day occasional entry rule

In accordance with Sub. H.B. 477 on and after January 1, 2001, the City of Ashland shall not tax the compensation of an individual if all of the following apply:
(1) The individual is not a resident of the City of Ashland.
(2) The compensation is paid for personal services performed by the individual in the City of Ashland on twelve or fewer days in the calendar year. For purposes of the 12-day calculation, any portion of a day worked in Ashland shall be counted as one day worked in Ashland.
(3) In the case of an individual who is an employee, the principal place of business of the individual’s employer is located outside of the City of Ashland and the individual pays tax on compensation described in division (2) of this section to the municipal corporation, if any, in which the employer’s principal place of business is located, and no portion of that tax is refunded to the individual.
(4) The individual is not a professional entertainer or professional athlete, the promoter of a professional entertainment or sports event, or an employee of such a promoter.

Beginning with the thirteenth day, the employer of said individual shall begin withholding Ashland income tax from remuneration paid by the employer to the individual, and shall remit the withheld income tax to the City of Ashland in accordance with Section 229.04. 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 Ashland by the individual for the first twelve days.

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

12-Day Occasional Entry Rule added 11/17/2000

$150 Deminimus Rule

The $150.00 Deminimus rule was overturned effective date 9/24/2003. Language left out of H.B. 95.

 

AGE REQUIREMENT TO FILE INCOME TAX

All residents & nonresidents 16 & 17 years of age need to file a return if they are not fully withheld by their employer. All residents 18 years of age must file a return weather they were employed or not.


TREATMENT OF ACCRUED LEAVE

Accrued leave (sick, vacation, etc.) is not considered to be compensation until such time that the accrued leave is exercised. At this point, the accrued leave becomes paid compensation, subject to applicable municipal tax considerations at the time exercised. Treatment of such compensation is without regard to when the accrual is earned.

TREATMENT OF THIRD PARTY SICK PAY

Third party sick pay is considered to be taxable compensation to the City of Ashland, Ohio, at the time of payment.


EXTENTION GUIDELINES

Withholding Accounts

No extension request will be allowed for the “Employer’s Monthly/Quarterly Return of Tax Withheld” (W-1).

The Income Tax Ordinance does not provide for an extension of time to file reconciliation (W-3) of returns and employee W-2’s.


Extension Request Criteria

The following documentation / attachments must be included for an extension to be approved. This criterion is in addition to the guidelines for delinquency of each account.
1. The extension request must be filed timely. It must be received prior to the original filing deadline due date of return.
2. Any estimated tax due is to be paid in full in a timely manner. It must be paid by the due date of the original return.
3. A first quarter estimated tax due for the current year must be completed , and paid accordingly.
4. A copy of the federal extension request should be attached.

Extension requests will not be granted if any of the previous is missing from the request. Extensions will also not be granted if any delinquency exists in the account as detailed in the Extension Request Guidelines.

The above criteria do not include an extension for payment, these will not be granted.

 

EXTENSION REQUEST GUIDELINES

Net Profit Accounts
Due Dates: Net Profit Income Tax Returns ORC Sec. 718.05(B) Tax Year 2004
The due date MUST be the 15th day of the fourth month following end of Tax Year.
For tax years ending December 31, 2004 the due date is April 15, 2005.

Requests for extension are denied for the following:
1. If request is received after filing deadline date-April 15th
2. If request is for a fiscal filer it must be received within the 120 day
period of their year end date:
• January 31 by May 31
• February 28 by June 30
• March 31 by July 31
• April 30 by August 31
• May 31 by September 30
• June 30 by October 31
• July 31 by November 30
• August 31 by December 31
• September by January 31
• October 31 by February 28
• November 30 by March 31
• December 31 by April 30
3. Missing previous years returns
4. Outstanding balances
5. Missing reconciliation and/or W-2’s
6. Withholding shortage or delinquency
7. Extension shows and anticipated tax due, and no payments have been received.
8. Any delinquency shown in either the net profit or withholding accounts. A delinquency is considered to be missing filings or missing payments. If a return is missing pertinent documentation and requests for such documentation have been ignored, denial can be based on noncompliance. We do not routinely deny extension requests based on audit procedures or audit questions. Individual judgment will be required.
9. Extensions will not be granted if return is received more than 30 days passed the extension requested date, unless an additional extension is requested prior to the initial requested date. Ord. 62-72, passed 12/5/72.

Extensions ORC Sec. 718.05(D) Tax Year 2004

For taxable years beginning after 2003, the extended due date of the municipal income tax return shall be the last day of the month following the month to which the due date of the federal income tax return has been extended. The IRS Authorizes 4 months automatically and additional requests are limited to 6 months from the original due date.
Individual and Partnership Returns.....November 30th
Corporate Returns...............................October 31st

If denied, a letter of denial is sent to the taxpayer/tax preparer. A date stamped extension granted letter is mailed out to the taxpayer/ tax preparer. All copies are retained in each separate account whether it be denied or granted.

 

GUIDELINES FOR BUSINESS OFFSETS

Business losses may never offset W-2 wages.

There is no loss carry forward allowed from one year to another.

Partnership losses may not offset partnership gains; each is treated as an entity.

Gains and losses from multiple rentals, if in the name of the same owner if that owner lives in Ashland, may offset each other. If owner lives outside Ashland, just the Ashland rentals may be used.

Rental and/or sole proprietorship gains and losses may offset if in the name of the same individual but not W-2 wages.

Effective with the Tax Years beginning after 9/23/2003. There is a question on how rental income is to be apportioned. Most cities will continue to allocate rental income based on where the property is located but you should check with each municipality.

S-Corporations gains and losses are to be divided by each shareholder according to their percentage share.

Taxation of Distributive Share ORC Sec. 718.01(F)(9) January 1, 2004

It is the consensus of a number of municipalities that municipalities may tax the flow thru income of a shareholder in an S-Corp provided the income is allocated or apportioned as Ohio income.

Note: Those municipalities that qualify for the special provision to tax all distributive share income must have the issue on the November 4, 2003 ballot. Ashland did not do this.

 

REDUCING TAXABLE INCOME DUE TO JOB-RELATED TRAVEL DAYS OUT OF TOWN

Non-residents who are employed in the City of Ashland, but are required to travel to work sites outside of Ashland can reduce their taxable income according to the allocable days out of town.

1. The travel must be a required part of job performance.
2. The travel must be detailed. A log or typed letter on employer letterhead of days out, destination of travel must be provided. An authorized agent or supervisor must certify this.
3. Holiday(s), sick days, vacation days, annual leave taken, etc. is not considered to be travel days and cannot be deducted. These types of compensation are taxable to the City of Ashland.
4. Severance pay, separation pay, or other similar types of retirement incentives, wage continuations, etc. are also fully taxable, and cannot be deducted.
5. A percentage of non-taxable days can be determined by dividing the number of days worked out by the total available (260 standard). This percentage can be multiplied by the total taxable compensation to arrive at the adjusted amount to be excluded. Documentation to support calculations must also be included.

All logs or letters will be subject to audit and authorizing agent or supervisor will be contacted for clarification if necessary. Returns received without full documentation required will be sent a letter asking the taxpayer for completion of missing documentation. A return is not considered to be “filed” until all required information and documentation is attached.

 

DUE DATES FOR QUARTERLY WITHHOLDING PAYMENTS

                                                 QUARTER            DUE DATE

                                                   1st Quarter              April 30
                                                   2nd Quarter             July 31
                                                   3rd Quarter           October 31
                                                   4th Quarter            January 31

Payments that are postmarked on or before the due date will be considered to be timely. Postage meter dates will not be used in determining timely receipt of a payment.

 

DUE DATES FOR MONTHLY WITHHOLDING ACCOUNTS

                                                  MONTH                DUE DATE

                                                  January                 February 28
                                                  February                  March 31
                                                   March                      April 30
                                                     April                        May 31
                                                     May                       June 30
                                                    June                        July 31
                                                    July                       August 31
                                                  August                  September 30
                                               September                 October 31
                                                 October                  November 30
                                               November                 December 31
                                               December                   January 31

Payments that are postmarked on or before the due date will be considered to be timely. Postage meter dates will not be used in determining timely receipt of a payment.

 

DUE DATES FOR FISCAL FINAL RETURNS AND QUARTERLY ESTIMATED TAX PAYMENTS

            YEAR            ENDING RETURN/ Q1                 Q-2               Q-3               Q-4

              1/31                         5/30                                     8/31             11/30             2/28

              2/28                         6/30                                    9/30              12/31             3/31

              3/31                         7/31                                   10/31              1/31              4/30

              4/30                         8/31                                    11/31             2/28              5/31

              5/31                         9/30                                    12/31             3/31              6/30

              6/30                        10/31                                    1/31              4/30               7/31

              7/31                        11/31                                    2/28              5/31               8/31

              8/31                        12/31                                    3/31              6/30               9/30

              9/30                          1/31                                    4/30              7/31              10/31

             10/31                         2/28                                    5/31               8/31             11/30

             11/30                         3/31                                    6/30               9/30             12/31

              12/31                        4/30                                    7/31              10/31             1/31

 

 

DUE DATE GUIDELINES FOR CORRESPONDENCE 

The Income Tax Office will audit and/or amend tax documents when it is necessary upon receipt of the tax document  The Income Tax office will initiate correspondence to the taxpayer. Declaration letters will be issued to any taxpayer that is not being withheld at a 1.5% or higher tax rate and has shown a tax liability of  $100.00 or more from the previous year. (Declarations are addressed in section 229.4 of the Codified Ordinance and Ordinance 62-72. Passed 12-5-72.)   The taxpayer is given 10 days or until the end of the month, whichever comes first, to respond to our correspondence.  If no correspondence is received, the following are guidelines that will be followed when there is no correspondence from the tax payer.

 END OF MONTH

 A billing letter is generated by the computer and mailed to the tax payer showing all tax, penalty, and interest due.

30 Days

 After 30 days a letter of review is sent to the taxpayer, stating that no payment has been received. The taxpayer is then given 10 working days to respond with payment of their intentions on this matter.

40 to 45 Days

The Law Director’s office sends correspondence asking for compliance to our letter.

50 to 55 Days

Court action is initiated by the Law Director’s office.  At this point the Income Tax office no longer handles the matter. 

Effective Date:  January 1, 2000

 

PAYMENT PLAN CRITERIA

The following criteria will be used to review any request for payment plans per Ordinance 69-88. Each situation is to be reviewed individually and must qualify based on situations detailed below. These situations must have occurred recently enough to currently impact the individual’s economic situation and need for payment plan.

1. Significant lapse in employment, decreasing income.
2. Loss of job/employment; spouse’s loss of job/ employment.
3. Health emergency for self/family member which resulted in:
a. Loss or reduction of income
b. Increased medical expense (not covered by insurance)
4. Similar circumstances which have resulted in unexpected lapse of employment or income.

A payment plan will follow a regularly scheduled signed payment arrangement, either weekly, bi-weekly or monthly, depending on receipt of income / frequency of income. Payment for next year. A lapse in payments will result in account being turned over to the City Law Directors office for court action. Length of payment plan, and amount of payment is dependent upon total due and current income level. Payment schedule as follows: $15.00 to $99.99 – 3 months to pay-in-full; $100.00 to $149.99 -- 6 months to pay-in-full, along with declaration payment for next year; $150.00 and up -- 9 months to pay-in-full along with declaration payment for next year; $150.00 and up Special Request payments will be determined on a case by case basis but in no instance will a payment plan run past the next years filing deadline date. Declarations are addressed in Ordinance 62-72. Passed 12/05/72.

Subsequent tax year liabilities will not be added to a payment plan. Only one payment plan at a time will be permitted per account. If account has a balance due future payment plans will not be approved. Alternative financing must be arranged.

The Finance Director will receive reports on a periodic basis or when requested.

Effective date: January 1, 2000

 

PENALTY AND INTEREST GUIDELINES

Any request for review of an assessed late filing and/or non-payment penalty will be granted by the Income Tax Administrator.

Penalties will be waived if a taxpayer is filing an Ashland return for the first time due to being a new resident of the city. This is considered to be a “ voluntary disclosure”. This penalty will not be waived if the return was filed due to a prompting correspondence from this office.

Penalty assessments on returns for which an extension has been granted will be bases on the elapsed time after the extended due date. Whether or not the tax office had to initiate correspondence reminding them to file.

In addition to those listed above, penalties may be waived only when some type of extenuating circumstance is brought to the attention of the Income Tax Administrator. The circumstances that would result in late filing could include catastrophic illness, family emergencies, etc. The taxpayer must be able to provide verification/documentation for such circumstances. Determination will be made based the taxpayer’s physical inability to file timely.

Interest will not be abated.

If further review is requested it must be done in writing and submitted to:

Larry D. Paxton
Finance Director
206 Claremont Avenue
Ashland, OH 44805

 

GUIDELINE FOR ESTABLISHING RESIDENCY

A taxpayer’s residency is the place where individuals have a clearly established domicile. Some may live part-time in more than one area without a clear indication of domicile. A taxpayer who lives in more than one area should take steps to establish only one of those states as his or her domicile.

Factors considered in determining domicile:
• Address on legal documents and passports.
• Address on registration for voting, vehicle, boat, or plane.
• Ownership of personal residence.
• Filing of state income tax and property tax returns.
• Address on federal income tax return.
• Claiming homestead exemptions.
• State where a will is executed and probated.
• Location of important personal records.
• Location of business/professional activity.
• Location of bank accounts, investment accounts, or safe deposit box.
• Memberships in clubs or religious organizations.
• Filing of a statement of domicile.


Note: This statement may not be all inclusive, other criteria may apply as situations arise.

 

GUIDELINES FOR LOCATING NEW TAXPAYERS

INDIVIDUALS

All businesses withholding Ashland City tax are required to file W-2’s or a computer generated report stating the same information as a W-2 with the Ashland Income Tax office. These W-2’s are then checked 100% to see if the correct amount was withheld and to see if the people with Ashland addresses are in our tax system. They are then checked to see if they are current with their filing of returns (no years missing). When checking to see if an individual is in our system the following steps are taken:

1. Name search.
2. Address search.
3. Social Security number search.

If the individual can not be found after the above steps are taken. They are then added to the tax computer system and sent a letter asking them to file the required tax return. The letter also asks if they should file any prior years with us.

If the individual does appear in our computer system. The account is then checked to make sure all filings are up to date. If the current year or any prior years have not been filed, information is obtained from the State of Ohio filing report. If it is established that the individual was a resident of Ashland a letter is then sent to the individual asking them to file all years that are delinquent. Any correspondence after this point refers to page 11, (Due dates for correspondence).

BUSINESSES

Business accounts are found by the following methods:

 

  1. State of Ohio listing of new corporations.
  2. Building permits.
  3. Subcontractors from the back of the questionnaires sent in by contractors doing business inside Ashland.
  4. City bid awards – Finance office.                                                                                   
  5. Permits granted by Mayors office.
  6. 1099’s sent to City tax office.
  7. Newspaper article.
  8. Signs in yards advertising while doing work inside corporation limits.
  9. New businesses call in to report themselves.

A questionnaire is then sent by the City of Ashland Tax office asking them to register with our office so an account can be set-up on our computer system.

If it is determined that they need to file a return for a current or previous year(s) a letter is sent by the City of Ashland Tax office asking them to file along with the requested return(s). Any correspondence after this point refers to Due dates for correspondence.

Individuals/Sole Proprietorships ORC Sec. 718.01(A)(7) January 1, 2004
The income required to be reported on Schedules C, E, and F. There is no provision in ORC Sec. 718 prohibiting the taxation of non-employee compensation (1099MISC) or gambling winning (W-2G).

 

LOTTERY AND OTHER GAMBLING TAX IMPLEMENTATION

(As reported in the IRS Instructions for W-2G and form 5754)

Lottery

Obtain annually a listing from the Ohio Lottery Commission, of the name and address of all individuals in our zip code area that have won lottery moneys. Upon receipt of the listing, the following should be done:

Review the list to determine place of residence.

Place of residence will be determined at the time of cash in.

Anyone receiving $5,000.00 or more will be sent a tax return to declare the winnings if they have not previously declared their winnings. Each person receiving lottery winnings will be required to supply documentation issued by the Ohio Lottery Commission.

There will be no deductions allowed against any gambling winnings.

Lump sum payment will be taxed in full. The 26-payment option will be taxed each year the recipient is a resident of Ashland. Proof of residence will be required if individual moves out of Ashland during the payment period.

Bingo and Slot Machines

The winnings (not reduced by the wager) are $1,200.00 or more.

Casino Gambling and Jackpots

The winnings (not reduced by the wager) are $1,200.00 or more.

Keno

The winnings (reduced by the wager) are $1,500.00 or more.

Poker Tournaments

The winnings (reduced by the wager or buy in) are $5,000.00 or more.

Other Winnings

All other types of winnings (not reduced by the wager) are $5,000.00 or more as shown on IRS form W-2G of 1099 misc.

 

 

 

 

 

 

 

 

 

 

 

Ashland Income Tax
218 Luther Street
Ashland, Ohio 44805

 

Office Hours:
Monday - Friday
7:30am - 4:00pm
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