As Reported by the House Local Government Committee

129th General Assembly
Regular Session
2011-2012
Sub. H. B. No. 50


Representative Snitchler 

Cosponsors: Representatives Burke, Murray, Schuring, Blessing 

A BILL
To amend sections 709.023 and 718.01 of the Revised 1
Code to exempt from municipal income tax the 2
compensation paid to persons performing personal 3
services for a political subdivision on its 4
property when that property is annexed to a 5
municipal corporation under the expedited type-II 6
annexation proceeding unless the compensation is 7
taxable because of the person's residency.8


BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

       Section 1.  That sections 709.023 and 718.01 of the Revised 9
Code be amended to read as follows:10

       Sec. 709.023. (A) A petition filed under section 709.021 of 11
the Revised Code that requests to follow this section is for the 12
special procedure of annexing land into a municipal corporation 13
when, subject to division (H) of this section, the land also is 14
not to be excluded from the township under section 503.07 of the 15
Revised Code. The owners who sign this petition by their signature 16
expressly waive their right to appeal in law or equity from the 17
board of county commissioners' entry of any resolution under this 18
section, waive any rights they may have to sue on any issue 19
relating to a municipal corporation requiring a buffer as provided 20
in this section, and waive any rights to seek a variance that 21
would relieve or exempt them from that buffer requirement.22

       The petition circulated to collect signatures for the special 23
procedure in this section shall contain in boldface capital 24
letters immediately above the heading of the place for signatures 25
on each part of the petition the following: "WHOEVER SIGNS THIS 26
PETITION EXPRESSLY WAIVES THEIR RIGHT TO APPEAL IN LAW OR EQUITY 27
FROM THE BOARD OF COUNTY COMMISSIONERS' ENTRY OF ANY RESOLUTION 28
PERTAINING TO THIS SPECIAL ANNEXATION PROCEDURE, ALTHOUGH A WRIT 29
OF MANDAMUS MAY BE SOUGHT TO COMPEL THE BOARD TO PERFORM ITS 30
DUTIES REQUIRED BY LAW FOR THIS SPECIAL ANNEXATION PROCEDURE."31

       (B) Upon the filing of the petition in the office of the 32
clerk of the board of county commissioners, the clerk shall cause 33
the petition to be entered upon the board's journal at its next 34
regular session. This entry shall be the first official act of the 35
board on the petition. Within five days after the filing of the 36
petition, the agent for the petitioners shall notify in the manner 37
and form specified in this division the clerk of the legislative 38
authority of the municipal corporation to which annexation is 39
proposed, the fiscal officer of each township any portion of which 40
is included within the territory proposed for annexation, the 41
clerk of the board of county commissioners of each county in which 42
the territory proposed for annexation is located other than the 43
county in which the petition is filed, and the owners of property 44
adjacent to the territory proposed for annexation or adjacent to a 45
road that is adjacent to that territory and located directly 46
across that road from that territory. The notice shall refer to 47
the time and date when the petition was filed and the county in 48
which it was filed and shall have attached or shall be accompanied 49
by a copy of the petition and any attachments or documents 50
accompanying the petition as filed.51

       Notice to a property owner is sufficient if sent by regular 52
United States mail to the tax mailing address listed on the county 53
auditor's records. Notice to the appropriate government officer 54
shall be given by certified mail, return receipt requested, or by 55
causing the notice to be personally served on the officer, with 56
proof of service by affidavit of the person who delivered the 57
notice. Proof of service of the notice on each appropriate 58
government officer shall be filed with the board of county 59
commissioners with which the petition was filed.60

       (C) Within twenty days after the date that the petition is 61
filed, the legislative authority of the municipal corporation to 62
which annexation is proposed shall adopt an ordinance or 63
resolution stating what services the municipal corporation will 64
provide, and an approximate date by which it will provide them, to 65
the territory proposed for annexation, upon annexation. The 66
municipal corporation is entitled in its sole discretion to 67
provide to the territory proposed for annexation, upon annexation, 68
services in addition to the services described in that ordinance 69
or resolution.70

       If the territory proposed for annexation is subject to zoning 71
regulations adopted under either Chapter 303. or 519. of the 72
Revised Code at the time the petition is filed, the legislative 73
authority of the municipal corporation also shall adopt an 74
ordinance or resolution stating that, if the territory is annexed 75
and becomes subject to zoning by the municipal corporation and 76
that municipal zoning permits uses in the annexed territory that 77
the municipal corporation determines are clearly incompatible with 78
the uses permitted under current county or township zoning 79
regulations in the adjacent land remaining within the township 80
from which the territory was annexed, the legislative authority of 81
the municipal corporation will require, in the zoning ordinance 82
permitting the incompatible uses, the owner of the annexed 83
territory to provide a buffer separating the use of the annexed 84
territory and the adjacent land remaining within the township. For 85
the purposes of this section, "buffer" includes open space, 86
landscaping, fences, walls, and other structured elements; streets 87
and street rights-of-way; and bicycle and pedestrian paths and 88
sidewalks.89

       The clerk of the legislative authority of the municipal 90
corporation to which annexation is proposed shall file the 91
ordinances or resolutions adopted under this division with the 92
board of county commissioners within twenty days following the 93
date that the petition is filed. The board shall make these 94
ordinances or resolutions available for public inspection.95

       (D) Within twenty-five days after the date that the petition 96
is filed, the legislative authority of the municipal corporation 97
to which annexation is proposed and each township any portion of 98
which is included within the territory proposed for annexation may 99
adopt and file with the board of county commissioners an ordinance 100
or resolution consenting or objecting to the proposed annexation. 101
An objection to the proposed annexation shall be based solely upon 102
the petition's failure to meet the conditions specified in 103
division (E) of this section.104

       If the municipal corporation and each of those townships 105
timely files an ordinance or resolution consenting to the proposed 106
annexation, the board at its next regular session shall enter upon 107
its journal a resolution granting the proposed annexation. If, 108
instead, the municipal corporation or any of those townships files 109
an ordinance or resolution that objects to the proposed 110
annexation, the board of county commissioners shall proceed as 111
provided in division (E) of this section. Failure of the municipal 112
corporation or any of those townships to timely file an ordinance 113
or resolution consenting or objecting to the proposed annexation 114
shall be deemed to constitute consent by that municipal 115
corporation or township to the proposed annexation.116

       (E) Unless the petition is granted under division (D) of this 117
section, not less than thirty or more than forty-five days after 118
the date that the petition is filed, the board of county 119
commissioners shall review it to determine if each of the 120
following conditions has been met:121

       (1) The petition meets all the requirements set forth in, and 122
was filed in the manner provided in, section 709.021 of the 123
Revised Code.124

       (2) The persons who signed the petition are owners of the 125
real estate located in the territory proposed for annexation and 126
constitute all of the owners of real estate in that territory.127

       (3) The territory proposed for annexation does not exceed 128
five hundred acres.129

       (4) The territory proposed for annexation shares a contiguous 130
boundary with the municipal corporation to which annexation is 131
proposed for a continuous length of at least five per cent of the 132
perimeter of the territory proposed for annexation.133

       (5) The annexation will not create an unincorporated area of 134
the township that is completely surrounded by the territory 135
proposed for annexation.136

       (6) The municipal corporation to which annexation is proposed 137
has agreed to provide to the territory proposed for annexation the 138
services specified in the relevant ordinance or resolution adopted 139
under division (C) of this section.140

       (7) If a street or highway will be divided or segmented by 141
the boundary line between the township and the municipal 142
corporation as to create a road maintenance problem, the municipal 143
corporation to which annexation is proposed has agreed as a 144
condition of the annexation to assume the maintenance of that 145
street or highway or to otherwise correct the problem. As used in 146
this section, "street" or "highway" has the same meaning as in 147
section 4511.01 of the Revised Code.148

       (F) Not less than thirty or more than forty-five days after 149
the date that the petition is filed, if the petition is not 150
granted under division (D) of this section, the board of county 151
commissioners, if it finds that each of the conditions specified 152
in division (E) of this section has been met, shall enter upon its 153
journal a resolution granting the annexation. If the board of 154
county commissioners finds that one or more of the conditions 155
specified in division (E) of this section have not been met, it 156
shall enter upon its journal a resolution that states which of 157
those conditions the board finds have not been met and that denies 158
the petition.159

       (G) If a petition is granted under division (D) or (F) of 160
this section, the clerk of the board of county commissioners shall 161
proceed as provided in division (C)(1) of section 709.033 of the 162
Revised Code, except that no recording or hearing exhibits would 163
be involved. There is no appeal in law or equity from the board's 164
entry of any resolution under this section, but any party may seek 165
a writ of mandamus to compel the board of county commissioners to 166
perform its duties under this section.167

       (H) Notwithstanding anything to the contrary in section 168
503.07 of the Revised Code, unless otherwise provided in an 169
annexation agreement entered into pursuant to section 709.192 of 170
the Revised Code or in a cooperative economic development 171
agreement entered into pursuant to section 701.07 of the Revised 172
Code, territory annexed into a municipal corporation pursuant to 173
this section shall not at any time be excluded from the township 174
under section 503.07 of the Revised Code and, thus, remains 175
subject to the township's real property taxes.176

       (I) Any owner of land that remains within a township and that 177
is adjacent to territory annexed pursuant to this section who is 178
directly affected by the failure of the annexing municipal 179
corporation to enforce compliance with any zoning ordinance it 180
adopts under division (C) of this section requiring the owner of 181
the annexed territory to provide a buffer zone, may commence in 182
the court of common pleas a civil action against that owner to 183
enforce compliance with that buffer requirement whenever the 184
required buffer is not in place before any development of the 185
annexed territory begins.186

       (J) Division (H)(12) of section 718.01 of the Revised Code 187
applies to the compensation paid to persons performing personal 188
services for a political subdivision on property owned by the 189
political subdivision after that property is annexed to a 190
municipal corporation under this section.191

       Sec. 718.01.  (A) As used in this chapter:192

       (1) "Adjusted federal taxable income" means a C corporation's 193
federal taxable income before net operating losses and special 194
deductions as determined under the Internal Revenue Code, adjusted 195
as follows:196

       (a) Deduct intangible income to the extent included in 197
federal taxable income. The deduction shall be allowed regardless 198
of whether the intangible income relates to assets used in a trade 199
or business or assets held for the production of income.200

       (b) Add an amount equal to five per cent of intangible income 201
deducted under division (A)(1)(a) of this section, but excluding 202
that portion of intangible income directly related to the sale, 203
exchange, or other disposition of property described in section 204
1221 of the Internal Revenue Code;205

       (c) Add any losses allowed as a deduction in the computation 206
of federal taxable income if the losses directly relate to the 207
sale, exchange, or other disposition of an asset described in 208
section 1221 or 1231 of the Internal Revenue Code;209

       (d)(i) Except as provided in division (A)(1)(d)(ii) of this 210
section, deduct income and gain included in federal taxable income 211
to the extent the income and gain directly relate to the sale, 212
exchange, or other disposition of an asset described in section 213
1221 or 1231 of the Internal Revenue Code;214

        (ii) Division (A)(1)(d)(i) of this section does not apply to 215
the extent the income or gain is income or gain described in 216
section 1245 or 1250 of the Internal Revenue Code.217

        (e) Add taxes on or measured by net income allowed as a 218
deduction in the computation of federal taxable income;219

        (f) In the case of a real estate investment trust and 220
regulated investment company, add all amounts with respect to 221
dividends to, distributions to, or amounts set aside for or 222
credited to the benefit of investors and allowed as a deduction in 223
the computation of federal taxable income;224

        (g) Deduct, to the extent not otherwise deducted or excluded 225
in computing federal taxable income, any income derived from 226
providing public services under a contract through a project owned 227
by the state, as described in section 126.604 of the Revised Code 228
or derived from a transfer agreement or from the enterprise 229
transferred under that agreement under section 4313.02 of the 230
Revised Code.231

       If the taxpayer is not a C corporation and is not an 232
individual, the taxpayer shall compute adjusted federal taxable 233
income as if the taxpayer were a C corporation, except guaranteed 234
payments and other similar amounts paid or accrued to a partner, 235
former partner, member, or former member shall not be allowed as a 236
deductible expense; amounts paid or accrued to a qualified 237
self-employed retirement plan with respect to an owner or 238
owner-employee of the taxpayer, amounts paid or accrued to or for 239
health insurance for an owner or owner-employee, and amounts paid 240
or accrued to or for life insurance for an owner or owner-employee 241
shall not be allowed as a deduction.242

        Nothing in division (A)(1) of this section shall be construed 243
as allowing the taxpayer to add or deduct any amount more than 244
once or shall be construed as allowing any taxpayer to deduct any 245
amount paid to or accrued for purposes of federal self-employment 246
tax.247

        Nothing in this chapter shall be construed as limiting or 248
removing the ability of any municipal corporation to administer, 249
audit, and enforce the provisions of its municipal income tax.250

       (2) "Internal Revenue Code" means the Internal Revenue Code 251
of 1986, 100 Stat. 2085, 26 U.S.C. 1, as amended.252

       (3) "Schedule C" means internal revenue service schedule C 253
filed by a taxpayer pursuant to the Internal Revenue Code.254

       (4) "Form 2106" means internal revenue service form 2106 255
filed by a taxpayer pursuant to the Internal Revenue Code.256

       (5) "Intangible income" means income of any of the following 257
types: income yield, interest, capital gains, dividends, or other 258
income arising from the ownership, sale, exchange, or other 259
disposition of intangible property including, but not limited to, 260
investments, deposits, money, or credits as those terms are 261
defined in Chapter 5701. of the Revised Code, and patents, 262
copyrights, trademarks, tradenames, investments in real estate 263
investment trusts, investments in regulated investment companies, 264
and appreciation on deferred compensation. "Intangible income" 265
does not include prizes, awards, or other income associated with 266
any lottery winnings or other similar games of chance.267

       (6) "S corporation" means a corporation that has made an 268
election under subchapter S of Chapter 1 of Subtitle A of the 269
Internal Revenue Code for its taxable year.270

       (7) For taxable years beginning on or after January 1, 2004, 271
"net profit" for a taxpayer other than an individual means 272
adjusted federal taxable income and "net profit" for a taxpayer 273
who is an individual means the individual's profit required to be 274
reported on schedule C, schedule E, or schedule F, other than any 275
amount allowed as a deduction under division (E)(2) or (3) of this 276
section or amounts described in division (H) of this section.277

       (8) "Taxpayer" means a person subject to a tax on income 278
levied by a municipal corporation. Except as provided in division 279
(L) of this section, "taxpayer" does not include any person that 280
is a disregarded entity or a qualifying subchapter S subsidiary 281
for federal income tax purposes, but "taxpayer" includes any other 282
person who owns the disregarded entity or qualifying subchapter S 283
subsidiary.284

       (9) "Taxable year" means the corresponding tax reporting 285
period as prescribed for the taxpayer under the Internal Revenue 286
Code.287

       (10) "Tax administrator" means the individual charged with 288
direct responsibility for administration of a tax on income levied 289
by a municipal corporation and includes:290

        (a) The central collection agency and the regional income tax 291
agency and their successors in interest, and other entities 292
organized to perform functions similar to those performed by the 293
central collection agency and the regional income tax agency;294

        (b) A municipal corporation acting as the agent of another 295
municipal corporation; and296

        (c) Persons retained by a municipal corporation to administer 297
a tax levied by the municipal corporation, but only if the 298
municipal corporation does not compensate the person in whole or 299
in part on a contingency basis.300

        (11) "Person" includes individuals, firms, companies, 301
business trusts, estates, trusts, partnerships, limited liability 302
companies, associations, corporations, governmental entities, and 303
any other entity.304

        (12) "Schedule E" means internal revenue service schedule E 305
filed by a taxpayer pursuant to the Internal Revenue Code.306

        (13) "Schedule F" means internal revenue service schedule F 307
filed by a taxpayer pursuant to the Internal Revenue Code.308

       (B) No municipal corporation shall tax income at other than a 309
uniform rate.310

       (C) No municipal corporation shall levy a tax on income at a 311
rate in excess of one per cent without having obtained the 312
approval of the excess by a majority of the electors of the 313
municipality voting on the question at a general, primary, or 314
special election. The legislative authority of the municipal 315
corporation shall file with the board of elections at least ninety 316
days before the day of the election a copy of the ordinance 317
together with a resolution specifying the date the election is to 318
be held and directing the board of elections to conduct the 319
election. The ballot shall be in the following form: "Shall the 320
Ordinance providing for a ... per cent levy on income for (Brief 321
description of the purpose of the proposed levy) be passed?322

        323

 FOR THE INCOME TAX 324
 AGAINST THE INCOME TAX  " 325

        326

       In the event of an affirmative vote, the proceeds of the levy 327
may be used only for the specified purpose.328

       (D)(1) Except as otherwise provided in this section, no 329
municipal corporation shall exempt from a tax on income 330
compensation for personal services of individuals over eighteen 331
years of age or the net profit from a business or profession.332

       (2)(a) For taxable years beginning on or after January 1, 333
2004, no municipal corporation shall tax the net profit from a 334
business or profession using any base other than the taxpayer's 335
adjusted federal taxable income.336

       (b) Division (D)(2)(a) of this section does not apply to any 337
taxpayer required to file a return under section 5745.03 of the 338
Revised Code or to the net profit from a sole proprietorship.339

       (E)(1) The legislative authority of a municipal corporation 340
may, by ordinance or resolution, exempt from withholding and from 341
a tax on income the following:342

       (a) Compensation arising from the sale, exchange, or other 343
disposition of a stock option, the exercise of a stock option, or 344
the sale, exchange, or other disposition of stock purchased under 345
a stock option; or346

       (b) Compensation attributable to a nonqualified deferred 347
compensation plan or program described in section 3121(v)(2)(C) of 348
the Internal Revenue Code.349

       (2) The legislative authority of a municipal corporation may 350
adopt an ordinance or resolution that allows a taxpayer who is an 351
individual to deduct, in computing the taxpayer's municipal income 352
tax liability, an amount equal to the aggregate amount the 353
taxpayer paid in cash during the taxable year to a health savings 354
account of the taxpayer, to the extent the taxpayer is entitled to 355
deduct that amount on internal revenue service form 1040.356

       (3) The legislative authority of a municipal corporation may 357
adopt an ordinance or resolution that allows a taxpayer who has a 358
net profit from a business or profession that is operated as a 359
sole proprietorship to deduct from that net profit the amount that 360
the taxpayer paid during the taxable year for medical care 361
insurance premiums for the taxpayer, the taxpayer's spouse, and 362
dependents as defined in section 5747.01 of the Revised Code. The 363
deduction shall be allowed to the same extent the taxpayer is 364
entitled to deduct the premiums on internal revenue service form 365
1040. The deduction allowed under this division shall be net of 366
any related premium refunds, related premium reimbursements, or 367
related insurance premium dividends received by the taxpayer 368
during the taxable year.369

       (F) If an individual's taxable income includes income against 370
which the taxpayer has taken a deduction for federal income tax 371
purposes as reportable on the taxpayer's form 2106, and against 372
which a like deduction has not been allowed by the municipal 373
corporation, the municipal corporation shall deduct from the 374
taxpayer's taxable income an amount equal to the deduction shown 375
on such form allowable against such income, to the extent not 376
otherwise so allowed as a deduction by the municipal corporation.377

       (G)(1) In the case of a taxpayer who has a net profit from a 378
business or profession that is operated as a sole proprietorship, 379
no municipal corporation may tax or use as the base for 380
determining the amount of the net profit that shall be considered 381
as having a taxable situs in the municipal corporation, an amount 382
other than the net profit required to be reported by the taxpayer 383
on schedule C or F from such sole proprietorship for the taxable 384
year.385

        (2) In the case of a taxpayer who has a net profit from 386
rental activity required to be reported on schedule E, no 387
municipal corporation may tax or use as the base for determining 388
the amount of the net profit that shall be considered as having a 389
taxable situs in the municipal corporation, an amount other than 390
the net profit from rental activities required to be reported by 391
the taxpayer on schedule E for the taxable year.392

       (H) A municipal corporation shall not tax any of the 393
following:394

       (1) The military pay or allowances of members of the armed 395
forces of the United States and of members of their reserve 396
components, including the Ohio national guard;397

       (2) The income of religious, fraternal, charitable, 398
scientific, literary, or educational institutions to the extent 399
that such income is derived from tax-exempt real estate, 400
tax-exempt tangible or intangible property, or tax-exempt 401
activities;402

       (3) Except as otherwise provided in division (I) of this 403
section, intangible income;404

       (4) Compensation paid under section 3501.28 or 3501.36 of the 405
Revised Code to a person serving as a precinct election official, 406
to the extent that such compensation does not exceed one thousand 407
dollars annually. Such compensation in excess of one thousand 408
dollars may be subjected to taxation by a municipal corporation. A 409
municipal corporation shall not require the payer of such 410
compensation to withhold any tax from that compensation.411

       (5) Compensation paid to an employee of a transit authority, 412
regional transit authority, or regional transit commission created 413
under Chapter 306. of the Revised Code for operating a transit bus 414
or other motor vehicle for the authority or commission in or 415
through the municipal corporation, unless the bus or vehicle is 416
operated on a regularly scheduled route, the operator is subject 417
to such a tax by reason of residence or domicile in the municipal 418
corporation, or the headquarters of the authority or commission is 419
located within the municipal corporation;420

       (6) The income of a public utility, when that public utility 421
is subject to the tax levied under section 5727.24 or 5727.30 of 422
the Revised Code, except a municipal corporation may tax the 423
following, subject to Chapter 5745. of the Revised Code:424

       (a) Beginning January 1, 2002, the income of an electric 425
company or combined company;426

        (b) Beginning January 1, 2004, the income of a telephone 427
company.428

       As used in division (H)(6) of this section, "combined 429
company," "electric company," and "telephone company" have the 430
same meanings as in section 5727.01 of the Revised Code.431

       (7) On and after January 1, 2003, items excluded from federal 432
gross income pursuant to section 107 of the Internal Revenue Code;433

       (8) On and after January 1, 2001, compensation paid to a 434
nonresident individual to the extent prohibited under section 435
718.011 of the Revised Code;436

       (9)(a) Except as provided in division (H)(9)(b) and (c) of 437
this section, an S corporation shareholder's distributive share of 438
net profits of the S corporation, other than any part of the 439
distributive share of net profits that represents wages as defined 440
in section 3121(a) of the Internal Revenue Code or net earnings 441
from self-employment as defined in section 1402(a) of the Internal 442
Revenue Code.443

       (b) If, pursuant to division (H) of former section 718.01 of 444
the Revised Code as it existed before March 11, 2004, a majority 445
of the electors of a municipal corporation voted in favor of the 446
question at an election held on November 4, 2003, the municipal 447
corporation may continue after 2002 to tax an S corporation 448
shareholder's distributive share of net profits of an S 449
corporation.450

        (c) If, on December 6, 2002, a municipal corporation was 451
imposing, assessing, and collecting a tax on an S corporation 452
shareholder's distributive share of net profits of the S 453
corporation to the extent the distributive share would be 454
allocated or apportioned to this state under divisions (B)(1) and 455
(2) of section 5733.05 of the Revised Code if the S corporation 456
were a corporation subject to taxes imposed under Chapter 5733. of 457
the Revised Code, the municipal corporation may continue to impose 458
the tax on such distributive shares to the extent such shares 459
would be so allocated or apportioned to this state only until 460
December 31, 2004, unless a majority of the electors of the 461
municipal corporation voting on the question of continuing to tax 462
such shares after that date vote in favor of that question at an 463
election held November 2, 2004. If a majority of those electors 464
vote in favor of the question, the municipal corporation may 465
continue after December 31, 2004, to impose the tax on such 466
distributive shares only to the extent such shares would be so 467
allocated or apportioned to this state.468

       (d) For the purposes of division (D) of section 718.14 of the 469
Revised Code, a municipal corporation shall be deemed to have 470
elected to tax S corporation shareholders' distributive shares of 471
net profits of the S corporation in the hands of the shareholders 472
if a majority of the electors of a municipal corporation vote in 473
favor of a question at an election held under division (H)(9)(b) 474
or (c) of this section. The municipal corporation shall specify by 475
ordinance or rule that the tax applies to the distributive share 476
of a shareholder of an S corporation in the hands of the 477
shareholder of the S corporation.478

       (10) Employee compensation that is not "qualifying wages" as 479
defined in section 718.03 of the Revised Code;480

        (11) Beginning August 1, 2007, compensation paid to a person 481
employed within the boundaries of a United States air force base 482
under the jurisdiction of the United States air force that is used 483
for the housing of members of the United States air force and is a 484
center for air force operations, unless the person is subject to 485
taxation because of residence or domicile. If the compensation is 486
subject to taxation because of residence or domicile, municipal 487
income tax shall be payable only to the municipal corporation of 488
residence or domicile.489

       (12) Compensation paid to a person for personal services 490
performed for a political subdivision on property owned by the 491
political subdivision, regardless of whether the compensation is 492
received by an employee of the subdivision or another person 493
performing services for the subdivision under a contract with the 494
subdivision, if the property on which services are performed is 495
annexed to a municipal corporation pursuant to section 709.023 of 496
the Revised Code on or after the effective date of the amendment 497
of this section, unless the person is subject to such taxation 498
because of residence or domicile. If the compensation is subject 499
to taxation because of residence or domicile, municipal income tax 500
shall be payable only to the municipal corporation of residence or 501
domicile.502

       (I) Any municipal corporation that taxes any type of 503
intangible income on March 29, 1988, pursuant to Section 3 of 504
Amended Substitute Senate Bill No. 238 of the 116th general 505
assembly, may continue to tax that type of income after 1988 if a 506
majority of the electors of the municipal corporation voting on 507
the question of whether to permit the taxation of that type of 508
intangible income after 1988 vote in favor thereof at an election 509
held on November 8, 1988.510

       (J) Nothing in this section or section 718.02 of the Revised 511
Code shall authorize the levy of any tax on income that a 512
municipal corporation is not authorized to levy under existing 513
laws or shall require a municipal corporation to allow a deduction 514
from taxable income for losses incurred from a sole proprietorship 515
or partnership.516

       (K)(1) Nothing in this chapter prohibits a municipal 517
corporation from allowing, by resolution or ordinance, a net 518
operating loss carryforward.519

        (2) Nothing in this chapter requires a municipal corporation 520
to allow a net operating loss carryforward.521

       (L)(1) A single member limited liability company that is a 522
disregarded entity for federal tax purposes may elect to be a 523
separate taxpayer from its single member in all Ohio municipal 524
corporations in which it either filed as a separate taxpayer or 525
did not file for its taxable year ending in 2003, if all of the 526
following conditions are met:527

       (a) The limited liability company's single member is also a 528
limited liability company;529

       (b) The limited liability company and its single member were 530
formed and doing business in one or more Ohio municipal 531
corporations for at least five years before January 1, 2004;532

       (c) Not later than December 31, 2004, the limited liability 533
company and its single member each make an election to be treated 534
as a separate taxpayer under division (L) of this section;535

       (d) The limited liability company was not formed for the 536
purpose of evading or reducing Ohio municipal corporation income 537
tax liability of the limited liability company or its single 538
member;539

       (e) The Ohio municipal corporation that is the primary place 540
of business of the sole member of the limited liability company 541
consents to the election.542

       (2) For purposes of division (L)(1)(e) of this section, a 543
municipal corporation is the primary place of business of a 544
limited liability company if, for the limited liability company's 545
taxable year ending in 2003, its income tax liability is greater 546
in that municipal corporation than in any other municipal 547
corporation in Ohio, and that tax liability to that municipal 548
corporation for its taxable year ending in 2003 is at least four 549
hundred thousand dollars.550

       Section 2.  That existing sections 709.023 and 718.01 of the 551
Revised Code are hereby repealed.552