A request to change the method of allocation must be made
in writing before the end of the Tax Year.
1. Separate Accounting Method
a. The Net Profits allocable to Massillon from Business, professional
or other activities conducted in Massillon by Corporations or
unincorporated entities (whether Resident or Non-Resident) may
be determined from the records of the Taxpayer if 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 Massillon.
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 Massillon are apportioned with reasonable accuracy.
c. In determining the income allocable to Massillon from the
books and records of a taxpayer, an adjustment may be made for
the contribution made to the production of such income by headquarters
activities of the Taxpayer, whether such headquarters is within
or without Massillon.
2. Business Allocation Percentage Method
a. STEP 1: Ascertain the percentage which the average net
book value of real and tangible personal property, including
leasehold improvements, owned or used in the Business and situated
within Massillon is of the average net book value 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 Massillon is determined by dividing the average net book
value of such property within Massillon (without deduction of
any encumbrances) by the average net book value of all such property
within and without Massillon. In determining such percentage,
property rented to the Taxpayer as real and tangible personal
property must be considered.
.01 The net book value of real and tangible personal property
rented by Taxpayer shall be determined by multiplying gross annual
rents 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.
.03 Non-Resident professional persons shall use the factor
of number of offices everywhere to the number of offices located
in this Municipality.
.001 A residence may not be considered an Office unless a
portion thereof is used exclusively for business purposes and
is reached by a separate entrance in an exterior wall which does
not serve as the entrance to the balance of the building.
b. STEP 2: Ascertain the percentage which the gross receipts
of the taxpayer derived from sales made and services rendered
in Massillon is of the total gross receipts wherever derived
during the period covered by; the return. Provided, however,
if the percentage of sales allocated to Massillon in LESS THAN
the aaverage of the percentages used in Step 1 (Property) and
STEP 3 (Payroll), a statement must be submitted with the return
listing: 1. The other locations (cities, municipalities, villages,
etc.) To which sales are allocated; 2. The percentage of sales
allocated to each of the other locations; 3. Whether or not a
return was filed and/or a tax was paid on the sales allocated
to each of the other locations. Failure to submit this statement
will result in the percentage of sales allocated to Massillon
being no less than the average of the percentages used in STEPS
1 and 2. Also, when the statement indicates that no return was
filed or no tax was paid on sales allocated to another location,
such sales shall be considered to have been Massillon sales and
shall be allocated as such. (8/91)
1. The following sale shall be considered Massillon sales:
.01 All sales made through retail stores located within Massillon
to purchasers within or without this Municipality except such
of said sales to purchasers outside this Municipality that are
directly attributable to regular solicitations made outside this
Municipality personally by Taxpayer's employees.
.02 All sales of tangible personal property delivered to purchasers
within this Municipality is shipped or delivered from an office,
store, warehouse, factory, or place of storage located within
Massillon.
.03 All sales of tangible personal property delivered to purchasers
within this Municipality, even though transported from a point
outside this Municipality, if the Taxpayer is regularly engaged,
through its own Employees, in the solicitation or promotion of
sales within Massillon 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 Municipality to purchasers outside the Municipality 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 sub-paragraphs, 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 Massillon by mail
or phone from an office, or Place of Business within this Municipality
shall not be considered a solicitation of sales outside this
Municipality.
.3 Non-resident professional persons shall use the factor
of Massillon billings over total billings.
c. STEP 3: Ascertain the percentage which the total wages,
salaries commissions and other compensation of Employees within
Massillon is of the total wages, salaries, commissions and other
compensation of all the Taxpayer's Employees within and without
Massillon 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 Wages, salaries, 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 this Municipality, the amount treated as compensation
for services performed within the Municipality 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 Massillon.
.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 this Municipality
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 Massillon is of his total working time in
accordance with the 40 per week and 254 days per year rule found
in Article VI a 6.
.04 Provided, however, all Employees regularly connected withor
working out of a Place of Business maintained by the Taxpayer
in the Municipality, who performs 75% or more of their services
within the Municipality, sall be considered Employees within
the Municipality. All Employees regularly connected with or working
out of a Place of Business maintained by the Taxpayer outside
the Municipality, who perform 25% or less of their services within
the Municipality, shall be considered Employees outside the Municipality.
(The provisions of this sub-paragraph are not applicable in determining
the tax liability of a Non-Resident who works in and outside
the Municipality.)
.4 Non-resident professional persons shall use the factor
of days spent within Massillon to total working days.
d. STEP 4: Add the percentages 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 computation merely because said factor is
found to be allocable entirely in or outside this Municipality.
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 Massillon.
3. Substitute Method
a. In the event a just an 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 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 be followed in making
such application. Once a Taxpayer has filed under a substitute
method he must continue to so file unless given permission to
change by the Board of Review.
4. Professional and Personal Service
a. In the case of professional people and others furnishing
personal services and their only Place of Business is within
the Municipality, all their Net Profits shall prima facie be
attributable to the Municipality.
5. Where professional people and others furnishing personal
services do so both within and without the corporate limits of
Massillon and they have been using a system recognized by the
accounting manual of certified public accounts, that system shall
be accepted as determining business attributable to this city.
