43-07 128.2703 Contractors - Collecting Taxes

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PLEASE SUBSTITUTE FOR ORDINANCE N0.43-07 PLACED ON 1ST READING & REFEREED TO THE RULES & ORDINANEES COMMITTEE 4/2/07, SECOND READING 4/16/07. ORDINANCE NO. 43-07 FitzGerald, Madigan, Seelie. AN ORDINANCE to take effect immediately provided it receives the affirmative vote of at least five (5) members elected to Council otherwise, it shall take effect and be in force after the earliest period allowed by law, to add Section 128.2703 of the Lakewood Codified Ordinances, entitled "LIABILITY OF CONSTRUCTION CON- TRACTORS, SUBCONTRACTORS, AND INDEPENDENT CONTRACTORS", for the purposes of expanding the Administrative Code to provide for the collection of municipal income taxes by the City of Lakewood Tax Department for construction employers WHEREAS, since January 1,2006, the City of Lakewood has collected municipal income taxes through its Department of Taxation; and WHEREAS, the City has an interest in ensuring that individuals and entities that perform construction work for third parties within the City pay any and all applicable income taxes under Chapter 128 of the Codified Ordinances of the City of Lakewood, and the City has determined that it is losing tax revenues because subcontractors and independent contractors in construction are not paying all applicable taxes; and WHEREAS, this Council by a vote of at least five members elected thereto determines this ordinance is an emergency measure, and that this ordinance shall take effect at the earliest date possible as set forth in ARTICLE Ill, SECTIONS 10 and 13 of the SECOND AMENDED CHARTER OF THE CITY OF LAKEWOOD, and that it is necessary to provide for the usual daily operation of the City in that the City must assure collection of authorized and mandated taxes Now therefore, BE IT ORDAINED BY THE CITY OF LAKEWOOD, STATE OF OHIO Section 1. That a new Section 128.2703 be added to Chapter 128 of the Codified Ordinances of the City of Lakewood, to read as follows: 128.2703 LIABILITY FOR NON-PAYMENT BY CONSTRUCTION CONTRACTORS, SUBCONTRACTORS, INDEPENDENT CON- TRACTORS, AND OWNERS (a) Any individual or entity that contracts or subcontracts, for any portion of work on a construction project in the City of Lakewood, (for purposes ef this section, hereafter "the contractor"), to another individual or entity for the performance of construction work ("the subcontractor"), shall be liable for any failure of the subcontractor to pay or forward for payment all taxes required to be withheld or paid under provisions of this Chapter, together with applicable penalties and interest for non- payment as provided in Section 128 1501 and 128.1502 above It is the intention to impose liability for non-payment of taxes, and any applicable interest and penalties, upon the entire chain of construction employment and contracting, from wage worker or independent contractor up through each subcontractor, contractor, general contractor, and eVen to the owner, except as that owner may be exempt under subsection (b) herein, to ensure that income taxes on construction projects are paid as required, No good faith exception under Section 128.1503 shall be permitted to limit liability under this section. Issuance of an IRS Form 1099 is nota defense, but may be evidence of liability under this section. (b) Notwithstanding the foregoing, the owner or Owners of residential premises and who also occupy those premises shall be exempt from liability under this section if the total cost of the project at the residence is $50,000.00 or less and the owner or owners have obtained written confirmation that the contractor employed for the project is registered with the City of Lakewood prior to the commencement of work