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S.A.L.T. Select Developments: Washington, D.C.

Baker Donelson's S.A.L.T. Select Developments will identify important state and local tax developments from Washington, D.C.

Overview

State and local taxes impact almost every taxpayer. S.A.L.T developments in any one jurisdiction can be frequent and sometimes confusing. Where multiple jurisdictions are involved, staying current with state and local tax developments can be overwhelming for any taxpayer.

To assist you with staying current on a periodic basis, Baker Donelson's S.A.L.T. Select Developments will identify one or more recent state and local tax developments from the District of Columbia.

October 2020

Reminder Reported – On October 8, 2020, the District's Office of Tax and Revenue (OTR) posted a reminder that payment options are available for any outstanding tax liabilities owed to the District. This reminder referenced both the OTR's tax portal, MyTax.DC.gov, which accepts online payments at any time, as well as noted that District taxpayers with outstanding tax liabilities can apply for an online payment agreement by logging into their account on that portal. Further, the reminder stated that taxpayers logging into their account will be allowed to make payments directly from their bank account for free or pay with a credit/debit card for a fee. The reminder also references a tutorial that may be helpful in setting up a payment agreement. Lastly, the reminder directs taxpayers to OTR's e-Services Unit at the designated contact information for purposes of seeking assistance. More information can be found here.

September 2020

Coronavirus Tax Payment and Return Filing Responsibilities (September 30) – Information Reported: On September 21, 2020, the District's Office of Tax and Revenue (OTR) issued an announcement reminding taxpayers, tax professionals and others, about tax changes that were enacted in the Fiscal Year 2021 Budget Support Emergency Amendment Act of 2020. According to this announcement, the new provisions impact real property, sales and use, motor vehicle fuel, corporate franchise, unincorporated business franchise, estate, individual income and other taxes. Unless otherwise noted, these changes take effect October 1, 2020. The OTR's announcement sets forth a brief summary of those tax changes. More information can be found here.

August 2020

Coronavirus Tax Payment and Return Filing Responsibilities (August 20) – Information Reported: In late July 2020, the District's Office of Tax and Revenue (OTR) issued an announcement stating that the OTR has been working with business groups and other taxpayers to resolve issues related to penalties and interest on deferred sales tax payments. With that announcement, the OTR also published Frequently Asked Questions involving the potential abatement of interest and waiver of penalties for the failure by the extended due date of July 20, 2020 to either pay sales and use taxes for the periods ending February 29, 2020 and March 31, 2020, or file returns for such periods by that extended due date. These FAQs address various situations regarding the failure to pay and/or file by that extended due date. The OTR also stated that businesses with additional questions should contact the OTR's Collections Division via email at compliance@dc.gov or by calling (202) 724-5045. More information can be found here.

June 2020

Coronavirus Tax Payment and Return Filing Responsibilities (June 25) – Reminder Reported: On May 26, 2020, the District's Office of Tax and Revenue (OTR) published a reminder of the important tax filing due dates, with new due dates for some taxes in response to COVID-19. This publication stated that if a taxpayer is unable to timely remit payments of amounts due, the taxpayer should contact the OTR at MyTax.DC.gov to submit a request to be placed on a payment plan. More information can be found here.

Coronavirus Tax Payment and Return Filing Responsibilities (June 2) – Updates Reported: On May 26, 2020, the District's Office of Tax and Revenue (OTR) published Notice 2020-06 dealing with the sales taxation of food, drink and alcohol within the District. The OTR states in the Notice that the sales of food, drink and alcohol for consumption on-premises prepared by restaurants, bars and similar establishments are subject to a sales tax rate of 10 percent and that sales of alcoholic beverages for consumption off-premises are subject to a sales tax rate of 10.25 percent. Further, if the sale is made directly by a restaurant (at the restaurant's location, through the restaurant's own website, over the phone or by other electronic means), the restaurant is required to collect sales tax as usual and remit that tax to the OTR.

Still further, marketplace facilitators are required to collect and remit to the District sales tax on sales made on their marketplaces. In the context of restaurants and bars, marketplace facilitators can take orders from customers for delivery or pick-up at a restaurant and collect payment directly from the customers. Those marketplace facilitators are required to collect sales tax from customers at the proper rate and remit such sales tax to the OTR.

The Notice also sets forth various key points. For instance, the Notice states where a restaurant has reported sales at the incorrect rate, the restaurant may file an amended sales tax return to report any increase or decrease in the tax due. More information can be found here.

May 2020

Coronavirus Tax Payment and Return Filing Responsibilities (May 8) – Further Updates Reported: On April 30, 2020, the District's Office of Tax and Revenue (OTR) published extensions for three important deadlines potentially pertinent to many property owners in the District. Those extensions include a May 15, 2020 extension from April 30 for the first level assessment appeals (tax year 2021); a June 1 extension from April 30 for Income and Expense Reports; and a May 15 extension from April 1 for Exempt Property Annual Use Reports. Separately, and due to the coronavirus (COVID-19) pandemic, the mayor of the District of Columbia had declared a public emergency and a public health emergency. With significantly more individuals working remotely from their homes than ever before, the OTR has announced that it will not seek to impose corporation franchise tax or unincorporated business franchise tax nexus solely on the basis of employees or property used to allow employees to work from home (e.g., computers, computer equipment, or similar property) temporarily located in the District during this period. More information regarding these developments can be found here and here.

April 2020

Coronavirus Tax Payment and Return Filing Responsibilities (April 16) – Updates Reported: Office of Tax and Revenue (OTR) of the District of Columbia has extended the original April 15, 2020 deadline to file and pay all income, partnership, and franchise tax returns until July 15, 2020. This extension applies to all D-20, D-30, D-40, D-41, D-40B, and D-65 tax filers, and includes combined return filers. This extension is automatic and does not require taxpayers to apply.

As to sales and use tax filers, the OTR will automatically waive interest and late payment penalties of sales and use taxes for all businesses (except hotels and motels) for periods ending on February 29, 2020 and March 31, 2020 provided that payment of all taxes due for these periods are paid in full by July 20, 2020. All businesses must continue to timely file their monthly and quarterly sales and use tax returns through OTR's online portal, MyTax.DC.gov, to receive this benefit.

For more information on the extension please click here.

August 2019

Tax Incentives: As part of D.C.'s Fiscal Year 2020 Budget Support Emergency Act of 2019, the District enacted emergency legislation that directly affects Qualified High Technology Company Incentives. In particular, the law makes changes to the tax incentives offered to Qualified High Technology Companies. Beginning in 2020, technology companies will no longer have the benefit of paying a reduced corporate franchise tax rate and instead will be taxed as regular corporations with two exceptions. First, the District is keeping its existing five-year exemption, with a $15 million cap, in place. Second, the technology companies will be entitled to a credit against taxes. The credit will be equal to the lesser of $250,000 or the difference between the amount of tax otherwise due at the regular rate and the reduced rate of six percent. On a related note, the law also provides a credit equal to five percent of the wages paid during the first 24 calendar months of employment to a qualified employee hired after December 31, 2017. While the credit will be limited to $3,000 per taxable year, the law provides for a ten-year carryforward in certain situations.

Details about the bill can be found at https://legiscan.com/DC/text/B23-0352/2019.

July 2019

Property Tax: As part of its continued compliance efforts, the D.C. Office of Tax and Revenue (OTR) recently announced that it will be reviewing the eligibility of District properties receiving the Homestead Deduction, Senior Citizen Real Property Owner Tax Relief and/or Disabled Property Owner Tax Relief. OTR has retained the services of outside consultant firm Tax Management Associates (TMA) to assist with this review. District property owners should expect to receive a Reconfirmation Notice and Reconfirmation Questionnaire. They must complete and return the Reconfirmation Questionnaire and attach the requested documents within 30 days from the mail date of the letter. The Reconfirmation Questionnaire must be completed and returned even if the property owner no longer owns the property. This is an extremely time-sensitive matter as any failure to timely return the completed Reconfirmation Questionnaire and applicable supporting documents by the required response date may result in the loss of tax benefit(s) for the real property. Detailed information can also be found on the Reconfirmation FAQs webpage.

June 2019

Sales Tax: Marketplace facilitators are now required to collect and remit to the District sales tax on certain sales made on their marketplaces. The definition of 'marketplace facilitator' for these purposes generally includes a person who lists, advertises, stores, or processes orders for retail sales subject to sales tax and directly or indirectly collects payment from a purchaser and remits payment to a marketplace seller (regardless of whether the marketplace facilitator receives compensation in exchange for its services). This extension of the sales tax collection/remittance to marketplace facilitators is part of the District's legislation effective March 22, 2019. Registration and filing guidance issued by the District can be found here.

For more information about state and local tax developments in the District of Columbia, please contact:

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