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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.

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.

March 2024

IRS Combined Federal/State Filing Program: The Office of Tax and Revenue (OTR) has announced that the District is participating in the IRS Combined Federal/State Filing program starting with filings in 2024 for tax year 2023. However, OTR also said that the District will require a separate filing for tax year 2023 via bulk upload or online data entry on OTR's tax portal, MyTax.DC.gov, even when the taxpayer is an approved filer in the Combined Federal/State Filing program. Information on filing on MyTax.DC.gov is set forth in this announcement. More information can be found here.

February 2024

Credits Emphasized for 2024 Tax Season: On January 23, 2024, the Office of Tax and Revenue (OTR) published an announcement by Mayor Bowser encouraging residents to explore available credits, incentives, and resources ahead of the 2024 tax season which begins January 29 and ends April 15, 2024. The OTR in this announcement specifically references and provides information regarding the Federal Earned Income Tax Credit, the District's Income Tax Credit, the District's Keep Child Care Affordable Tax Credit, and the District's Disabled or Senior Citizen Property Tax Relief. The OTR also references and provides information in this announcement regarding the free tax preparation locations and financial assistance that may be available to its residents. More information can be found here.

January 2024

Annual Tax Practitioner's Workshop on January 11, 2024: The Office of Tax and Revenue (OTR) recently published an announcement that the OTR will hold its annual "Tax Practitioner's Institute" on January 11, 2024, from 9 a.m. – 3 p.m. ET, and such seminar will take place online using the Teams platform. The OTR stated that the seminar is free, but registration is required using the registration link set forth in the announcement. According to the OTR, this seminar will provide tax preparers with a comprehensive presentation, with several speakers and an advanced look at what is new for the tax filing season and for the new tax year. The OTR notes that registered preparers during the week of January 8 will receive an email that will include a link to join the seminar. This announcement also includes a link through which questions can be submitted regarding the upcoming seminar. More information can be found here.

November 2023

2023 Real Property Discount Tax Sale: The Office of Tax and Revenue (OTR) recently published an announcement regarding the discount tax sale that is scheduled to begin December 5, 2023. The OTR stated in this publication that notice is given that all real properties that were bid back to the District during the July 2023 Real Property Tax Sale, were not sold at a subsequent special deed sale, and have not been redeemed, will be offered for sale by the OTR to the highest bidder at a public auction beginning December 5, 2023. Information pertaining to this public auction can be found here.

October 2023

Notice of Tax Changes: The Office of Tax and Revenue (OTR) recently published a reminder to taxpayers, tax professionals, businesses, and others about recent tax changes, including those taking effect on October 1, 2023. The OTR stated in that reminder that these changes include those pursuant to the Fiscal Year 2024 Budget Support Emergency Amendment Act of 2023, previously enacted legislation applicable on October 1, 2023, as well as other changes required by the District's laws. Among the many tax changes summarized in this reminder, the OTR referenced the Tourism Recovery Tax Amendment Act of 2023 and the Street Vendor Advancement Amendment Act of 2023 for sales tax purposes, and the sunsetting of the Recordation and Transfer Taxes Amendment Act of 2019 for commercial recordation and transfer taxes. Additionally, other legislative tax developments are addressed in this reminder. More information can be found here.

September 2023

Filing/Paying Responsibility: The Office of Tax and Revenue (OTR) has published a reminder that taxpayers are responsible for filing their tax returns on time and paying the full amount owed. The OTR stated in this reminder that if a tax is not fully paid, a notice of tax due will be mailed; and, in addition to the amount of delinquent tax owed, taxpayers will be charged interest (ten percent compounded daily) and a failure to pay penalty (five percent monthly up to 25 percent). The reminder also referenced that if the full payment is not received within 15 days from that notice date, the OTR will send a notice of enforcement by certified mail, and thereafter, will initiate enforcement action against the delinquent taxpayer. Further, if the taxpayer does not respond promptly to these notices, a representative from OTR's Tax Division will contact the taxpayer by telephone or in person concerning their tax problem. This reminder noted that taxpayers will be expected to make all necessary arrangements to immediately bring their account up-to-date so there will be no need for further enforcement action to be taken by OTR. More information can be found here.

August 2023

Real Property Tax Sale: The Office of Tax and Revenue (OTR) has recently published a Notice that all real properties, described in that Notice, for which real property taxes or vault rents (including penalties and interest, if applicable) were levied and in arrears on October 1, 2022, for which Business Improvement District taxes (including penalties and interests, if applicable) were levied and in arrears before September 1, 2022, or for which any other tax certified by the OTR for collection hereunder remains unpaid, shall be sold at public auction to the highest bidder at the 2023 Real Property Tax Sale. That Sale began July 18, 2023, and continues (except Saturdays, Sundays, and legal holidays) until all the real properties available for sale are sold. More information regarding the foregoing Notice and the list of properties can be found here.

July 2023

UCC New Forms for Filing: The Office of Tax and Revenue (OTR) has recently published Tax Notice 2023-05, entitled Uniform Commercial Code Article 9 Amendments-New Forms for Filing. This Tax Notice, which supersedes Tax Notice 2013-01, provides that effective July 1, 2023, the only versions of Article 9 forms that will be accepted for filing are those provided at the IACA International Association of Commercial Administrators website. The forms referenced in that Notice include the UCC Financing Statement Form UCC1, UCC Financing Statement Addendum Form UCC1Ad, UCC Financing Statement Amendment Form UCC3, and UCC Financing Statement Amendment Addendum Form UCC3Ad. More information can be found here.

June 2023

Tax Sale Online Seminar To Be Conducted: By news release dated June 9, 2023, the Office of Tax and Revenue (OTR) announced that two online seminars will be conducted via Webex by the OTR so as to explain tax sale procedures involving real property. The OTR stated that all persons interested in participating in this annual seminar are encouraged to attend so as to learn critical information relating to the tax sale process. According to this news release, the June seminars are to be held on June 28 and June 29, 2023, at the times set forth in the news release. Registration for these seminars is open from June 19 through June 26, and instructions on registering for the seminars are set forth in the news release. July seminar dates will be announced at a later time. More information can be found here.

May 2023

Updated Notice Regarding Recordation Tax on Refinancing Instruments: On April 26, 2023, the Office of Tax and Revenue (OTR) issued Notice 2023-04 entitled "Notice Regarding the Taxation of Instruments Relating to Refinances and Modification." The OTR states that this Notice supplements and supersedes Notice 2014-05, dated May 21, 2014, by providing generally that, to constitute a refinance, the new loan must be made to the same obligor(s) who was indebted under the loan(s), as modified or restated, if applicable, that is being paid off, extinguished and replaced, and must be secured by the same real property that secured the loan(s), as modified and restated, if applicable, being paid off, extinguished and replaced. The recording tax law, as referenced in this Notice, provides generally that, at the time a security instrument is submitted for recordation, it is taxed at the rate of 1.45 percent (except for instruments relating to residential properties which are taxed at a lower rate under certain conditions) of the total amount of debt incurred that is secured by the interest in real property (provided, that if the existing debt is refinanced, the rate should reapply only to the principal amount of the new debt in excess of the principal balance due on existing debt to the extent that such existing debt was previously taxable or otherwise exempt as referenced in the Notice). OTR addresses various topics in this Notice, including refinances, modifications, as well as the substantiation of the taxable amount and exemption entitlement. The Notice provides contact information for any questions or comments. More information can be found here.

April 2023

Sales Tax Applies to Additional Mandatory Charges: On April 16, 2023, the Office of Tax and Revenue (OTR) issued Notice 2023-03 addressing additional mandatory charges that certain employers are imposing on consumers of tangible personal property and taxable services sold within the District. By way of background, in November 2022, the District voters passed Initiative 82 which eliminated the tipped minimum wage for service, bartenders and other tipped workers which was $5.35. To reach the District's minimum wage, currently at $16.10, the minimum wage difference was made up with gratuities, whether voluntarily given by consumers or required to be paid by consumers. This gratuity is otherwise known as the "tip credit." However, beginning on May 1, 2023, employers are required to supplement workers' pay if the worker did not earn enough in tips to reach the District minimum wage. This tipped minimum wage will be phased out according to the Notice by 2027 and replaced with one universal minimum wage. However, the OTC stated in this Notice that it has received inquiries from consumers who have recently noticed an additional line-item mandatory charge on their bills for otherwise taxable purchases, such charges being characterized as "fair wage service charge," "packaging fee," "resort fee," or similar descriptions. This Notice reminds businesses and consumers that, under District law, if the tangible personal property or taxable service being sold is subject to the District sales tax, the business must collect or remit the sales tax on the total sales price, which includes mandatory service charges or fees. The Notice provides contact information if there are questions regarding the taxability of these mandatory charges. More information can be found here.

March 2023

Housing Tax Credit Transfer Requirements Addressed: On February 14, 2023, the Office of Tax and Revenue (OTR) issued Notice 2023-02, addressing the requirements for transferring credits available for "qualified projects" located in the District. As stated in this Notice, a "qualified project" means a rental housing development in the District that, after October 1, 2021, receives an allocation of federal low-income housing tax credits under Internal Revenue Code Section 42(h)(1) or (4) or a commitment to extend low-income housing pursuant to Code Section 42(h)(6)(B) between the owner and the Department executed on or after October 1, 2021. This Notice then addresses the eligibility requirement to receive low-income housing credits, followed by addressing the requirements for an owner to transfer, sell, sign, or otherwise allocate the tax credits to a subsequent taxpayer. As referenced in this Notice, the owner of the tax credits may transfer, sell, assign, or allocate some or all of the tax credits to parties eligible pursuant to the applicable provisions of the D.C. Code; and the owner is not limited on the number of transactions to transfer, sell, assign or otherwise allocate the tax credits to subsequent holder, so long as the number of tax credits transferred, sold, assigned, or allocated does not exceed the maximum given for the qualifying project. The Notice also states that for any transfer, sale, assignment, or allocation to be valid, the transferee must certified to the CFO of the OTR that the qualifying owner received consideration in an amount consistent with that Notice, and that the owner who makes a transfer to another unrelated party shall submit to the CFO and the Commissioner of the OTR a statement that the recipient of the transfer, sale, assignment, or allocation is eligible, and shall provide the appropriate information so that the tax credit may be properly allocated. The Notice provides some examples of transfer situations, and also provides contact information for additional questions. More information can be found here.

February 2023

Tax Filing Season Began January 23, 2023: On January 12, 2023, the D.C. Office of Tax and Revenue (OTR) published an announcement that it will begin to accept and process Tax Year 2022 individual income tax returns on Monday, January 23, 2023, consistent with the start of the federal tax filing season. The OTR included a tax rate schedule in that publication; information regarding the standard deduction, the District's Earned Income Tax Credit, Homeowner and Renter Property Tax Credit, and Unemployment Insurance; and information about the deadline to submit the Tax Year 2022 individual income tax returns or extension to file and pay tax, which is April 18, 2023. The OTR also announced that it will be closed on April 17, 2023, in observance of Emancipation Day. More information can be found here.

January 2023

Annual Tax Institute Workshop on January 12, 2023: On November 10, 2022, the Office of Tax and Revenue (OTR) published an announcement that the OTR's annual Tax Practitioner's Institute is scheduled to be held online on January 12, 2023, from 9 a.m. to 3:30 p.m. EST, using the Teams platform. The seminar is free, but registration is required. A registration link is in that announcement. More information can be found here.

October 2022

Veterans Homestead Deductions Start October 1, 2022: On September 30, 2022, the Office of Tax and Revenue (OTR) published an announcement that, effective October 1, 2022, residential real property owned by a veteran who has been classified by the United States Department of Veterans Affairs as having a total and permanent disability as a result of a service-incurred or service-aggravated condition or is paid at the 100 percent disability rating level as a result of unemployability, is eligible for reduction in assessed value of $445,000, provided that various conditions are satisfied. These conditions include:

  • The property must be occupied by the disabled veteran and contain no more than five dwelling units (including the unit occupied by the owner);
  • The property must be the principal residence of the disabled veteran;
  • The disabled veteran must have at least 50 percent ownership of the property as shown by deed;
  • The disabled veteran must be domiciled in the District; and
  • Total household income cannot exceed the limit Senior/Disabled Tax Relief limit, which is $139,900 for tax year 2022.

Information regarding the application processes is also set forth in this announcement. More information can be found here.

September 2022

Tax Changes Effective October 1, 2022, for Various Taxes: On September 2, 2022, the Office of Tax and Revenue (OTR) published an announcement reminding taxpayers, tax professionals, software providers, businesses, and others about tax changes that were enacted in the Fiscal Year 2023 Budget Support Emergency Amendment Act of 2022 and take effect October 1, 2022, unless otherwise noted. Those changes with respect to real property taxation include the Seniors and Individuals with Disabilities Real Property Tax Increase Limit Amendment Act of 2022, which provides that the senior citizen assessment cap credit limits taxable assessment increases to 2 percent beginning with tax year 2023; Disabled Veterans Homestead Exemption Amendment Act of 2022, which establishes a $445,000 homestead deduction for individual real property owners having total and permanent disability resulting from a service-incurred condition; and Tax Abatements for Housing in Downtown Act of 2022, which establishes tax abatements for certain real property undergoing a change of use to provide at least 10 housing units. Further, with respect to individual income tax, the District Earned Income Tax Credit for the tax year 2022 has been increased to 70 percent of the federal earned income tax credit, and the New District of Columbia Tax Rate Schedule for 2022 is set forth in this publication. Other changes are also noted for various taxpayers. More information can be found here.

August 2022

Tax Deed Recordation Revised Process Following Tax Sale: On June 9, 2022, the Office of Tax and Revenue (OTR) published an announcement that the 2022 real property tax sale would occur on July 19 and 20, 2022. That announcement contained various information regarding the sale such as the location of the sale as well as when and where the list of subject property would be available for review. For those purchasers at that tax sale, the OTR previously issued Notice 2022-04, which set forth the District's revised tax deed issuance and recordation process that would be effective May 1, 2022. Under that Notice and upon receipt of a final order, the tax sale purchaser shall provide a certified copy of the order to the OTR and, after receiving the certified copy of the final order, the OTR shall generate a bill for deed directing the tax sale purchaser to pay the amounts required by applicable law. The purchaser "should pay the required amount to the District within 30 days of the final order." Subject to other conditions in the Notice, and after review of tax account financials and applicable case documents, the OTR will prepare the Tax Deed and record the Tax Deed with the Recorder of Deeds. Questions regarding this revised process should be directed, according to the Notice, to mytax.dc.gov via the tax sale purchaser's account. More information can be found here.

June 2022

Corporation/Unincorporated Business Franchise Tax Relief Expires July 16, 2022: On June 6, 2022, the Office of Tax and Revenue (OTR) published Tax Notice 2022-06 (Notice), "COVID-19 Franchise Tax Nexus," providing that the relief earlier provided to businesses because of the coronavirus would expire July 16, 2022. In that regard, this notice referenced the Declaration of Public Emergency on March 11, 2020 caused by the coronavirus; and the subsequent relief set forth in Tax Notice 2020-05 indicating that the OTR would not seek to impose corporation franchise tax or unincorporated business franchise tax nexus solely on the basis of employees or property used to allowed employees to work from home during the declared public emergency and the public health emergency, and for a subsequent 90 days after the end of the emergency. That emergency relief was extended several times, with the latest extension being through April 16, 2022. No further extension has been announced; accordingly, the relief set forth in Tax Notice 2020-05 and Tax Notice 2020-07 will expire on July 16, 2022. The latest Tax Notice 2022-06 provides information for various contacts at the OTR's Customer Service Center. More information can be found here.

May 2022

Assistance for Businesses Needing a Certificate of Clean Hands: On May 18, 2022, the Office of Tax and Revenue (OTR) published an announcement stating the OTR has dedicated staff available from May 18 through May 20 to review requests for Certificate of Clean Hands for bars, restaurants, and other establishments seeking to renew their liquor licenses prior to the May 31 deadline. The announcement stated businesses seeking a license renewal before the upcoming deadline may make appointments with the OTR for such purposes. The announcement also provided contact information in the event of questions related to the Certificate of Clean Hands. More information can be found here.

April 2022

Solid Mineral Tax Rates for 2022: On March 21, 2022, the Florida Department of Revenue (Department) issued Tax Information Publication No: 22B07-01 which sets forth the severance tax rates for phosphate rock producers, heavy mineral producers, and other solid minerals producers. This Publication sets the severance tax rate for the period through December 31, 2022, on a per ton basis. The Publication further states that questions should be addressed in writing to the Department, Taxpayer Services, at the address set forth in the Department's Publication. More information can be found here.

March 2022

Business Franchise Tax Obligations: On January 19, 2022, the Office of Tax and Revenue (OTR) published Tax Notice 2022-01 providing clarification of those instructions for Form 2021 D-30 dealing with the unincorporated business franchise tax return for the tax year 2021. The OTR stated in that Notice that the District had enacted legislation in 2020, effective January 1, 2021, clarifying the taxable income of unincorporated businesses includes gain from the sale or other disposition of any assets, including tangible assets and intangible assets, including real property and interests in real property, in the District even when the sale or other disposition results in the termination of an unincorporated business. However, the Notice further stated that the printed version of the booklet for 2021 D-30 did not contain this instruction and instead included language that this gain should be reported on the owner’s individual return. The OTR stated in Notice that it will publish updated instructions for the 2021 D-30 that can be found on OTR’s homepage, but will not be printing new booklets or instructions. More information can be found here.

February 2022

COVID-19 Tests Exempt from Sales/Use Tax: The Office of Tax and Revenue (OTR) recently published Tax Notice 2022-02 stating at-home COVID-19 tests are exempt from the OTR's sales and use tax, and retail businesses should no longer add a sales tax to at-home COVID-19 tests purchases. More information can be found here.

January 2022

Annual Tax Preparer Seminar to Be Held January 13, 2022: In late November 2021, the Office of Tax and Revenue (OTR) published an announcement that the Tax Practitioners Institute will be held on January 13, 2022 and will provide tax preparers with a comprehensive presentation and an advanced look at what is new for the tax-filing season and for the new tax year. The OTR advised that the seminar is free, but registration is required. Registered preparers will receive an email in advance of the seminar, which will include a link to use to join the seminar on January 13, 2022. More information can be found here.

October 2021

Tax Changes Effective October 1, 2021: On September 30, 2021, the Office of Tax and Revenue (OTR) published a reminder regarding tax changes that were enacted in the Fiscal Year 2022 Budget Support Emergency Amendment Act of 2021 (2021 Act). This reminder provides that such changes will take effect October 1, 2021, unless otherwise noted. The reminder lists various sources of income that will be excluded from the computation of the District's gross income, including unemployment insurance benefits provided by the District or any other state, and certain grants identified in the reminder. Further, beginning on January 1, 2022, the individual income tax rates will be determined by the table set forth in the reminder. Additional changes which became effective October 1, 2021 are also reviewed in the reminder even though such changes are not included in the 2021 Act. The reminder provides contact information for the OTR's Customer Service Center in the event of questions. More information can be found here.

September 2021

Homeowners Can Complete Their Real Property Tax Transactions Simpler: On September 1, 2021, the Office of Tax and Revenue (OTR) published a reminder that property tax owners can utilize the MyTax.DC.gov portal to complete their real property tax transactions, including reviewing and paying property tax bills online, applying for tax relief benefits to reduce tax liabilities, and viewing tax assessments for multiple years. The OTR provides in this reminder various contact information in the event that homeowners have questions related to their accounts. More information can be found here.

August 2021

Answers to Most Frequently Asked Questions: According to a notice issued by the Office of Tax and Revenue (OTR), the OTR's taxpayer advocate, Elena Fowlkes, has hosted a series of interactive discussions on how to navigate and complete your tax transactions more effectively. The last of those interactive discussions, scheduled for August 27, will address obtaining answers to the most frequently asked questions. This upcoming discussion will be available by live stream beginning promptly at 12 p.m. via OTR's official Instagram page (@MyTaxDC). More information can be found here.

July 2021

Marketplace Sellers FAQs: The Office of Tax and Revenue (OTR) has published on its website frequently asked questions (FAQs) regarding the responsibilities of marketplace sellers for sales tax collection and remittance purposes. These FAQs include addressing the definition of a remote seller; the responsibilities that a remote seller has under the District's current sales tax laws; the economic nexus standard in regard to which the District will require the remote seller to obtain a retail license and begin collecting and remitting tax; the beginning date for a remote seller's obligations; and many other such FAQs. More information can be found here.

June 2021

Amended Returns Advised For Taxpayers: The Office of Tax and Revenue (OTR) previously issued Tax Notice 2021-06 (more information can be found here) which addressed the treatment for District tax purposes of the federal unemployment compensation exclusion. In that Tax Notice, the OTR stated that taxpayers should not file an amended District return at this time since the OTR is waiting for more guidance from the Internal Revenue Service on how these recalculations will be reported to taxpayers and state taxing agencies. On May 26, 2021, the OTR issued Tax Notice 2021-07 stating that the OTR is now advising taxpayers who filed an original 2020 District tax return without reporting the unemployment exclusion, to file an amended return with the OTR. Tax Notice 2021-07 then discusses the filing of amended returns with the OTR and encourages taxpayers to file those amended returns electronically. More information can be found here.

May 2021

Treatment of Federal Unemployment Compensation Exclusion: On April 15, 2021, the District's Office of the Tax Revenue (OTR) posted Tax Notice 2021-06 which addressed the treatment for Maryland tax purposes of the federal unemployment compensation exclusion. The Notice stated that if a taxpayer's modified adjusted gross income is less than $150,000, the federal American Rescue Plan Act, which was enacted on March 11, 2021, excludes from income up to $10,200 of unemployment compensation paid in 2020. This Notice goes on to provide various information regarding the impact of that exclusion for Maryland tax purposes and states that such federal exclusion will also be reflected on the District individual tax returns. The OTR then discusses in this Notice the steps District taxpayers need to take in the event the District return has not yet been filed, as well as in those situations where the District return has been filed. With respect to the latter situation, the OTR states the taxpayer should not file an amended District return at this time since the OTR is waiting for more guidance from the Internal Revenue Service on how these recalculations will be reported to taxpayers and state taxing agencies. The Notice provides the OTR Customer Service Center contact number in the event additional information is needed. More information may be found here.

April 2021

Extension to May 17, 2021: On March 19, 2021, the District's Office of Tax and Revenue (OTR) posted an announcement extending the deadline to file and pay all income tax returns until May 17, 2021. According to this announcement, the extension applies to all D-20, D-30, D-40, Standalone Schedule H, D-41, D-40B, and D-65 tax filers, and includes combined return filers. The announcement also noted that this extension is automatic and does not require taxpayers to apply. The announcement also noted that taxpayers may continue to request an extension to file their income, partnership and franchise tax returns to October 15, 2021 or November 15, 2021 for combined return filers, and that such extension requests must be made by filing the applicable extension form with OTR by May 17, 2021, and making all required payments for tax year 2020 by that same date. However, the announcement stated that the deadlines to file Forms D-20ES, D-30ES, D-40ES, and D-41ES and to make estimated tax payments remain unchanged, with the first quarter payments due April 15, 2021. Separately, and on March 22, 2021, the OTR issued an announcement regarding certain real property tax and related filing deadline extensions. More information regarding these extensions can be found here.

March 2021

Updates Reported – On February 17, 2021, the District's Office of Tax and Revenue (OTR) posted Tax Notice 2021-01 dealing with the treatment of hotel stays for federal troops deployed to the District of Columbia. In that regard, the OTR referenced in said Notice that troops from federal agencies as well as troops from other states were deployed to protect the District during the January 6, 2021 violent protests; and that many of those troops stayed in hotels in the District in the days before January 6 and many of the troops remain in those hotels indefinitely. With respect to the sales taxability of hotel stays by these troops during this period, the OTR stated that such hotel stays shall be deemed tax-exempt transactions during this period for sales and use tax purposes. More information can be found here.

February 2021

Updates Reported – On January 25, 2021, the District's Office of Tax and Revenue (OTR) posted an announcement that the OTR will begin to accept and process tax year 2020 individual income tax returns on February 12, 2021. The posting stated that the OTR is following the lead of the Internal Revenue Service in that regard. Further, the OTR set forth in its announcement various information regarding tax returns processing and refunds, changes to tax forms, tax preparation information, and tax booklets and customer service available through the OTR. Further, the OTR stated that the deadline to file income tax returns for the year 2020 is April 15, 2021, unless extended by the OTR. More information can be found here.

January 2021

Updates Reported – In connection with the 2021 tax filing season, the District's Office of Tax and Revenue (OTR) has posted the filing dates for various individual income tax forms and related information for the 2020 tax year. More information regarding that OTR posting can be found here.

December 2020

Updates Reported – On November 17, 2020, the District's Office of Tax and Revenue (OTR) posted Tax Notice 2020-08 addressing the use of digital signatures on certain tax returns to be filed with the OTR. The Tax Notice referenced the continuing declaration by the Mayor of the District of Columbia that a declared public emergency and a public health emergency exists through December 31, 2020; and that, in order to protect public health and safety, the OTR will allow taxpayers and tax professionals to use digital signatures on forms, even on those forms that cannot be filed electronically during the declared public health emergency. The OTR noted that the use of digital signatures assists in reducing in-person contact and lessens the risk to taxpayers and tax professionals during the pandemic, allowing both groups to work remotely and to file forms timely.

While the OTR encouraged taxpayers and tax professionals to electronically file returns, where electronic filing is not possible then taxpayers and tax professionals may digitally sign an income tax, withholding, or corporate/unincorporated franchise business tax return and mail in a printed copy of the return with the digital signature to the OTR. However, the OTR stated that certain returns must be filed electronically on www.MyTax.DC.gov, and cannot be filed by mail – including the alcohol beverage tax, the cigarette and other tobacco products tax, the motor fuel tax, the personal property tax, sales and use taxes, among others as specified in the Tax Notice. More information can be found here.

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.

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.

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 Washington, D.C., please contact:

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