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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.

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 and 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.

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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