Sales Tax Updates in Washington DC

Tax Professionals' Resource
January 18, 2013 — 1,665 views  
Become a Bronze Member for monthly eNewsletter, articles, and white papers.

A 6% sales tax is assessed to sales of tangible personal property in the District of Columbia. A sales or use tax is levied to anyone who is in the business of selling, buying, or using tangible personal property in the District of Columbia. Alcohol, meals at restaurants, public parking, and hotel accommodations are subject to higher rates.

The District of Columbia sales tax is calculated by multiplying the gross receipts by the tax rate. By law, it is required that the actual cost of the tax is passed from the seller to buyer. Businesses cannot absorb the tax, as in taking the burden of the sales tax away from the buyer and paying for it out of pocket, as this is illegal in the state.

One thing that makes the District of Columbia rather unique is the fact that the district itself can go directly to the customer to collect the correct sales tax amount if a tax is miscalculated by the seller at the time of transaction.

Many goods and services in the District of Columbia are exempt from the sales tax. For example, purchases made with the intent of resale are tax exempt if a valid resale exemption certification is presented to and filled out by the seller. This certificate gives the purchased products an assigned registration and resale number. Purchases made by charitable organizations are also exempt from sales tax

The District of Columbia sales tax is applicable to services such as short term lodging, copy/mailing businesses, admissions, laundry/dry cleaning businesses, any parking or storage of motor vehicles, employment services, landscaping, delivery companies, telecommunications, property maintenance, data entry/processing, and information services.

Leasing or rental agreements that pertain to tangible personal property are subject to sales tax, unless the business leases or rents out property to radio and television stations or theaters, as these are exempt from both sales and use taxes.

Purchases of taxable services or properties from out-of-state retailers will require the payment of a use tax based on the price. This use tax can either be paid directly to the District of Columbia or by the seller if they are authorized to collect this tax. In the event of an overpayment, a claim can be filed by either the customer or seller. In this case, the District of Columbia typically issues a credit memorandum if there is an erroneous payment.

Tax Professionals' Resource