The Office of the Chief Financial Officer presented at the Washington, DC Economic Partnership's Doing Business 2.0 seminar on Business Taxes (2/13/13).

1. Serving the Citizens of the District of
Columbia
District of Columbia
Office of the Chief Financial Officer
Office of Tax and Revenue
Washington DC Economic Partnership
Stephen M. Cordi
Deputy Chief Financial Officer
February 13, 2013
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2. FY 2013 Tax Changes
• For each of the last 3 years, there
have been significant tax changes as
DC has tried to squeeze more money
out of its tax system
• By last year, revenues were on the
rise, so that the need for additional
revenues diminished
• That has manifested itself in the form
of both fewer and smaller tax changes
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Office of Tax and Revenue

3. Combined Reporting - 1
• As I reported last year, the DC Council
enacted combined reporting, effective
for tax year 2011 in September of 2011
• That legislation was largely based upon the
MTC model legislation as modified by West
Virginia
• It took us until January of 2012 to propose
comprehensive regulations and until shortly
before the corporate due date of March 15th
to release combined reporting schedules
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Office of Tax and Revenue

4. Combined Reporting -2
• The proposed regulations received a more
favorable response than I would have expected
• We did receive in excess of 50 public comments
on the regulations. Some, of course, seemed to
want us to repeal the legislation
administratively and others were taxpayer
specific
• A number were comprehensive and helpful.
That send us back to the drawing board for
revisions and additions
• The regulations were re-proposed in early
September and became effective September 14,
2012, one day before the returns were due
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Office of Tax and Revenue

5. Combined Reporting -3
• Just before that, representatives of COST convinced
us that we had statutory authority to extend the due
date
•We exercised that authority to extend the corporate
franchise tax due date until October 15
• We have also bolstered our combined reporting
effort by naming veteran auditor Nirmail Dhaliwal as
Senior Agency Tax Advisor for combined reporting
matters
• Among his new responsibilities is consulting with
corporate taxpayers on combined reporting technical
issues
•He may be reached at (202) 442-6632 or at
nirmail.dhaliwal@dc.gov
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Office of Tax and Revenue

6. Interest on Refunds – Rate Change
• Under law in effect until 12/31/12, for
general taxes, DC paid interest of 6% per
year beginning 91 days for personal income
taxes and 181 days for business taxes after
claims for refunds are filed
• Beginning January 1, 2013, the rate
becomes variable annually in relation to the
discount rate of the Richmond Federal
Reserve Bank, not to exceed 6%
• For 2013, the rate will be 2% per year
• The change is not applicable to real
property tax refunds which remains at 6%
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Office of Tax and Revenue

7. Expanded Business Use Tax
Filing Requirement
• Background
• Applicable to businesses with
withholding tax accounts but no sales
tax accounts
• First returns due for the October 1,
2011 through September 30, 2012
fiscal year on October 22, 2012
• Implementation issues
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Office of Tax and Revenue

8. Lower EFT Payment
Requirement
•Effective October 1, 2012,
business tax payments of greater
than $5,000 are required to be
made electronically.
•Prior to this the electronic
payment requirement applied to
business tax payments of greater
than $10,000.
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Office of Tax and Revenue

9. Vendor Sales Tax Collection
Requirement
• Prior law provided that street vendors and food
trucks would not collect the tax but remit $375 per
quarter
• Effective October 1, 2012, these vendors must collect
the tax at 10% for food and 6% for other tangible
personal property and remit the higher of the amount
collected or $375
• The law permits “employers” to file on behalf of their
vendors on a consolidated basis if done electronically
• Returns are quarterly
• The first returns were due for the December 2012
quarter on January 20, 2013
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Office of Tax and Revenue

10. Federal Vendor Offset
• Reciprocal agreement with US Treasury
whereby the Treasury offsets federal
payments to satisfy DC tax and non-tax debt
in exchange for DC offsetting its tax refunds
and vendor payments to satisfy federal
liabilities
• Expected to be operational with 10 days
• DC will be the 8th jurisdiction to participate
• Operational in MD for some years
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Office of Tax and Revenue

11. Individual Income Tax
Changes
 Personal Exemption & Standard Deduction COLA
 New formula for tax year 2013 – Standard
deduction to $4,050; no change in personal
exemption of $1,675
 Also applies to Homestead - $69,100
 Interest on Out of State Bonds
 The applicability date of taxation of out-of-state
exempt bond income is changed to 1/1/2013
 Applies to interest on non-DC tax exempt bonds
acquired on or after that date
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Office of Tax and Revenue

12. DC Joins the Free File Alliance
• What is the Free File Alliance?
• Why is DC joining now?
• Taxpayers with income up to $57,000 will be
able to file free federal and DC returns
online through the Free File Alliance website
• Taxpayers who used the system last year
were notified by OTR of their eligibility for a
voucher for free e-filing in 2013
• Intuit will make fillable electronic returns
available beginning next year
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Office of Tax and Revenue

13. Contact Information
• Tax Practitioner Hotline (202) 727-1435
• Main Call Center (202) 727-4TAX (4829)
• Problem Resolution (202) 442-6348
• Collections Division (202) 724-5045
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Office of Tax and Revenue