Washington D.C. adds new economic nexus requirements

Washington D.C. adds new economic nexus requirements

Add Washington DC to the list of states that have new rules governing sales tax that impact wineries. Mayor Muriel Browser signed into law bill B22-0914 the Internet Sales Tax Amendment Act of 2018 on January 18, 2019. This bill is expected to take effect retroactively after a 30-day congressional review, which is underway. However, in the their Wayfair Response Notice, DC clarifies that the new provisions actually took effect on January 1st. That’s because of emergency legislation that was designed to bridge the gap between January 1st and the April 1st effective date of the original bill. 

Prior to January 1st, all wineries without physical nexus could ship to consumers in DC without a shipping license or a tax permit. This law would add a new sales tax requirement for any wineries that exceed the economic nexus thresholds.

DC joins Minnesota, Iowa, Colorado, and Wyoming in drafting a bill that changes requirements for wineries in accordance with the guidance provided in the Wayfair decision. The economic nexus for out of state or online retailers designates that a company with gross revenue exceeding $100,000 or 200 or more separate transactions in the previous or current year will be required to register for and remit sales tax monthly.

State Effective
$ Threshold Transaction
Minnesota 10/1/2018 $100,000 100
Colorado 5/31/2019 $100,000 200
Iowa 1/1/2019 $100,000 200
Wyoming 2/1/2019 $100,000 200
Washington D.C. 1/1/2019 $100,000 200

The DC Department of Consumer and Regulatory Affairs confirms those with nexus will need to first;

  1. Register with the Office of Tax and Revenue, Corporate Division
  2. Obtain a Basic Business License with the Department of Consumer and Regulatory Affairs

The implementation date for the new requirements is January 1, 2019. Those wineries with nexus should be collecting DC off-premise alcohol tax rate of 10.25% once registered rather than the 6% DC general sales tax rate. Tax payments will be due monthly on the 15th of the month for the preceding month.

If nexus has not been reached, there is no need to register. Registration and payments should only begin once a company exceeds the threshold.

As always, if you would like help understanding these changes, or need to get registered for sales tax in DC, please contact us.

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