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District of Columbia Use Tax Requirements


The Employer Use Tax Return Act of 2012 topped the news releases on September 25, 2012, at the District of Columbia Office of Tax and Revenue. It takes effect October 1, 2012, at the start of the new fiscal year.

The purpose of this new act is to capture revenue lost in the sales tax -- use tax loophole. Sales and use taxes are often lumped together; businesses and individuals are required to pay one or the other, but not both. Goods purchased outside of DC -- whether in person, online, by phone, or by mail -- are not subject to DC sales tax. If they are used in the district, however, they are subject to the use tax.

According to the Washington Business Journal, "[t]he sales and use tax has long been interchangeable." Until the Employer Use Tax Return Act of 2012 takes effect, '[o]nly businesses that file a sales tax return with the D.C. tax office are required to file a use tax return."

The Employer Use Tax Return Act of 2012 changes that.

As stated in the act, any DC employer "required to file a DC withholding return" but "not required to collect and remit sales tax" must "file an annual use tax return … on or before October 20 of each year," along with the use taxes due. The initial return, which covers the period from October 1, 2011 through September 30, 2012, is due October 20, 2102.

The Washington Business Journal reports that the "CFO expects the district will reap $2.2 million a year with the budget provision."

The Office of Tax and Revenue will open a use tax account for all businesses required to comply with the Employer Use Tax Return Act of 2012. OTR will also issue instructions to all affected businesses by October 1, 2012.

Electronic filing is available through the Office of Tax and Revenue Taxpayer Service Center (eTSC). Taxpayers not already registered with eTSC must submit an online application.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.