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D.C.'s Emergency Adjustment Act of 2013

  • Aug 13, 2013 | Gail Cole

 Sit down--this is big.

Update, 9.19.2013: It's official. The sales and use tax rate in Washington D.C. is decreasing from 6% to 5.75%, effective October 1, 2013.

Update, 9.6.2013: It is unclear whether The Fiscal Year 2014 Budget Support Emergency Act of 2013 will be enacted as originally reported by the Washington Times (see below). We will update this post if and when an official rate change is made.

Unlike Detroit, the nation's capitol finds itself flush with a budget surplus. As a result, Washington D.C. is lowering its sales tax rate. It's the "perfect time" to do so, says council member Jack Evans (D). "We promised the taxpayers that when we raised the taxes that we'd lower it back down again." (The Washington Times).

The sales tax reduction is part of the broader Emergency Adjustment Act of 2013, which also deals with Internet sales tax, the Multistate Tax Compact, and the applicability of sales tax to restaurant utilities.

Read on for highlights from the Emergency Adjustment Act of 2013:

Sales Tax Relief (Title X Section 10006)

Beginning October 1, 2013, the rate of sales tax in the District of Columbia will decrease from 6% to 5.75%.

Internet Sales Tax (Subtitle EE)

The following Internet tax provision is included in the Emergency Adjustment Act: 

"Within 120 days of the effective date of this chapter, the District government shall require every remote-vendor not qualifying as an exempted vendor to collect and remit to the District remote sales taxes on sales made via the Internet to a purchaser in the District of Columbia." 

Under the new law, an Internet sales tax "shall apply as of the effective date of the Marketplace Fairness Act of 2013 [MFA], passed by the Senate on May 6, 2013 (S. 743)." The MFA has yet to grab the attention of Congress, but it may eventually do so and it may eventually become law. If it does, D.C. will be ready.

The new provision also includes a reference to simplification measures: "A plan to substantially reduce the administrative burdens associated with sales and use taxes, including remote sales taxes."

Multistate Tax Compact Enactment and Clarification (Subtitle HH)

Under the Emergency Adjustment Act, "The Multistate Tax Compact is adopted and entered into…" by the District of Columbia.

The purpose of the Mulitstate Tax Compact is to:

  1. Facilitate proper determination of state and local tax liability of multistate taxpayers, including equitable apportionment of tax bases and settlement of apportionment disputes.
  2. Promote uniformity or compatibility in significant components of tax systems.
  3. Facilitate taxpayer convenience and compliance in the filing of tax returns and in other phases of tax administration.
  4. Avoid duplicative taxation.

This compact applies to any state in the United States, the District of Columbia, and the Commonwealth of Puerto Rico or any territory or possession of the United States.

Sales Tax on Restaurant Utilities Clarification Emergency Act of 2013 (Subtitle II, Section 7362)

Restaurants in the District of Columbia are defined as retail establishments "in the principle business of preparing and serving food to the public." Section 47-2005(11A) of the District of Columbia Official Code is amended by the Emergency Adjustment Act to exempt from sales tax all sales of "natural or artificial gas, oil, electricity, solid fuel, or steam, directly used in a restaurant." It takes effect August 1, 2013 and expires 90 days later, on October 28, 2013.

Curious to learn more? Read the Fiscal Year 2014 Budget Support Emergency Act of 2013 in its entirety here. Bring your waders, your patience and a strong cup of tea.

Relax, It's Temporary

As explained just above the signature line, the Emergency Adjustment Act of 2013 "shall remain in effect for no longer than 90 days." Except as otherwise noted in the Act, it "shall apply as of October 1, 2013." It is set to expire October 28, 2013. The sales tax rate change, however, is not temporary.

In other words, just when you get used to a new exemption, you'll have to forget it.

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District Of Columbia State Rates

photo credit: Stuck in Customs via photopin cc

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.