Video: OTR’s Tax Relief Programs for Property Owners

The District of Columbia offers eligible property owners a number of tax relief programs  that can lower their tax bill.

Property owners may qualify for programs such as:

  • Homestead deduction
  • Senior or disabled owner real property tax relief
  • Tax deferral, and
  • Much more

Click on the video below to learn more.

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Effective Oct 1, the Sale of Diapers is Exempt from DC Sales & Use Tax

Exemption-for-Diapers_v02_082719-2Effective Tuesday, October 1, the sale of or charge for diapers is exempt from DC sales and use tax.

“Diaper” is defined by statute as “an absorbent incontinence product that is washable or disposable and worn by a person, regardless of age or sex, who cannot control bladder or bowel movements.” (SeeC. Official Code § 47-2005(39).)

Click here to learn more and to view upcoming tax changes.

 

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Tax Changes To Take Effect October 1

DC-Tax-Rate-Change_v03_082819 (002)The following tax changes were required by the Fiscal Year 2020 Budget Support Emergency Amendment Act of 2019. The new provisions, which include sales and use, individual income, corporate franchise, real property, and recordation and transfer taxes, will take effect Tuesday, October 1, 2019. There is also a tax rate increase on cigarettes.

SALES AND USE TAXES

  • Soft Drinks: The sale of or charge for soft drinks are subject to 8 percent sales and use tax. Sales or charges for soft drinks sold for immediate consumption will remain subject to a 10 percent sales tax. Further, the definition of “soft drink” is expanded to include beverages with natural or artificial sweeteners that contains less than 100 percent juice, less than 50 percent milk, soy, rice or similar milk substitutes or coffee substitutes, coffee, cocoa or tea. (See D.C. Official Code § 47-1803.02.)
  • Diapers: The sale of or charge for diapers is exempt from sales and use tax. “Diaper” is defined by statute as “an absorbent incontinence product that is washable or disposable and worn by a person, regardless of age or sex, who cannot control bladder or bowel movements.” (SeeC. Official Code § 47-2005(39).)
  • Qualified High Technology Companies (QHTC): Sales of certain property by QHTCs and sales to QHTCs of computer software, or hardware are NO LONGER exempt from sales and use tax. (See D.C. Official Code §§ 47-2001(n)(2)(G) and 47-2005(31).) All QHTC Exempt Purchases Certificates issued before October 1, 2019 are terminated as of that date.

INDIVIDUAL INCOME TAXES

Schedule H Credit:   Beginning with tax year 2019, the maximum Schedule H credit is increased from $1,025 to $1,200.  The income eligibility limits are increased to $55,000 for non-seniors and $75,000 for seniors.   For purposes of calculating the credit, a third tier of 5 percent is added for federal adjusted gross incomes of $52,000-$55,000 for non-seniors. Dependent income is no longer included in the federal adjusted gross income of the tax filing unit.   (See D.C. Official Code § 47-1806.06.)

Further, beginning with tax filing season 2021, taxpayers who are not required to file a Form     D-40 with OTR will be able to file a “stand alone” Schedule H electronically in a manner prescribed by OTR. (See D.C. Official Code § 47-1806.06(s).)

  • Keeping Childcare Affordable Tax Credit (formerly known as the Early Learning Tax Credit): Beginning with tax year 2019, the income eligibility limit is reduced from $750,000 to $150,000 (from $375,000 to $75,000 for married filing separately). (SeeC. Official Code § 47-1806.15.)
  • Safe at Home Grant Program: Beginning with tax year 2019, amounts received by a taxpayer pursuant to the Safe at Home Grant Program are excluded from DC gross income. (SeeC. Official Code 47-1803.02(a)(CC).)

 CORPORATION FRANCHISE TAXES

  • Qualified High Technology Companies (QHTC): Beginning with tax year 2020, except as otherwise provided under D.C.  Official Code § 47–1817.06(a)(2), QHTCs will be subject to the regular franchise tax rate imposed on corporations.   Beginning with tax year 2020, QHTCs are, instead, allowed a new credit that is equal to the lesser of $250,000 or the difference between the applicable corporation franchise tax rate (currently 8.25 percent) and 6 percent.  The credit is allowed for a period of 5 taxable years from the later of December 31, 2019 or the last year the QHTC is eligible to receive the “0 percent rate” under D.C.  Official Code § 47–1817.06(a)(2).   (SeeC. Official Code § 47–1817.06.)

Further, beginning with tax year 2020, the amount of credits a QHTC can claim for wages paid to qualified employees is reduced.   Beginning with tax year 2020, a credit is allowed for 5 percent of wages paid to a qualified employee hired after December 31, 2017 and paid during the first 24 calendar months of employment and is capped at $3,000 per qualified employee.  (See D.C.  Official Code § 47–1817.03(a-1).) Further, no carryforward will be allowed for credits obtained for wages paid to a qualified employee hired on or after October 1, 2019.  (See D.C. Official Code § 47–1817.03(c).)

REAL PROPERTY TAXES

  • Senior/Disabled Residents Real Property Tax Cap Credit: The portion of a cooperative receiving both the homestead and senior/disabled tax deduction will receive the 105 percent assessment cap credit beginning with tax year 2019 (October 1, 2018). (SeeC. Official Code § 47-864.)
  • Commercial Property Rate: For real property whose assessed value is greater than $10 million, the commercial property (Class 2) tax rate of $1.89 for each $100 of assessed value will no longer be subject to reduction for sales tax revenue receipts collected from remote sellers. (SeeC. Official Code § 47-812(b-9)(2).)
  • Nonprofit Workforce Housing Property: Rental properties owned by a nonprofit organization can qualify for a real property tax exemption where at least 50 percent of the tenants have household income that does not exceed 80 percent of area median income (AMI), and the household income of the remaining tenants does not exceed 120 percent of AMI. Other requirements also must be met.  Compliance with the eligibility requirements will be certified to OTR by an independent compliance monitor.   (SeeC. Official Code § 47-1005.03.)
  • Performing Arts Venues Credit: A rebate of up to $15,000 of real property tax paid as required by a lease is available to a business hosting live entertainment a minimum of 48 hours per month and that has a seating capacity of less than 300 seats. Qualified businesses must apply by September 15 of the tax year. The application must include the following:
    • Copy of the lease
    • Documentation that the real property tax was paid
    • Documentation that the business hosts live performances for a minimum of 48 hours per month, and
    • The venue has a capacity under 300 seats.

(See D.C. Official Code § 47-869.)

 RECORDATION AND TRANSFER TAXES

  • Commercial Property Rate Increase: The combined recordation and transfer tax rate for class 2 property will increase from 2.9 percent to 5 percent if the consideration is $2 million or more. The tax rate for transfers of economic interests in such property will increase to 5 percent.  The recordation tax rate on security interest instruments for debt of $2 million or more secured by such Class 2 property will be 2.5 percent   Transfers are subject to the increased rate if any portion of the building is Class 2 property and there is majority common ownership between the interest transferred and the commercial portion of the property.  This provision sunsets on September 30, 2023.  (SeeC. Official Code §§ 42-1103 and 47-903.)
  • Nonprofit Workforce Housing Property: Deeds to housing properties eligible for the workforce housing real property tax exemption discussed above and for which the required certification as to both the property and the nonprofit owner have been made are exempt from recordation tax. Transfers of a workforce housing property by a nonprofit owner for which the required certification has been made are exempt from transfer tax. (SeeC. Official Code § 47-1005.03(e).)

Additional Changes Effective October 1:

CIGARETTE TAX

  • Cigarettes: The fixed tax remains $4.50 per package of 20 cigarettes. However, the surtax is increased from $.44 cents to $.48 cents per package of 20 cigarettes.  As a result, the combined cigarette excise tax per package of 20 cigarettes is $4.98.       OTR will not administer a floor tax in connection with this increase in the cigarette tax, nor will the cigarette stamps currently in use be changed when the tax increases on October 1. Cigarette stamps purchased on or after October 1 will be sold at the new tax rate.  Sales of cigarettes at retail are not subject to the DC sales tax.
  • Other Tobacco: The tax rate on other tobacco products is decreased from 96 percent to 91 percent of wholesale sales of other tobacco products.

For additional information, contact OTR’s Customer Service Center at                            (202) 727-4TAX (4829).

 

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New Modernized Real Property Tax System Coming December 2020

The District of Columbia Office of Tax and Revenue (OTR) announced today that it is implementing a new Modernized Real Property Tax System (MRPTS), which will go-live December 2020.

The implementation of the state-of-the-art system with technology partner FAST Enterprises will support property tax assessments, ownership and address changes, tax billing, collections, tax relief administration, tax sales, appeals, and the land recordation of real property.

Chief Financial Officer Jeffrey DeWitt said, “We will be one of the only jurisdictions in the United States that has fully integrated our new income tax, sales tax, and business tax systems with a new property tax system in MRPTS.  The new customer service and operational capabilities will be substantial with all of our tax systems in the most modern technology.”

MRPTS benefits include:

  • Integration of all real property tax systems and functions
  • User friendly design to process tax relief applications, such as the  Homestead and Senior Deduction
  • Online filing and management of assessment appeals
  • Automated scheduling, rescheduling and confirmation of assessment appeal appointments
  • Real time posting of real property transactions
  • Ability to update account information (i.e., mailing address, authorized users, etc.)

 “This is an exciting time for the Office of Tax and Revenue,” said Deputy Chief Financial Officer for Tax and Revenue Keith J. Richardson. “MRPTS is an example of OTR’s continued focus on improving customer service, communication and technology as we move to a single, unified system.”

In October 2018, OTR successfully implemented a multi-phased changeover to a Modernized Integrated Tax System (MITS), in which more than 20 tax types and fees administered by OTR are housed. MRPTS will complete OTR’s consolidation of all tax types – individual income, business and real property taxes – into one system.

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DC Office of Tax and Revenue to Hold Its 2019 Real Property Tax Sale Beginning Tuesday, July 16

The District of Columbia Office of Tax and Revenue (OTR) will hold its annual public Tax Sale beginning Tuesday, July 16, from 8:30 am until 12 noon and from 1 pm until 4 pm, or until all properties advertised are sold. The sale will be held at 1101 4th Street, SW, 2nd Floor, Washington, DC 20024.

A list of more than 1900 properties by parcel, square, suffix, and lot number, with the name of the owner of record and the unpaid tax amount, is available on OTR’s website, as well as The Washington Informer and The Washington Times newspapers.

Public Seminars:

OTR will conduct four public seminars to explain the Tax Sale procedures to prospective bidders. The seminars will be conducted at 1101 4th Street, SW, Suite W250, Washington, DC 20024, on the following dates:

  • June 25: 9:30 am to 12 noon and 2 pm to 4:30 pm
  • June 26: 9:30 am to 12 noon and 2 pm to 4:30 pm

To register for a seminar, please call OTR at (202) 727-4TAX (4829) or visit the Customer Service Administration’s Walk-In Center, located at 1101 4th Street, SW, Suite W270, Washington, DC 20024.

Registration:

Registration for the Sale is mandatory and begins Monday, July 8, and continues until the final day of the sale. To register, prospective bidders must make a deposit of at least 20 percent of their total bids. A $200 Tax Sale fee will be added to each property at the time of the sale. Purchasers are also required to complete Form FR-500, Combined Business Tax Registration Application, prior to registering. The form is available at OTR’s portal, MyTax.DC.gov.

For more information on the Tax Sale process, please call (202) 727-4TAX (4829) or visit OTR’s Customer Service Center at 1101 4th Street, SW, Room W270.

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Tax Exemption Workshop for Non-Profit and Faith-Based Organizations: June 12, 6pm to 8pm

 

OTR Workshop Flyers for June 12 2019_website (004)

On June 12, from 6pm to 8pm, the Office of Tax and Revenue (OTR) will host another workshop to educate non-profit and faith-based organizations on the District’s new filing requirements for tax exempt organizations. Attendees will learn about OTR’s changes and new processes for those applying for or retaining an Income and Franchise tax, Personal Property tax and/or Sales and Use tax exemption from the District.

OTR staff will also provide one-on-one assistance to attendees who may need support recertifying their exemption via the online reporting system, MyTax.DC.gov. Attendees will need to bring the following documents, as applicable:
•Articles of Incorporation
•Certificate of Incorporation issued by the District of Columbia Department of Consumer and Regulatory Affairs (DCRA)
•Certificate of Occupancy or Deed
•IRS Determination Letter

The event is FREE; however, space is limited. REGISTER NOW!

 

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OTR and the DC Bar Pro Bono Center to Host a Series of Workshops for Organizations Exempt From D.C. Income and Business Taxes

OTR Flyer_ Faith-based and non profits

The Office of Tax and Revenue (OTR) in partnership with the DC Bar Pro Bono Center will host a series of workshops on the District’s new filing requirements for tax exempt organizations. This event will serve as a great way to learn more about all changes and processes for those applying for or retaining an Income and Franchise tax, Personal Property tax and/or Sales and Use tax exemption from the District.

The workshops will be held as follows:

  • Non-Profits Organizations: Tuesday, April 30; 10 am to 12 noon
  • Faith-Based Organizations: Thursday, May 2; 10 am to 12 noon

The workshops are free and will be held at OTR’s office, 1101 4th Street, SW, Suite W240. There will be an opportunity to ask questions and give feedback.

As space is limited, individuals who are interested should RSVP by emailing communicationsotr@dc.gov.

OTR staff will also provide on-the-spot assistance to individuals who may need support recertifying their exemption via the online reporting system, MyTax.DC.gov.  They will need to bring the following documents, as applicable:

  • Articles of Incorporation
  • Certificate of Incorporation issued by the District of Columbia Department of Consumer and Regulatory Affairs (DCRA)
  • Certificate of Occupancy or Deed
  • IRS Determination Letter

Don’t miss this opportunity!

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