OTR to Hold Its Annual Tax Practitioner’s Institute Workshop Virtually on January 12, 2023

The Office of Tax and Revenue (OTR) will hold its annual “Tax Practitioners Institute” on Thursday, January 12, 2023, from 9 am to 3:30 pm EST. It will take place online using the Teams platform. The seminar is free, but registration is required. Please register here.

At the seminar OTR will provide tax preparers a comprehensive presentation, with several speakers and an advance look at what’s new for the tax-filing season and for the new tax year.

Registration:
Registered preparers will receive an email in advance of the seminar, which will include a link to use to join the seminar on January 10.

Do you have questions that you would like addressed during the seminar?
Email those questions in advance, using the following email address: communicationsotr@dc.gov.

During the seminar, the presenters will answer as many of those questions as possible. (Please do not include any client-specific information.)

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The District’s Disabled Veterans Homestead Deduction Helps Veterans by Reducing the Tax Assessment of Their Home by $445,000

A $445,000 homestead deduction (deducted from the assessed value) has been established for individual real property owners who have a total and permanent disability resulting from a service-incurred condition or are paid at the 100 percent disability rating level as a result of unemployability.

To qualify, a veteran must obtain certification of eligibility from the DC Office of Veteran’s Affairs and provide that:

  • The property is occupied by the disabled veteran and contains no more than five dwelling units (including the unit occupied by the owner)
  • The property is the principal residence of the disabled veteran
  • The disabled veteran has at least 50% ownership of the property as shown by deed
  • The disabled veteran is domiciled in the District; and
  • Total household income does not exceed the limit applicable to Senior/Disabled Tax Relief, currently $139,900 for TY 2022

If a properly completed and approved application is filed from October 1 to March 31, the property will receive the Veterans Homestead Deduction for the entire tax year (and for subsequent tax years, provided that the property continues to qualify).

If a properly completed and approved application is filed from April 1 to September 30, the property will receive one-half of the deduction reflected on the second-half tax bill (and for subsequent tax years, provided that the property continues to qualify).

Properties receiving the Disabled Veterans’ Homestead Deduction are not eligible for the Senior Citizen/Disabled Tax Relief or tax cap credit.

Cooperative properties are not eligible for this deduction.

To apply, please visit https://communityaffairs.dc.gov/page/disabled-veterans-homestead-exemption-application.

For additional questions, please contact the Mayor’s Office of Veterans Affairs at OVA@DC.gov or (202) 724-5454.

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Taxability of Student Loan Forgiveness in the District

On August 24, 2022, President Biden announced student loan debt forgiveness up to $20,000 for qualifying individuals. The discharge of student loan debt will be exempt from federal gross taxable income from January 1, 2021 through December 31, 2025. See Internal Revenue Code § 108(f)(5).

In the District, the provisions of the Internal Revenue Code are effective on the same dates that they are effective for federal tax purposes. See D.C. Code § 47-1801.04(28). Additionally, the term “gross income” has the same meaning in the District as it is defined in Internal Revenue Code § 61. D.C. Code § 47-1803.02(a).

Therefore, since the District conforms to the Internal Revenue Code § 108(f)(5), to the extent a student loan is forgiven and the forgiveness is excluded from federal taxable income, then the amount will also be excluded from District taxable income.

For additional information, please contact OTR’s Customer Service Center at e-services.otr@dc.gov or (202) 759-1946.

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District of Columbia Tax Changes Take Effect October 1 for Real Property, Individual Income and Franchise Taxes

The District of Columbia Office of Tax and Revenue (OTR) reminds taxpayers, tax professionals, software providers, businesses and others about tax changes that were enacted in the Fiscal Year 2023 Budget Support Emergency Amendment Act of 2022.

These tax changes will take effect October 1, 2022, unless otherwise noted, for the following tax types:

Real Property:

  • Seniors and Individuals with Disabilities Real Property Tax Increase Limit Amendment Act of 2022: The senior citizen assessment cap credit limits taxable assessment increases to 2 percent, beginning with TY 2023 (the current taxable assessment increase limit is 5 percent).  The increase in the amount of the benefit will be reflected beginning with the first half TY 2023 real property tax bill. It’s automatic for seniors/disabled individuals who are already receiving the tax benefit.
  • Disabled Veterans Homestead Exemption Amendment Act of 2022: A $445,000 homestead deduction (deducted from the assessed value) has been established for individual real property owners who have a total and permanent disability resulting from a service-incurred condition or are paid at the 100 percent disability rating level as a result of unemployability.   The benefit is subject to the Senior/Disabled Tax Relief household income threshold, currently $139,900 for TY 2022.  The veteran must have obtained certification of eligibility from the DC Office of Veteran’s Affairs.
  • Tax Abatements for Housing in Downtown Act of 2022: Tax abatements have been established for certain real property undergoing a change of use to provide at least ten housing units. For each property meeting the requirements, the real property tax shall be abated in an annual amount per residential square foot for a maximum of 20 years, subject to total program annual ceiling limits.

Individual Income:

District Earned Income Tax Credit (EITC): For tax year 2022, the DC EITC percentage has been increased to 70 percent of the federal EIC. Individuals with qualifying children receiving the DC EITC will be paid differently than in the past. Taxpayers will receive a refund equal to 40 percent of their federal EIC as usual after their return is processed.  The additional 30 percent of the DC EITC, however, will be paid in monthly installments over the 11 months pursuant to District law. 

Additionally, certain District residents who are not citizens or resident aliens of the United States and who are not eligible for the federal earned income tax credit will be eligible for a District EIC beginning in tax year 2023.

New District of Columbia Tax Rate Schedule: For tax year 2022, the DC income tax rate schedule is:

Not over $10,000                                         4% of taxable income
Over $10,000 but not over $40,000$400 plus 6% of the excess over $10,000
Over $40,000 but not over $60,000$2,200 plus 6.5% of the excess over $40,000
Over $60,000 but not over $250,000$3,500 plus 8.5% of the excess over $60,000
Over $250,000 but not over $500,000$19,650 plus 9.25% of the excess over $250,000
Over $500,000 but not over $1,000,000$42,775 plus 9.75% of the excess over $500,000
Over $1,000,000$91,525 plus 10.75% of the excess over $1M

Corporation Franchise and Unincorporated Business:

  • Cigarettes: The fixed tax remains $4.50 per package of 20 cigarettes. However, the surtax is increased from $.51 cents to $.52 cents per package of 20 cigarettes. As a result, the combined cigarette excise tax per package of 20 cigarettes is $5.02.

    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. 

  • Other Tobacco: The tax rate on other tobacco products is decreased from 80 percent of wholesale sales of other tobacco products to 79 percent of wholesale sales of other tobacco products. Additionally, the rate for little cigars remains at $.2510 per little cigar.
  • Motor Fuel Tax: The motor fuel surcharge is increased from $.103 to $.107 per gallon on the sale of gasoline, gasohol, and other motor vehicle fuel. This surcharge is in addition to the $.235 tax on the sale of gasoline, gasohol and other motor vehicle fuel.

The following sources of income will be excluded from the computation of District gross income (retroactive to January 1, 2022, upon expiration of the Congressional review period for the Fiscal Year 2023 Budget Support Act of 2022):

  • Cash assistance grants awarded by the Washington Convention and Sports Authority to excluded workers (extended through tax year ending December 31, 2023 only).
  • The following grants awarded by the Deputy Mayor for Planning and Economic Development:
    • Grants awarded to housing providers awarded under D.C Code § 1-328.04(w); and
    • Central Business District grants awarded under D.C Code § 1-328.04(x).
  • The following grants awarded by the Department of Energy & Environment:
    • Funding received pursuant to the Solar for All Program established by D.C Code § 8-1774.16; and
    • Sustainable Energy Trust Fund grants awarded pursuant to D.C Code § 8-1774.10(c)(22).
  • Rebates issued by the Mayor pursuant to the Automated External Defibrillator Incentive Program.
  • Lump-sum payments received by individuals from the Early Educator Pay Parity Program pursuant to D.C Code § 1-325.431(c)(1A).

Additional Resources:

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

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DC Office of Tax and Revenue will hold the 2022 Real Property Tax Sale on July 19th and 20th

The District of Columbia’s Office of Tax and Revenue (OTR) has announced that July 19th and 20th will be the official dates for the 2022 Annual Real Property Tax Sale. The Tax Sale will be held at the agency’s office located at 1101 4th Street SW, 2nd Floor, Washington, DC 20024 on both dates from 8:30 a.m. to 12:00 p.m., and from 1:00 p.m. to 4:00 p.m., or until all properties advertised for that day are sold.

A list of the properties by parcel, square, suffix, and lot number, with the name of the owner of record and the unpaid tax amount will be available on OTR’s website on June 22th. This information will also be published in The Washington Times on June 23th, and Washington Informer on June 22th and 23th.

Online Seminars:

OTR will conduct two online seminars, via WebEx, to explain the Tax Sale procedures to prospective bidders. Although registration for the seminars is not mandatory, all persons interested in participating in the Annual Tax Sale are encouraged to attend the Tax Sale seminars to learn critical information relating to the Tax Sale process.

The seminars for the 2022 Tax Sale will be conducted as follows:

  • Wednesday, June 29th: 9:30 a.m. to 12:00 p.m. and from 1:30 p.m. to 4:00 p.m.
  • Thursday, June 30th: 9:30 a.m. to 12:00 p.m. and from 1:30 p.m. to 4:00 p.m.

The registration period for the Tax Sale seminars is open from June 6th through June 24th. Instructions for registering for a seminar are as follows:

1. Go to www.MyTax.DC.gov

2. Real Property

3. View More Options

4. Tax Sale Registration

5. Register for a Tax Sale Seminar

Note: A Webex invitation link will be sent to the email you have provided at the time of registration a day prior to the scheduled event. Please also note: A person with a communication impairment requiring interpreter must submit their request via MyTax.DC.gov no later than June 22th for the June 29h session and June 23th for the June 30th session.

Tax Sale Registration:

Registration for the Tax Sale is mandatory, and will be begin on July 6th, and will remain open until the final day of the sale. Anyone planning to participate in the annual Tax Sale is 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. Please be advised: a $200.00 Tax Sale fee will be added to each property at the time of the sale.

OTR has mailed a Notice of Delinquency to advise applicable property owners of the Tax Sale. The notice can also be viewed by visiting MyTax.DC.gov under the “Billing History” section. A comprehensive list of tax sale notices can be also viewed here.

For more information on the Tax Sale process, please call (202) 727-4TAX (4829).

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OTR Offers Special Assistance for Businesses Needing A Certificate of Clean Hands

The Office of Tax and Revenue (OTR) is committed to ensuring that all eligible businesses are able to receive a Certificate of Clean Hands (CCH) in order to renew their liquor licenses with the ABRA.

We will have dedicated staff available from May 18 through May 20 to review requests for Certificate of Clean Hands (CCH) for bars, restaurants, and other establishments seeking to renew its liquor licenses prior to the May 31st deadline.

Any businesses seeking a license renewal before the upcoming deadline, may make an appointment online at: https://appt.cfo.dc.gov/qmaticwebbooking/index.html#/. When making an appointment, under “Purpose of Visit,” please indicate “ABRA renewal.” All appointment requests must include a valid daytime telephone number. This will ensure that our specialists are able to contact the business with any pertinent information prior to its scheduled appointment time.

If you have questions related to a Certificate of Clean Hands (CCH) request, please call our Collections Division at (202) 724-5045, or send an e-mail to CleanHands.Cert@DC.gov.

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Webinar: Learn How DC Taxes Rental Income

On Tuesday, April 5 at 11am EST, the Office of Tax and Revenue will host an interactive discussion on the taxation of rental income.

Participants will learn how to:

  • Report rental income on their District tax returns
  • Obtain a short-term or vacation rental license
  • Qualify for a Homestead tax credit
  • Obtain a Certificate of Clean Hands
  • Come into compliance if they have not correctly reported rental income

To join the discussion, please RSVP, via e-mail, to OTR’s communications team at communicationsotr@dc.gov. A Teams link will be forwarded to all registered participants.

Note: Personal tax account information will not be discussed at the event. For assistance in addressing a specific tax matter, please contact the Customer Service Center at (202) 727-4TAX (4829).

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Tax Returns Processing and Refunds

The Office of Tax and Revenue’s (OTR) enhanced security measures to safeguard taxpayers’ identities and to combat theft/tax refund fraud may result in longer processing times for some tax returns and associated refunds. The processing window for selected tax returns could be up to eight weeks.

Check Refund Status: Taxpayers can check the status of their refund via OTR’s tax portal, MyTax.DC.gov by using the “Where’s My Refund” tool on the homepage. This feature is available 24/7 and will provide an update on refund statuses.

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Sales Tax Exemption for At-Home COVID-19 Tests

Pursuant to the DC Code 47-2005(14), at-home COVID-19 tests are exempt from the District’s sales and use tax. Retail businesses should no longer add a sales tax to at-home COVID tests purchases.

For additional information, please contact the Office of Tax and Revenue’s Customer Service Center at (202) 727-4829.

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Individual Income Tax Filing Season Officially Begins Today

Today, the Office of Tax and Revenue (OTR) officially begins accepting and processing electronically and paper filed District individual income tax returns for Tax Year 2021. 

The following reminders will assist District residents in preparing their returns this filing season:

File Electronically (e-File) and Direct Deposit: OTR expects to receive more than 400,000 individual income tax returns this year. E-filing tax returns and direct deposit are a winning combination this tax filing season. E-filing is faster, helps minimize errors, and provides an electronic filing acknowledgement. Opting to direct deposit tax refunds to a chosen bank account is safer and there is no risk of a lost or stolen check.

D-40 Individual Income and Standalone Schedule H Tax Return: Taxpayers will have the option to file their Tax Year 2021 individual income or standalone Schedule H tax return by logging into their MyTax.DC.gov account.

Tax Returns Processing and Refunds: OTR’s enhanced security measures to safeguard taxpayers’ identities and to combat theft/tax refund fraud may result in longer processing times for some tax returns and associated refunds. The processing window for selected tax returns could be up to eight weeks.

Check Refund Status: Taxpayers can check the status of their refund via OTR’s tax portal, MyTax.DC.gov by using the “Where’s My Refund” tool on the homepage. This feature is available 24/7 and will provide an update on refund statuses.

Individual Income tax filing deadline: The filing deadline to submit Tax Year 2021 individual income tax returns or an extension to file and pay tax owed is Monday, April 18, 2022. OTR will be closed on Friday, April 15 in observance of Emancipation Day.

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