Washington DC flag

A new law requires Washington, DC, employers who file a withholding tax return, but are not a sales tax return, to file an annual use tax return by October 20, 2012.

Washington, DC, Employers: File Use Tax Return by October 20

  • 10/16/2012

Washington, DC, Employers: File Use Tax Return by October 20

A tax filing deadline is approaching for Washington, DC, employers who file a withholding tax return — but are not required to file a sales tax return. Recent legislation now requires these employers to file an annual use tax return, which is due on October 20, 2012, for the 12-month period ending on September 30, 2012.

The District of Columbia Office of Tax and Revenue (OTR) states that employers must pay use tax in lieu of sales tax for purchases made from sources outside Washington when no sales tax is charged or collected in the District. This includes items purchased online and in sales-tax-free states.

“Not all taxpayers covered by this new law may be required under the U.S. Constitution to file this return,” says Ellen McCabe, a state and local tax partner with CliftonLarsonAllen. “In general, the Constitution requires employers to only file sales and use tax returns if they have ‘minimum contacts’ and some form of physical presence or physical incursion with the state. An employee can be a resident of Washington and yet work for a company located outside of the District. If this is the case, then the employee’s residence within Washington may not establish the ‘minimum contacts’ needed for an employer to file a sales and use tax return.”

“Nonetheless, states and jurisdictions like the District of Columbia continue to explore new avenues of raising revenue, some of which attempt to expand filing requirements against traditionally accepted definitions or interpretations,” she adds.

The OTR will issue forms and instructions and automatically open a use tax account for all affected taxpayers. Those not already registered through the OTR electronic Taxpayer Service Center (eTSC) may register online to file their returns electronically.

How we can help

Contact your CliftonLarsonAllen tax advisor for more information on whether your business is affected by this requirement, and if so, how to proceed with submitting a return. Employers who are unable to speak to their tax advisor before October 20 should file an annual use tax return, even if they are reporting no use tax.

Contact the OTR

For more information from the OTR regarding filing or payment requirements, contact its customer service at 202-727-4TAX (4829) or taxhelp@dc.gov. For questions concerning electronic filing, contact the e-Commerce Division at 202-442-6313 or ETSCAccount@dc.gov.

Ellen McCabe, State and Local Tax Partner
ellen.mccabe@cliftonlarsonallen.com or 612-376-4807