State Sales Tax Nexus and General Overview

Need to Understand a State's Sales Tax Situation? Here it is...

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District-of-Columbia (DC)

DC Sales Tax - Name of Tax and General Application:

The District of Columbia imposes a tax on the privilege of performing retail sales of tangible personal property and providing certain services in the state. This tax is called a "sales tax". Additionally, there is a tax imposed on the use, storage or consumption of tangible personal property and some taxable services where no sales tax was paid upon purchase. This is called a "use tax".

DC Nexus - General Requirements:

The word "nexus" means a link or connection. If you are determined to have nexus to a U.S. state then you are subject to that state's sales and use tax rules and must collect and remit sales tax to the state. This is known as a "filing obligation."

Each state has a different definition of nexus. However, if the answer to any of the following questions is yes, it is likely that a company has nexus as legally defined in most U.S. States.

Does the company own property in the state? Does the company have employees living in the state? Does the company regularly send employees in the state to perform services? Does the company have an agent acting on behalf of the company in the state?

The District of Columbia requires retailers to collect and pay use tax when they sell, deliver or furnish tangible personal property or services. These requirements would also include maintaining or occupying a place of business or having representatives, agents or employees in the state.

DC Local Tax - Do Localities Impose Tax?

The District of Columbia does not impose local sales tax.

DC Resale Certificate Renewal Agreements:

The purchaser provides the vendor with a resale certificate at or before the time of sale. This certificate needs to include the purpose for the property being purchased, the purchaser's certificate of registration number and purchaser signature.

DC Resale Certificate Renewal Periods

The vendor (or seller) holds a certificate for each customer. The certificate is valid until canceled by the customer.

DC Statute of Limitations

Three years from the date the return was filed. Six years from the date the return was filed if tax understated by more than 25%.