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Business Taxes | OTR | Doing Business 2.0


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The Office of the Chief Financial Officer presented at the Washington, DC Economic Partnership's Doing Business 2.0 seminar on Business Taxes (2/13/13).

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Business Taxes | OTR | Doing Business 2.0

  1. 1. Serving the Citizens of the District of Columbia District of Columbia Office of the Chief Financial Officer Office of Tax and RevenueWashington DC Economic Partnership Stephen M. Cordi Deputy Chief Financial Officer February 13, 2013 1
  2. 2. FY 2013 Tax Changes • For each of the last 3 years, there have been significant tax changes as DC has tried to squeeze more money out of its tax system • By last year, revenues were on the rise, so that the need for additional revenues diminished • That has manifested itself in the form of both fewer and smaller tax changes 2Office of Tax and Revenue
  3. 3. Combined Reporting - 1 • As I reported last year, the DC Council enacted combined reporting, effective for tax year 2011 in September of 2011 • That legislation was largely based upon the MTC model legislation as modified by West Virginia • It took us until January of 2012 to propose comprehensive regulations and until shortly before the corporate due date of March 15th to release combined reporting schedules 3Office of Tax and Revenue
  4. 4. Combined Reporting -2 • The proposed regulations received a more favorable response than I would have expected • We did receive in excess of 50 public comments on the regulations. Some, of course, seemed to want us to repeal the legislation administratively and others were taxpayer specific • A number were comprehensive and helpful. That send us back to the drawing board for revisions and additions • The regulations were re-proposed in early September and became effective September 14, 2012, one day before the returns were due 4Office of Tax and Revenue
  5. 5. Combined Reporting -3 • Just before that, representatives of COST convinced us that we had statutory authority to extend the due date •We exercised that authority to extend the corporate franchise tax due date until October 15 • We have also bolstered our combined reporting effort by naming veteran auditor Nirmail Dhaliwal as Senior Agency Tax Advisor for combined reporting matters • Among his new responsibilities is consulting with corporate taxpayers on combined reporting technical issues •He may be reached at (202) 442-6632 or at 5Office of Tax and Revenue
  6. 6. Interest on Refunds – Rate Change • Under law in effect until 12/31/12, for general taxes, DC paid interest of 6% per year beginning 91 days for personal income taxes and 181 days for business taxes after claims for refunds are filed • Beginning January 1, 2013, the rate becomes variable annually in relation to the discount rate of the Richmond Federal Reserve Bank, not to exceed 6% • For 2013, the rate will be 2% per year • The change is not applicable to real property tax refunds which remains at 6% 6Office of Tax and Revenue
  7. 7. Expanded Business Use Tax Filing Requirement • Background • Applicable to businesses with withholding tax accounts but no sales tax accounts • First returns due for the October 1, 2011 through September 30, 2012 fiscal year on October 22, 2012 • Implementation issues 7Office of Tax and Revenue
  8. 8. Lower EFT Payment Requirement •Effective October 1, 2012, business tax payments of greater than $5,000 are required to be made electronically. •Prior to this the electronic payment requirement applied to business tax payments of greater than $10,000. 8Office of Tax and Revenue
  9. 9. Vendor Sales Tax Collection Requirement • Prior law provided that street vendors and food trucks would not collect the tax but remit $375 per quarter • Effective October 1, 2012, these vendors must collect the tax at 10% for food and 6% for other tangible personal property and remit the higher of the amount collected or $375 • The law permits “employers” to file on behalf of their vendors on a consolidated basis if done electronically • Returns are quarterly • The first returns were due for the December 2012 quarter on January 20, 2013 9Office of Tax and Revenue
  10. 10. Federal Vendor Offset • Reciprocal agreement with US Treasury whereby the Treasury offsets federal payments to satisfy DC tax and non-tax debt in exchange for DC offsetting its tax refunds and vendor payments to satisfy federal liabilities • Expected to be operational with 10 days • DC will be the 8th jurisdiction to participate • Operational in MD for some years 10Office of Tax and Revenue
  11. 11. Individual Income Tax Changes  Personal Exemption & Standard Deduction COLA  New formula for tax year 2013 – Standard deduction to $4,050; no change in personal exemption of $1,675  Also applies to Homestead - $69,100  Interest on Out of State Bonds  The applicability date of taxation of out-of-state exempt bond income is changed to 1/1/2013  Applies to interest on non-DC tax exempt bonds acquired on or after that date 11Office of Tax and Revenue
  12. 12. DC Joins the Free File Alliance • What is the Free File Alliance? • Why is DC joining now? • Taxpayers with income up to $57,000 will be able to file free federal and DC returns online through the Free File Alliance website • Taxpayers who used the system last year were notified by OTR of their eligibility for a voucher for free e-filing in 2013 • Intuit will make fillable electronic returns available beginning next year 12Office of Tax and Revenue
  13. 13. Contact Information • Tax Practitioner Hotline (202) 727-1435 • Main Call Center (202) 727-4TAX (4829) • Problem Resolution (202) 442-6348 • Collections Division (202) 724-5045 13Office of Tax and Revenue