DC Sales Tax 101 States

Washington DC Sales Tax Guide

by Mark Faggiano

District of Columbia sales tax

This blog post may now be out of date. For our most up-to-date info on Washington D.C. sales tax, check out our “Washington D.C. Sales Tax Guide for Businesses.

Confused how sales tax works around the country? It’s not a surprise, considering every single state (and in district like DC!)  has its own rules and regulations regarding these taxes. We know how frustrating it is, so we’re going around the country highlighting various rules and regulations when it comes to sales tax to help you out. Today, we have Washington DC!

You’re a merchant living anywhere but Washington DC

Do you have a business that doesn’t exist within Washington DC lines and otherwise have no nexus in DC? If so, then you don’t have to worry about sales tax. Congrats!

You live and/or operate your business in Washington DC

If your business actually exists within Washington DC, then you must collect and remit sales tax. Washington DC is destination-based so your concern is where your customer lives, not where your business is. Normally this would be very complicated, but tiny Washington DC has made things simple by having a 5.75% universal rate for the whole district. Nice!

You live-out-of-state but use a 3rd party fulfillment service like FBA

Do you have nexus in Washington DC? Not sure? There are no Amazon fulfillment centers in the nation’s capital, but here’s what you need to know if you store inventory or use a 3rd party fulfillment service based in the district. Here is a remarkably in-depth guide to nexus in DC:

District vendors are required to collect sales tax, but the obligation of out-of-state vendors to collect the tax is conditioned on whether the vendor has sufficient “nexus” or contacts with the District.

“Vendor” includes every person or retailer engaging in business in the District and making sales at retail.

“Engaging in business in the District” includes any activity in connection with the selling, delivering, or furnishing in the District, or any activity in the District in connection with the selling, delivering, or furnishing in the District, of tangible personal property or services sold at retail. The term shall include but not be limited to the following acts or methods.

–          The maintaining, occupying or using, permanently or temporarily, directly or indirectly, or through a subsidiary or agent, by whatever name called, of any office, place of distribution, sales or sample room or place, warehouse or storage place, or other place of business.

–          The having of any representative, agent salesman, canvasser, or solicitor operating in the District for the purpose of making sales at retail, or the taking of orders for such sales.

Washington DC nexus

As stated above, Washington DC is destination-based, meaning you need to only worry where your customer lives. However, they’ve managed to simplify it by only having a 5.75% universal rate. No local rates to worry about!

Filing sales tax in Washington DC

To get started, you should register your business in Washington DC. After you do, you can start collecting sales tax.

A Sales and Use Tax Monthly Return must be filed for each month by the 20th day of the month following the period being reported. However, if your liability is consistently less than $100 per period, file an annual return instead, which is due annually on October 20th. If your sales and use tax liability is consistently between $201 and $1,200 per period, you must file a quarterly return. You can find all these forms on the Sales and Use Tax Forms page.

To pay online, sign up for an account at the Office of Tax and Revenue.

Sales tax on shipping

According to a rep at the Washington DC Department of Revenue, shipping costs ARE taxable even if they are separately stated on an invoice.

Summary: Washington DC makes something simple for once

Contrary to most laws and mess that come out of our nation’s capital, sales tax is pretty darn easy to understand. The only rate you have to worry about is 5.75%, as that’s the universal rate – there are no local rates to worry about. So if you have nexus or your business is physically located in Washington DC, collect 5.75% from customers there.

Make sure to register before collecting sales tax. Then you should start paying every month on or before the 20th. If your liability ends up consistently less than $100 per period, file annually. If it’s consistently between $201 and $1,200 per period, file quarterly. You can sign up for an account at the Office of Tax and Revenue to pay or file through paper forms.

  • Question please. I’m a new seller on Etsy.com with a DC address. My business is licensed in the District for online sales of handcrafted jewelry from a home based op. Am I required to collect taxes from the online sales? Thank you in advance for your info.

    • Hi there,

      You are only required to collect sales tax in states (or districts!) where you have sales tax nexus. Here’s what constitutes nexus: http://taxjar.wpengine.com/sales-tax-nexus-definition/

      If you only have nexus in DC, then you’d only charge sales tax to buyers in DC. I hope this helps!

      • Thank you!
        That confirms what I’ve been looking for.
        I appreciate your quick response.

  • Pitlie

    What are the business license requirement for DC, for a company filing sales tax return and property tax returns in the DC?

  • John Gaylord

    Isn’t the tax rate in DC now 5.75%?

    • You are right! This changed as of October 2013. Great catch and I’ve updated the post. Thank you!

  • Cathy Frederick

    We are a nonprofit in Maine. We are having an event in Washington DC, New York and Boston. At this event we are selling T-shirts. When we sell them in Maine we charge Maine sales tax and file a Maine Sales Tax return. When we sell these same T-shirts in other States do we still use the Maine Sales Tax Rate? The event will be a one time evening event.

    • Hi Cathy,

      Unfortunately it wouldn’t be Maine sales tax if you’re in another location. You’d need to find out what each of those states says about temporary sales tax. I have post here about trade shows that will apply somewhat: http://taxjar.wpengine.com/does-attending-a-trade-show-create-sales-tax-nexus/ And the good news that it looks like that in NY and MA selling a single time doesn’t create sales tax nexus, though you may want to contact them and DC (who don’t have any explicit info on their website about temporary sales) to make sure that’s the case. You can find their best numbers here: http://taxjar.wpengine.com/state-sales-tax-phone-numbers/

      I know this creates a chore, but I hope it helps!

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