How Does the District of Columbia Economic Nexus Work?

Daniel Kostrzewa
October 30, 2020

When the South Dakota v. Wayfair, Inc. decision was made, remote businesses needed to take note of how states and territories were requiring the collection and remittance of sales tax. The District of Columbia economic nexus was also impacted, with D.C. adopting requirements in line with South Dakota’s, which were laid out in the Supreme Court case. Here, we outline the larger points of how Washington, D.C. requires remote sellers to collect and remit sales tax.

Enforcement date:
January 1, 2019.

Sales/transactions threshold:
$100,000 or 200 transactions.

Measurement period:
Threshold applies to the previous or current calendar year.

Included transactions/sales:
All retail sales delivered into the District.

When You Need to Register Once You Exceed the Threshold:
Next transaction.

Summary: The District of Columbia requires remote sellers to collect and remit sales tax if in the previous or current calendar year they had gross receipts from all retail sales delivered into the District that meet the previously described threshold. Marketplace facilitators must collect sales tax on behalf of their marketplace sellers.

“Assuming a remote seller had not yet received more than $100,000 of District gross receipts, a remote seller must begin collecting sales tax on its 201st sale,” the District’s Office of Tax and Revenue states. “The remote seller’s obligation will also extend to the following calendar year, even if sales in that year are below the applicable thresholds.”

Washington, D.C. also states that the 20th of the month is the filing date for returns. If the 20th falls on a weekend or holiday, the return is due the next business day. Returns must be filed, even if businesses did not make any sales or no sales and use tax is due. Otherwise, a delinquency notice will be sent out.

Remote sellers that operate in the District of Columbia do not need to panic when sales and use tax rules change. Instead, it’s important to remain informed and check in with experts to remain compliant with all state and local requirements.

Washington, D.C. Sales Tax Resources: Our team is ready to answer your questions. Also be sure to check out our interactive sales tax nexus map to see how other states are adopting economic nexus changes.

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Daniel Kostrzewa

Daniel Kostrzewa is a Regulatory Counsel at Sovos. Within Sovos’ Regulatory Analysis function, Daniel focuses on domestic sales tax issues. Prior to joining Sovos in 2018, he worked as an attorney in Boston. Daniel received his B.A. in Economics from Boston College and J.D. from Boston College Law School. He is a member of the Massachusetts Bar.
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