D.C. Proposes Emergency Economic Nexus Legislation

The District of Columbia has proposed economic nexus legislation that would require remote sellers to collect sales tax on sales into the U.S. capital if they exceed an economic threshold. The purpose of the B22-0914, the “Internet Sales Tax Amendment Act,” is to amend D.C. code to require that internet sales tax be collected from online retailers, to direct generated revenues to lower the commercial property tax rate.

A remote seller is required to collect and remit sales tax if the seller meets either of the following criteria in the previous calendar year or current calendar year:

  • The seller’s annual gross revenue from the sale of tangible personal property, any product transferred electronically, or services delivered into the District of Columbia exceeds $100,000; or
  • The seller sold tangible personal property, any product transferred electronically, or services for delivery in the District of Columbia in 200 or more separate transactions in a 12-month period.

D.C. will not enforce these provisions retroactively before the effective date of the act. The act will take effect following the approval of the D.C. Mayor, a 30-day period of congressional review, and publication in the District of Columbia Register.

The D.C. Committee on Finance and Revenue held a public hearing on October 10, 2018 to present the act and allow individuals to testify. We are monitoring closely for an additional activity. (B22-0914 – Internet Sales Tax Amendment Act of 2018, introduced July 9, 2018)

UPDATE: Following a first reading of B22-0914 on November 13 and granting the bill preliminary approval, the D.C. Council gave their final approval of the post-Wayfair emergency legislation on December 4, 2018. The bill targets January 1, 2019 as the enforcement date for remote seller sales tax collection. To become law, the bill must be signed by the D.C. Mayor and sent to Congress for a period of 30 days for approval. We will be watching this approval process closely. For more information, you can visit the Council’s B22-0914 legislation tracking page.

Posted on October 29, 2018