Employer Use Tax Return Act of 2012

October 4, 2012

The Washington, DC Department of Tax and Revenue has posted a notice about the Employer Use Tax Return Act of 2012, the details of which we are sharing for your information.

District of Columbia employers required to file a DC withholding return, including businesses and nonprofits, may face an additional filing requirement regarding use tax, which impacts purchases made outside the District of Columbia for use by the employer but for which no DC sales tax has been paid.

All DC-based employers including those that have made no purchases will now be required to file an annual use tax return (FR-800A) on or before October 20 and remit use tax payment for the year October 1, 2011 through September 30, 2012.  

Our presumption is that charitable organizations exempt from sales tax will not be required to pay use tax for purchases that fall within the entity’s exempt mission though we will continue to advise clients should new information become available. This exemption may not apply to business income generated from a nonprofit’s unrelated activity.  

The Employer Use Tax Return Act of 2012 modifies previous filing obligations for DC-based businesses. In the past, only those required to collect and remit sales tax also had a use tax filing obligation. The Act now requires use tax payment for those employers that do not collect and remit sales taxes.

The Act is intended to close a loophole through which purchases made outside the District of Columbia for use within the District were subjected to neither a sales tax nor a use tax obligation.

The District of Columbia will distribute forms and instructions to businesses required to pay use tax prior to the October 20 filing deadline.

Should you have questions about use tax filing obligations or other tax concerns, please contact Gelman, Rosenberg & Freedman’s experienced tax professionals today