District of Columbia: Sales Tax Handbook
What constitutes sales tax nexus in District of Columbia?
One of the more complicated aspects of District of Columbia sales tax law is sales tax nexus, the determination of whether a particular sale took place within the taxation jurisdiction of District of Columbia, and is thus subject to state (and possibly local) sales taxes.
If a vendor's transactions are determined to have nexus in District of Columbia, the vendor must register for a District of Columbia sales tax license and collect appropriate sales taxes from the buyer for all transactions with nexus in the state. On this page, we have compiled some of the most commonly needed facts about what constitutes sales tax nexus in District of Columbia.
Sales Tax Nexus in District of Columbia
According to the law in the District of Columbia, retailers who have tax nexus can be defined in several distinct ways. To have tax nexus, the business must meet a minimum of one of the following requirements:
Having an office or any other place of business(including but not limited to sample rooms, warehouses, places of storage, or sales room) within the district and having any representitive(employee, agent, salesman, etc.) in the District of Columbia for the purpose of makeing sales at retail, or taking orders for these sales
For additional details on sales tax nexus law in District of Columbia, see the nexus information page from the Office of Tax and Revenue at http://dccode.org/simple/sections/47-2201.html
Taxation of Internet-Based Sales in District of Columbia
NOTE: 2018 Supreme Court Ruling Regarding Online Sales Taxes
In the 2018 Supreme Court case South Dakota vs. Wayfair Inc, Et Al., the court overturned a previous ruling that required a merchant to have physical nexus in order for a state to collect sales tax. This means that any state is now free to enforce collection of sales taxes on out-of-state online merchants. The information provided here may be subject to change, and many states are expected to begin collecting online sales taxes following this ruling.
Generally, District of Columbia does not charge sales tax on Internet-based transactions determined to have nexus within the state. This means that purchases from Amazon.com and other Internet-based retailers may be sales-tax-free.
The nexus status and taxability of Internet-based sales, by vendors and/or consumers within District of Columbia, have been the subject of hot debate in recent years. You can learn more on our introduction to Internet-based sales taxes.
Does my business have tax nexus in District of Columbia?
The folks at the sales tax compliance company Avalara are an approved District of Columbia sales tax partner, and you can use their free District of Columbia nexus wizard tool to determine whether or not your business has nexus, and is therefore required to pay District of Columbia sales taxes. If you're interested in automating your sales tax collection and filing process, click here to get more information.
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