DISTRICT OF COLUMBIA SALES TAX REGISTRATION
A seller’s permit is commonly known as a sales tax permit, reseller permit, resale certificate, sales tax exemption certificate, sales tax license or sales and use tax permit. In the District of Columbia it is formally referred to as a sales & use tax registration. This registration will furnish a business with a unique DC sales tax number, otherwise referred to as a DC Tax ID number. It is essential to know that obtaining this license is one of the first steps a business owner should take when starting a business. As the task of collecting sales tax falls on the business that makes the sales and not the consumer, any failure to remit sales tax may lead to interest charges, fines and/or criminal charges.
DO I NEED A SALES TAX PERMIT IN DC?
You need to get a sales tax permit and comply with sales tax laws if you have nexus or a connection to the state of District of Columbia. Nexus can be triggered by either physical or economic presence.
DC SALES TAX NEXUS:
You will have to comply with the District of Columbia’s individual sales tax laws and apply for a seller’s permit if:
- The business’s primary location (online store, storefront, office etc.) where it conducts operations is located within the District of Columbia
- The ownership or staff of the business (including sales people, contractors or agents) enter the District of Columbia to conduct business activities
- Personal property owned or leased in the District of Columbia is warehoused
- You sell taxable products or services in the District of Columbia from out of State (remote sellers that sell in District of Columbia and meet economic nexus thresholds)
- You sell products for shipment within the District of Columbia
- You want to hire employees or contractors in the District of Columbia
- You own a wholesale company that sells products for resale use in the District of Columbia (in most wholesale trade shows and markets it will be required to present a copy of your DC resale certificate in order to participate)
The examples above establish the connection (nexus) between the state and the seller. This allows the state to impose a sales tax collection obligation on the seller.
Additionally, as of June 2018, the Supreme Court of the Unites States ruled that nexus can also be established by an entity conducting economic activity in a state. This is what is known as remote seller nexus. If a remote seller has above a certain amount of sales volume and/or transactions in another state, they are required to register for sales tax. This means that all online sellers on marketplaces (Amazon, Sears, Walmart, Etsy, Big Commerce, Shopify, eBay etc.) may have to potentially collect and pay sales tax.
DC RESALE CERTIFICATE
Another closely related permit is a District of Columbia resale certificate -also known as a sales tax exemption certificate- provided after completing the OTR-368 Form, which grants your business the benefit of being able to buy goods without paying local sales tax on them. When doing this, you are the primary party responsible for collecting the tax from the customer when you sell the item. To complete the tax exempt form, you will need to provide your sales tax license number.
HOW TO GET A SELLER’S PERMIT IN DC
You can either fill out a paper application and file it in person or you can simply submit an online application. It is strongly recommended that all new businesses file for their sales tax permits through an online tax registration application as it is the easiest and fastest way to apply. For the fastest processing time, please have the following information ready to complete the online application for a DC Sales Tax Number:
Business name, physical/ mailing address & phone number
A short description of the business
The owner or officer’s Information
DC SALES TAX PERMIT APPLICATION
Register for a DC Sales Tax License Online by filling out and submitting the “State Sales Tax Registration” form. This license will furnish your business with a unique sales tax number (DC Sales Tax ID Number). Once you complete the online process, you will receive a confirmation with all relevant important information within 1-2 business days. Shortly after that, you will receive your documents directly from the DC Office of Tax and Revenue and your MyTax DC account will be ready for future use.