Bulk Sales Act
Under this act, a purchaser of an existing business must notify the Office of Tax and Revenue of the sale and its terms and conditions by certified mail 15 days before taking possession of the business. Failure to comply with this requirement can result in the purchaser being held responsible for the seller’s unpaid tax liability.
For further information contact the Special Investigations Unit at (202) 724-5045 or send a notification of sale to:
Office of Tax and Revenue
PO Box 37559
Washington, DC 20013
Attention: Special Investigations Unit
Clean Hands
The Clean Hands Law (DC Official Code §§47-2861 through 47-2866) provides that an applicant for a license or permit cannot owe more than $100 to the District government. If an applicant for a license or permit has failed to file District tax returns, they are also subject to the Clean Hands Law and will be denied the license or permit. A Clean Hands certification form is required to be submitted with any application for a license or permit in the District of Columbia, including a Basic Business License.
The Office of Tax and Revenue (OTR) Collection Division receives Clean Hands certifications from various District agencies. The following steps are taken to research these certifications:
- OTR researches each application through its computer system for any accounts receivables owed in aggregate of $100 or more and whether District tax returns have been filed.
- Upon completion of this investigation, OTR may discover that the applicant is not in compliance with the filing requirements of the District of Columbia. A non-compliance list is then prepared and forwarded to the agency from which the applicant is seeking a license or permit.
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The licensing/permitting agency makes the determination as to whether an applicant knowingly falsified this certification. If so, the District government shall:
- Immediately revoke each license or permit requested by the applicant for which they submitted a falsified certification.
- Fine the applicant $1,000 for each false certification.
Certificate of Clean Hands (Formerly Certificate of Good Standing)
Discovery Program
Each year, the District of Columbia loses tens of millions of dollars in potential revenue because many individuals and businesses fail to file and pay District taxes. The District’s Office of Tax and Revenue (OTR) has engaged MUNISERVICES to help close this “tax gap.”
Since 1978, MuniServices, LLC has consistently provided the highest level of municipal revenue enhancement services--helping municipalities preserve, enhance, and manage their revenue base. Working exclusively in the government sector, MuniServices is one of the few firms in the United States providing Revenue Discovery, Audit, Collections, and Information Services that encompass every municipal tax source. They identify non-reporting and non-compliant businesses, assist businesses through the registration process as well as educate businesses. MuniServices helps local governments fulfill the expanding demands of their constituents, even in the place of flat or low-growth revenue performance. No other single organization can provide an equivalent variety and depth of revenue enhancement services.
MuniServices extensive service offerings are used in part, and in whole, by over 260 cities throughout the United States; in California alone, MuniServices serves 9 of the 10 largest cities. To-date, MuniServices has recovered over $1 billion in tax revenue for its clients.
If you have received a notice of a potential tax liability from Muniservices and have questions or require assistance in filing the appropriate tax return, call Muniservices’ toll free number dedicated to taxpayers: Phone 1-800-800-8181 Fax: 1-818-991-5365.
MuniServices Departments
MuniServices has a number of different departments that are individually and collectively dedicated to fulfilling the specific requirements of each client. Because each department specializes in a major tax revenue source, management and staff are knowledgeable, experienced, and readily able to handle new challenges.
Enforcement Actions
|
Action |
Description |
|---|---|
|
Lien |
A tax lien may be filed with the District of Columbia Recorder of Deeds if a taxpayer neglects or refuses to pay the District within 10 days after receiving a Notice of Tax Due and a demand for payment. The tax lien puts the public on notice that the District has a preferred claim over other creditors. A lien can affect a taxpayer's credit rating and can prevent them from borrowing money or selling real estate. If the taxpayer attempts to sell real estate in the District, the taxes due will be paid out of the sale proceeds, at which time the lien can be released. |
|
Levy |
To collect the proper amount of tax due, the Office of Tax and Revenue (OTR) may seize wages, bank accounts, accounts receivable, and other money held by third parties and owed to the taxpayer. When OTR issues a levy, the law requires the person holding the money to turn it over to OTR. |
|
Seizure |
At times it may be necessary to seize property such as a residence, business establishment, business property, automobile, boat, etc. After the property has been seized, OTR may sell the property at a public auction if the tax remains unpaid. The proceeds of the sale will first pay the expenses of the sale, and the balance will be applied to the delinquent taxes. |
|
Collection Agencies |
The Office of Tax and Revenue (OTR) use the services of collection agencies to collect delinquent taxes. The collection agencies focus on stop-filers, non-filers and taxpayers who are unknown to OTR, but are conducting business in the District of Columbia and have not complied with District tax filing requirements. The District utilizes the services of MuniServices and PRA Government Services. If you have received correspondence or need to contact a representative from one of these collection agencies, their contact information is as follows: MuniServices, LLC or MuniServices, LLC RSI Enterprises, Inc. All Payments and Correspondence should still be sent to: Office of Tax and Revenue |
|
Liability Offset |
Under this program, all liabilities due to OTR are cross-matched against any pending District or federal tax refunds. OTR will also levy against any District government contracts for work performed or services rendered. Once the liability has been paid in full, the levy will be released. If the liability is not satisfied, OTR will continue to intercept any pending funds, and the taxpayer or vendor will receive notification of the offset. |
|
Sales Tax Certificate Revocation |
OTR may choose to revoke a sales tax certificate in lieu of seizure of a business. When this action occurs, the business owner is prohibited from conducting sales, and, in most cases, other District licenses held by the business may immediately be revoked by other District licensing agencies under the Clean Hands Act. |
|
Trust Fund Recovery Assessment |
Collected sales and employer withholding taxes are considered trust funds. If a corporation, LLC or partnership does not remit these taxes to OTR, individual(s) responsible for making financial decisions for the business (such as corporate officers, bookkeepers, and accountants) may be held personally liable for payment of the unpaid trust fund taxes. Individuals held liable for unpaid trust funds are subject to the normal tax collection process, unless payment is voluntarily made. |
Extension of Time to File
An extension of time to file a return may be requested on or before the due date of the return. The extension is limited to six (6) months. No additional extension of time to file will be granted beyond the six months unless the taxpayer is outside the continental limits of the United States.
Note: Copies of a federal request for extension of time to file are not acceptable.
The extension of time to file is not an extension of time to pay. Full payment of any tax liability, less credits, is due with the extension request. If the tax liability is not paid in full with the extension, the request for an extension will not be accepted, and the taxpayer will be subject to a failure-to-pay penalty and interest on any tax due.
FR-127: Extension of Time to File Income Tax Return
Fees
The Office of Tax and Revenue assesses a collection fee of 20 percent on all unpaid balances that are owed for a period of 90 days or more and that have not been referred to a collection agency.
Taxpayers may avoid the fee by paying amounts due within 30 days of a Notice of Enforcement Action.
Forms
Notice of Tax Due
Taxpayers are responsible for filing their tax returns on time and paying the full amount owed. If a tax is not fully paid, a notice of tax due will be mailed. In addition to the amount of delinquent tax owed, taxpayers will be charged interest (10% compounded daily) and a failure to pay penalty (5% monthly up to 25%).
If full payment is not received within 15 days from the notice date, the Office of Tax and Revenue (OTR) will send a notice of enforcement by certified mail, and OTR will initiate enforcement action against the delinquent taxpayer.
If the taxpayer does not respond promptly to these notices, a representative from OTR’s Collection Division will contact them by telephone or in person concerning their tax problem. Taxpayers will be expected to make all necessary arrangements to immediately bring their account up-to-date, so there will be no need for further enforcement action to be taken.
If a taxpayer has questions regarding a notice of tax due or enforcement, they should call the telephone number on the notice immediately.
Special Events
A “special event” is an uncommon, unique, noteworthy, or extra occurrence of a specific activity open to the general public and designed, advertised, or promoted for an identified purpose. The event is to be conducted or held on a designated day or series of days, whether held outdoors, indoors, or both, in a public or private facility at which at least 50 vendors will be present.
Special events include auctions, shows, celebrations, circuses, expositions, exhibits, fairs, festivals, fundraisers, historical re-enactments, movies, pageants, parades, and sporting events, the conduct of which has the effect or intent to draw persons and create an atmosphere or opportunity to sell taxable tangible personal property or services.
An activity that constitutes a “qualified convention or trade show activity” as defined in section 513(d) of the Internal Revenue Code of 1986 is not a special event. However, participants are liable for sales tax on taxable sales and must file a Form FR-500B.
For additional information on the District’s special events tax filing requirements, please contact Revenue Officers Patricia Richey at (202) 442-6824 or Annette Brown at (202) 442-6593, Monday through Friday, between the hours of 8:15 am and 4:30 pm. You may also visit the Office of Tax and Revenue Customer Service Center at 1101 4th Street, SW, Suite W270, Washington, DC 20024.
- Frequently Asked Questions
- Sales and Use Tax Forms
- FR-500B - Special Event Registration Application [PDF]
Voluntary Disclosure
The Office of Tax and Revenue (OTR) encourages businesses and individuals that are not in compliance with District tax laws to voluntarily come forward to bring their accounts into compliance through the Voluntary Disclosure Program. Voluntary Disclosure Program offers may be submitted anonymously or under the taxpayer's identity. OTR will waive civil penalties if the tax and interest is paid in full.
Note: If a taxpayer has been contacted by OTR or its representatives (i.e. Multistate Tax Commission or MBIA MuniServices), the taxpayer is not eligible for the Voluntary Disclosure Program.
The Audit Division of OTR's Compliance Administration administers the Voluntary Disclosure Program. A voluntary disclosure offer may be submitted to any tax auditor at OTR, but approval authority is vested in the Audit Division Chief, Assistant Audit Division Chief, or the Review and Conference Supervisory Tax Auditor.
Voluntary disclosure offers should be submitted to the following address:
Office of Tax and Revenue
Attn: Voluntary Disclosure
PO Box 96381
Washington, DC 20090-6381
Fax: (202) 442-6882