REMOTE SELLERS

1. Who is a remote seller?

A remote seller is an out-of-state retailer (i.e., a person engaged in the business of making sales at retail) that has no physical presence in the District of Columbia.

2. What responsibilities does a remote seller have under the new sales tax law?

Beginning on January 1, 2019, remote sellers must collect and remit District sales tax if they had, in the previous calendar year, or will have, in the current calendar year, more than $100,000 of gross receipts from retail sales delivered into the District or more than 200 separate retail sales delivered in the District.

3. What is the economic nexus standard in the District that will require a remote seller to obtain a retail license and begin collecting and remitting the District sales tax?

In the District, a remote seller whose gross revenue from sales delivered into the District exceeds $100,000 or who has more than 200 separate retail sales delivered in the District in the previous calendar year or the current calendar year has economic nexus with the District and is responsible for obtaining a retail license, as well as remitting District sales and use tax.

4. When does a remote seller’s obligation to collect the sales tax begin?

If a remote seller had more than $100,000 of gross receipts from retail sales delivered into the District or more than 200 separate retail sales delivered in the District in 2018, that remote seller’s obligation to collect District sales tax began on January 1, 2019.

If a remote seller did not have more than $100,000 of gross receipts from retail sales delivered into the District or more than 200 separate retail sales delivered in the District in 2018, that remote seller must begin collecting District sales tax in 2019 as soon as its sales into the District exceed the $100,000 gross receipts threshold or 200 transaction threshold. No tax will be owed on those transactions occurring in 2019 before the applicable threshold is crossed. That remote seller must also continue to collect District sales tax for 2020 because it crossed one or both thresholds the previous year in 2019.

For example, assuming a remote seller had not yet received more than $100,000 of District gross receipts, a remote seller must begin collecting sales tax on its 201st sale. The remote seller’s obligation will also extend to the following calendar year, even if sales in that year are below the applicable thresholds.

5. Do sales to purchasers in the District with valid District sales tax exemption certificates count towards the economic nexus thresholds?

Yes, sales to District purchasers with valid District sales tax exemption certificates count when determining whether the more than $100,000 gross receipts threshold or the more than 200 separate retail sales threshold has been met.

6. If a remote seller makes sales on its own website and on a marketplace, do both sales streams count towards determining if the economic threshold has been met?

Yes, if a remote seller makes sales on its own website and on a marketplace, both sales streams count when determining if the economic threshold has been met.

For example, if a remote seller makes 100 sales to the District on its website, and 150 sales to the District through a marketplace, the total sales exceed 200, and the remote seller must collect tax on the sales made on its website.

7. Are foreign remote sellers required to collect District sales tax?

Yes, a foreign remote seller is required to register and collect and remit District sales tax if the remote seller meets the thresholds for economic nexus in the District.

8. May a remote seller who does not have more than $100,000 of gross receipts or more than 200 transactions in the District voluntarily obtain a retail license and begin collecting the District Sales and Use Tax?

Yes. Any remote seller whose activity in the District does not exceed the relevant thresholds may voluntarily obtain a retail license and remit sales and use tax at any time.

9. Are out-of-state sellers who deliver goods or taxable services in the District through employees or independent contractors considered “remote sellers?”

No, sellers who deliver goods or taxable services in the District through employees or independent contractors have a physical presence in the District regardless of whether they have a location in the District and must collect and remit District sales tax on its gross receipt for all sales in the District. Because these sellers have a physical presence in the District, they are not remote sellers and the applicable sales thresholds for remote sellers do not apply.

MARKETPLACE SALES

10. Is a “marketplace facilitator” required to collect District of Columbia sales tax on behalf of “marketplace sellers?”

Beginning on April 1, 2019, a “marketplace facilitator” is required to collect District sales tax on behalf of its “marketplace sellers.”

A “marketplace facilitator” is a person that provides a marketplace that lists, advertises, stores, or processes orders for retail sales subject to tax under this chapter for sale by such marketplace sellers, and directly or indirectly collects payment from a purchaser and remits payment to a marketplace seller regardless of whether the marketplace facilitator receives compensation or other consideration in exchange for its services.

A “marketplace seller” is a person that makes retail sales through a marketplace operated by a marketplace facilitator.”

Any agreement between a marketplace facilitator and a marketplace seller regarding the collection and remittance of District sales tax does not relieve either the marketplace facilitator or the marketplace seller from liability for any District sales tax due.

REGISTRATION WITH OTR

11. How should remote sellers register with OTR to collect and remit District sales tax?

Remote sellers should register as a new business online using Form FR-500 and indicate that they are a remote seller when prompted.

12. How should marketplace facilitator register with OTR to collect and remit District sales tax?

Marketplace facilitators should register for a marketplace sales tax account with the District of Columbia and begin collecting and remitting tax immediately on their marketplace sales. Those marketplaces that are already registered with the District as a vendor or a remote seller should add an additional marketplace account to their customer profile.

13. How should sellers register with OTR if they operate as both a remote seller and as a marketplace facilitator?

Sellers operating as both a remote seller and as a marketplace facilitator should register for two sales and use tax accounts and report their remote sales and their marketplace sales separately.

14. How should sellers register with OTR if they operate as both a retailer with a location in the District and as a marketplace facilitator?

Sellers operating as both a traditional vendor and as a marketplace facilitator should register for two sales and use tax accounts and report their traditional brick and mortar sales and their marketplace sales separately.

15. Where can I get assistance in registering with OTR to collect District sales tax?

Taxpayers can contact OTR’s e-Services Unit Monday through Friday from 8:15 a.m. to 5:30 p.m. by utilizing the web message feature available in MyTax.DC.gov. They may also call (202) 759-1946 or send an email to [email protected].

16. Where can I receive answers to general District sales and use tax questions?

General District tax law FAQs, including sales tax FAQs, are available at: https://mytax.dc.gov/WebFiles/faq/faq.html.