The following discussions have been divided into several sections and are designed to assist you with your filing responsibilities with current information and rates. Although the list of examples of the services subject to sales tax are not intended to be all inclusive, it should be used as a guide to answer your questions regarding the application of sales tax to these services.
Services Subject to Sales and Use Tax
Real Property Maintenance Services
Sales tax at the rate of 5.75 percent is imposed on charges for the service of real property maintenance. Real property maintenance means any activity that keeps the land or the premises of a building clean, orderly, and functional, including the performance of minor adjustments, maintenance, or repairs which include: floor, wall, ceiling, and window cleaning; pest control; servicing in-ground and in-building swimming pools; exterior building cleaning; parking lot, garage and recreation area maintenance; exterior and interior trash removal; restroom cleaning and stocking; lighting maintenance; chimney and duct cleaning; and ground maintenance. Real property maintenance does not include: painting, wallpapering, or other services performed as part of construction or as a major repairs; or services performed under an employee-employer relationship.
Sales tax at the rate of 5.75 percent is imposed on charges for landscaping. Landscaping means the activity of arranging or modifying areas of land and natural scenery for an improved or aesthetic effect; the addition, removal, or modification of retaining walls, ponds, sprinkler systems, or other landscape construction services; other services provided by landscape designers or landscape architects, such as consultation, research, preparation of general or specific design or detail plans, studies specifications or supervision, or any other professional services or functions associated with landscaping.
Data Processing Services
Sales tax at the rate of 5.75 percent is imposed on charges for the service of data processing. Data processing service means the processing of information for the compilation and production of records of transactions; the maintenance, input, and retrieval of information; the provision of direct access to computer equipment to process, examine, or acquire information stored in or accessible to the computer equipment; the specification of computer hardware configurations, the evaluation of technical processing characteristics, computer programming or software, provided in conjunction with part of a sale, lease, operation, or application of computer equipment or systems; word processing, payroll and business accounting, and computerized data and information storage and manipulation; the input of inventory control data for a company; the maintenance of records of employee work time; filing payroll tax returns; the preparation of W-2 forms; the computation and preparation of checks; and any system or application programming or software.
Sales tax at the rate of 5.75 percent is imposed on charges for providing information services. Information services means the furnishing of general or specialized news or current information, including financial information, by printed, mimeographed, electronic, or electrical transmission, or by wire, cable, radio waves, microwaves, satellite, fiber optics, or any other method in existence or which may be devised; electronic data retrieval or research, including newsletters, real estate listings, or financial, investment, circulation, credit, stock market, or bond rating reports; mailing lists; abstracts of title; news clipping services; wire services; scouting reports; surveys; bad check lists; and broadcast rating services. Information services do not include information sold to a newspaper or radio or television station licensed by the Federal Communications Commission, if the information is gathered or purchased for direct use in newspapers or radio or television broadcasts; charges to a person by a financial institution for account balance information; information gathered or compiled on behalf of a particular client and my not be sold to others by the person who compiled on behalf of a particular client, if the information is of a proprietary nature to that client and may not be sold to others by the person who compiled the information, but does include a subsequent sale of the information by the client for whom the information was gathered or compiled.
Examples of Taxable and Non-Taxable Services
Current Tax Rates
1. Sales and Use Tax
- Sales or charges for rooms, lodging, or accomodations furnished to transients will be taxed at the rate of 14.5 percent.
- Food and Beverage Tax: Sales of food or drink served or prepared for immediate consumption, or sold in or by restaurants, lunch counters, cafeterias, hotels, snack bars, caterers, boarding houses, carry-out shops and like places of business, or from carts and motor vehicles or any other form of vehicle, are subject to tax at the rate of 10 percent.
- Sale/Rental of Motor Vehicle/Utility Trailers: Sales or charges for the rental of motor vehicles and utility trailers will now be taxed at the rate of 10 percent.
2. Corporation and Unincorporated Business Franchise Tax
The Corporation and Unincorporated Business Franchise tax rate is 9.975 percent, including a surcharge of 2.5 percent.
Taxpayers who currently have a Sales and Use Tax liability less than $100 per month are placed on an annual filing basis. However, due to the new changes in the tax law, some annual filers may exceed the filing limitations and their filing status should be changed. In order to comply with the tax regulations, you should call the Office of Tax and Revenue, Customer Service Administration on (202) 727-4TAX to report any necessary changes.
Any business not currently registered with the Office of Tax and Revenue that is performing any services or related activities associated with the "Services Subject to Sales and Use Tax," should call Tax Forms office at (202) 727-6170 to obtain a registration application. The Tax Forms office is located at the Office of Tax and Revenue, 941 North Capitol Street, NE, First Floor, Customer Service Walk-In Center.
How to Obtain Additional Information
All questions related to the items discussed in this notice should be directed to the Office of Tax and Revenue, Audit division, at (202) 442-6631.
Written requests should be addressed to:
Government of the District of Columbia
Office of Tax and Revenue
P.O. Box 556
Washington, DC 20044
Tax Collection Charts
If you need tax collection charts, call (202) 727-4TAX (4829) to have charts mailed to you or visit the Office of Tax and Revenue, Customer Service Walk-In Center located at 1101 4th Street, SW, Suite W270, Washington, DC 20024.