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Learn the fundamentals of sales tax
Do you need to collect sales tax in Washington, D.C.?
You’ll need to collect sales tax in Washington, D.C. if you have nexus there. There are two ways that sellers can be tied to a state when it comes to nexus: physical or economic. Physical nexus means having enough tangible presence or activity in a state to merit paying sales tax in that state. Economic nexus means passing a states’ economic threshold for total revenue or the number of transactions in that state.
Do you have physical nexus in Washington, D.C.?
Washington, D.C. considers a seller to have physical nexus if the following apply:
- having an office, place of distribution, sales or sample room or place, warehouse or storage place, or other place of business
- having a representative, agent, salesman, canvasser, or solicitor for the purpose of making sales at retail, or the taking of orders for such sales.
You can click here to read exactly what the Washington D.C. Office of Tax and Revenue has to say about what constitutes sales tax nexus in Washington D.C.
Do you have economic nexus in Washington, D.C.?
Effective January 1 2019, remote sellers in Washington D.C. who exceed the $100K gross sales or the 200 transactions number are required to register, collect sales tax on sales that ship to Washington D.C., and remit the sales tax to the state.
You can read guidance on the text of Washington D.C. economic nexus law here.
Is what you’re selling even taxable?
Services in Washington, D.C. are generally not taxable, with some exceptions. However if the service you provide includes creating or manufacturing a product, you may have to deal with the sales tax on products.
Tangible products are taxable in Washington D.C. , with a few exceptions. These exceptions include certain groceries, and certain equipment sold to businesses. If you’re wondering if you need to charge sales tax on items you sell in Washington D.C. you can contact the District of Columbia Office of Tax and Revenue.
How to get a sales tax permit in Washington, D.C.
You can register online at My Tax DC.
You need this information to register for a sales tax permit in Washington, D.C.:
- Your Federal Employer Identification Number and/or Social Security Number and the info for anyone authorized on your account
- Your legal form of business (e.g. partnership, corporation, sole proprietor)
- Your business address
- The names, titles, home address, and Social Security number of the proprietor, partners, or principal officers (mandatory)
- The former Entity Information if previously registered with the District
- The addresses for all locations where you will collect sales tax in the District of Columbia
It’s free to apply for a sales tax permit, but other business registration fees may apply.
Collecting Sales Tax
Luckily, collecting sales tax in Washington D.C. is fairly simple. There’s only one sales tax rate – 6%.
So if you have sales tax nexus in Washington D.C. and sell to a buyer in Washington you would charge them the 6% sales tax rate.
Should you collect sales tax on shipping charges in Washington, D.C.?
If you have nexus in Washington, D.C. and are shipping goods to Washington D.C. then shipping is taxable.
When are Returns Due?
When you file and pay Washington, D.C. sales tax depends on two things: your assigned filing frequency and your state’s due dates.
How often will you file sales tax returns in Washington, D.C.?
States assign you a filing frequency when you register for your sales tax permit. In most states, how often you file sales tax is based on the amount of sales tax you collect from buyers in the state.
In Washington D.C., you will be required to file and remit sales tax either monthly, quarterly or annually.
Washington D.C. sales tax returns are always due the 20th of the month following the reporting period. If the filing due date falls on a weekend or holiday, sales tax is generally due the next business day.
Filing Sales Tax
When it comes time to file sales tax in Washington, D.C. you must do three things:
- Calculate how much sales tax you owe
- File a sales tax return
- Make a payment
How to Calculate How Much Sales Tax You Owe in Washington, D.C.
Calculating how much sales tax you should remit to the state of Washington, D.C. is easy with TaxJar’s Washington, D.C. sales tax report.
All you do is connect the channels through which you sell – including Amazon, eBay, Shopify, Square and more – and we’ll calculate exactly how much sales tax you collected. All the information you need to file your Washington, D.C. sales tax return will be waiting for you in TaxJar. All you have to do is login.
How to File and Pay Sales Tax in Washington, D.C.
You have a few options for filing and paying your Washington, D.C. sales tax:
- File online – File online with D.C. Freefile. You can remit your payment through their online system.
- File by mail – You can use paper form FR-800A to file and pay annually, FR-800Q to file and pay quarterly, and FR-800M to file and pay monthly. You can find all your Washington D.C. sales tax forms here.
- AutoFile – Let TaxJar file your sales tax for you. We take care of the payments, too. You’ll never have to worry about spreadsheets, calculations or filling out complex sales tax returns.
Keep in mind that if your sales tax liability is $5,000 or greater, you are required to file and pay electronically.