Under D.C. Code, a sales tax is imposed upon all vendors for the privilege of making a “retail sale” or “sale at retail” of tangible personal property and certain selected enumerated services. A corresponding use tax is imposed on the use, storage, or consumption of any tangible personal property and service sold or purchased at retail.
Business owners who perform certain services in the District should be aware that taxable services includes security services, employment services, real property maintenance, data processing and information services. Sales for resale are specifically exempt from the definition of retail sales, however the sales for resale exemption only applies to tangible personal property and not to services.
The sale of or charges for digital goods are now included in the definition of retail sale. Digital goods includes digital audiovisual works, digital audio works, digital books, digital codes, digital applications and games, and any other otherwise taxable tangible personal property electronically or digitally delivered, streamed or accessed and whether purchased singly, by subscription or in any other manner, including maintenance, updates and support.
Under long established law set by the U.S. Supreme Court, sellers without a physical presence in a jurisdiction were not required to collect and remit sales tax to that jurisdiction. In 2018, the Court overturned the previous decision by issuing an opinion in South Dakota v. Wayfair, which held that such physical presence in a jurisdiction is not required for sellers to be obligated to collect and remit sales taxes to that jurisdiction.
Accordingly, the District has enacted recent legislation (Internet Sales Tax Emergency Amendment Act) which requires sellers without a physical presence in the District to collect and remit sales tax if they will 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. Additionally, the legislation requires marketplace facilitators (who provide a marketplace that lists, advertises, stores, or processes orders for retail sales) to collect and remit to the District sales tax on sales made on their marketplace.