Serving the Citizens of the District of Columbia 1 District of Columbia Office of the Chief Financial Officer Office of Tax and Revenue Washington DC Economic Partnership Doing Business 2.0 Stephen M. Cordi Deputy Chief Financial Officer December 15, 2010

Office of Tax and Revenue 2 District Taxes District is unique – administers both state and city taxes State taxes – income, sales, withholding, alcohol tobacco, motor fuel City taxes – commercial and residential realty, personal property

Office of Tax and Revenue 3 District Taxes - 2 Surprise to many – it is much easier to do business in the District than in surrounding jurisdictions There is no need to deal with multiple jurisdictions to do business in one place – state, county and municipal governments Avoid overlapping and redundant taxation and regulatory regimes

Office of Tax and Revenue 4 Current Recession Like most jurisdictions in the country District revenues have fallen sharply since 2008 While they are showing signs of leveling off, they remain far below earlier levels Mayor and City Council have addressed the budget shortfall mostly by reducing expenditures and drawing on reserves.

Office of Tax and Revenue 5 Current Recession - 2 Tax increases that have occurred are largely at the margin In 2009, the general sales tax rate was increased from 5.75% to 6% The tobacco tax was increased first by a dollar and then by 50 cents Indexing of personal exemptions and the standard deduction for the income tax and the Homestead exemption

Office of Tax and Revenue 6 Current Recession - 3 The motor fuel tax was increased to match MDs 23.5 cent rate A 40% floor was put under the Homestead exemption In 2010, soft drinks were made subject to the sales tax Combined reporting was put into the financial plan but has not been enacted

Office of Tax and Revenue 7 Combined Reporting In 2009, the Council enacted legislation providing for combined reporting beginning with the 2011 tax year It later amended the legislation to specify that the Council would enact legislation providing for combined reporting for tax year 2011 The CFO has provided draft legislation to the Council, generally based on the Multistate Tax Commission model as enacted by West Virginia No bill has as yet been introduced in the Council

Office of Tax and Revenue 8 The DC Tax Amnesty Council also authorized its first tax amnesty in more than 15 years this summer It ended September 30 th The offer – waive penalties and fees in exchange for the payment of tax and interest Target of $20 million was met

Office of Tax and Revenue 9 The DC Tax Amnesty - 2 Now in the process of cranking up post- amnesty enforcement Centerpiece is the authority OTR has been granted to direct employers to set w-4 allowances of tax delinquents to zero Expect notices to be sent to employers in January Seizures and business closings which were put on hold during the amnesty have resumed for those that did not take advantage of the amnesty

Office of Tax and Revenue Budget Reconciliation As part of its 2011 budget balancing effort, the Council last week authorized $2 million for additional computer programming services to enhance OTR compliance efforts It also authorized the District to participate in the federal vendor offset program

Office of Tax and Revenue Filing Season OTR will discontinue mailing D-20 and D-30 tax booklets We will mail D-40 booklets this year with a notice that the 2011 booklets will not be mailed We are shifting sales tax booklets from a calendar year to a September fiscal year basis. Sales tax booklets mailed in January will contain returns through September 2011 and new fiscal year booklets will be mailed in October.

Office of Tax and Revenue 12 Contact Information Tax Practitioner Hotline(202) Main Call Center(202) 727-4TAX (4829) Problem Resolution (202) Collections Division(202)