The District of Columbia (DC) Council recently enacted the “Vendor Sales Tax Collection and Remittance Act of 2012.”2012 D.C. Laws No. L19-0149 (Act No. A19-0355). The act changes the rules governing how street vendors collect and remit sales tax, amending D.C. Code sec. 47-2002.01.
Prior to these changes, licensed “street vendors” were required to make payments of $375 per quarter instead of collecting and remitting sales tax. This meant that increasingly popular food carts and trucks paid a flat annual fee of $1,500, while restaurateurs had to collect the District’s 10% on all meals sold to customers.
The Act, which will go into effect October 1, 2012, requires licensed street vendors (including food trucks, sidewalk food carts, and merchandise vendors) to collect sales taxes. Then, the vendors must make minimum sales tax payments of $375 to the Office of Tax and Revenue each quarter. Additionally, DC will require vendors that collect more than $375 of sales taxes in a quarter to remit the full amount collected. Thus, all vendors will be liable for a minimum sales tax payment of $375 per quarter, and those street vendors that collect more than $375 in any given quarter must report and remit the total amount of sales tax they collected.
The District of Columbia Office of the Chief Financial Officer (OFCO) recently estimated that approximately 1,200 licensed street vendors pay the District the quarterly payment instead of collecting sales tax. D.C. Council Comm. Rep. on Bill 19-163, the “Vendor Sales Tax Collection and Remittance Act of 2012″ (Mar. 1, 2012). The OFCO estimates that implementation of this Act will produce an additional $3,451,000 in revenue through 2015.
Please note that individual vendors that hold licenses as an Employee License Holder for a Business Beneficial License Holder will not be responsible for remitting a minimum sales tax. The Business Beneficial License Holder will ultimately be responsible for reporting and remitting all sales tax collected by its employees. For purposes of this act, “Business Beneficial License Holder” means a corporation, limited liability company, partnership, or other business entity that is the beneficial owner of the vending license held by an Employee License Holder. An “Employee License Holder” means an individual street vendor who holds a vending license as an employee, agent, or representative, or for the ultimate benefit, of a corporation, limited liability company, partnership, or other business entity.