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Street Vendors to Collect Sales Tax in the District of Columbia

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.

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City seeking street vendor applicants

York city is seeking applications from anyone who’d like to operate a food cart on Continental Square in 2013.

It’s a fairly coveted slot, according to city health and sanitation officer Tamika Rascoe, who explained the city will hold a lottery among those who apply for the sidewalk food vendor license.

For the past few years, the city has offered the one-year contract to any vendor who’d like to operate a cart, Rascoe said. Past vendors have sold hot dogs, though there’s no limitations on what can be offered, as long as the cart passes inspection, she said.

“You just have to be in good standing with the city,” she said. “And I have to check the cart.”

City residents will be given first chance, Rascoe said, and applications can be submitted beginning at 8:30 a.m. Dec. 10. Others may apply starting at 8:30 a.m. Dec. 13, with the application period to run through 4:30 p.m. Dec. 14.

In the case of multiple applications, the city will hold a lottery to pick a winner, with the contract to start Jan. 1, 2013, Rascoe said. The license allows the vendor to sell at the intersection of George and Market streets.

A measure passed by the city council in 2011 reduced the number of street vendor licenses to one. It also doubled the distance vendors must stand from restaurants.

Last year, the city received three applications, said Rascoe, who added in that case the merchant selected wanted to sell.

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