America's Property Tax Advisor

DC Internet Sales Tax Revenue Could Cut
Commercial Property Tax


The District of Columbia Council passed legislation to lower taxes on commercial properties worth more than $10 million. To replace the property tax revenue, the district intends to begin collecting sales tax this month from online retailers that meet certain requirements.


Tax Rate May Drop


Large commercial property owners have been paying higher taxes since October 1 under the District’s $14.4 billion Fiscal 2019 budget. The budget included several tax increases to cover the $178.5 million annual commitment to fund the Metro mass transit system.


For the tax year beginning October 1, 2019, and each tax year thereafter, the Internet Sales Tax Amendment Act of 2018 seeks to lower the property tax rate for commercial properties valued greater than $10 million from $1.89 back to $1.85 for every $100 of assessed value.


The tax rate will only be reduced if the Internet Sales Tax (IST) revenue is in excess of the amount required for the financial plan for the current fiscal year. Because of this, the tax rate is not likely to be rolled back until Tax Year 2020 or later.


Nationwide Trend


The District’s move to mandate sales tax collections on remote sellers comes following the Supreme Court’s landmark South Dakota v. Wayfair ruling that clears the way for states and cities to collect and remit sales and use tax on internet purchases.


The D.C. legislation mirrors the law from South Dakota that requires tax be charged on companies with more than $100,000 in sales or more than 200 separate transactions. The Council included a section in the legislation that expands the definitions of vendor and retailer to include online marketplaces such as Amazon and eBay. In D.C., collection by marketplace platforms will be enforced beginning April 1.


Upon advice from the Office of Tax and Revenue, the bill specified that there will be no retroactive enforcement of collection and remittance requirements..