Tax & Accounting Blog

District of Columbia Wants Remote Sellers to Collect Sales Tax

Indirect Tax, Sales and Use Tax, Sales Tax Nexus July 29, 2011

The District of Columbia recently passed tax legislation – D.C. Bill 19-203 –  subject to Congressional oversight, that creates a nexus presumption for remote sellers who sell goods or taxable services over the Internet to D.C. residents.  Authorizes the District to enforce sales tax on non-physically present sellers under certain circumstances.

The bill does not rely on affiliate nexus like we’ve seen in California, New York and  Illinois.  Rather, the District of Columbia casts a net over all taxable goods or services sold by remote sellers over the Internet to District residents.

The effective date of the remote seller nexus provisions is 120 days after the effective date of the Fiscal Year 2010 Budget Request Act of 2011.  The effective date of the Fiscal Year 2010 Budget Request Act is the expiration of the 30-day Congressional review period.  The Budget Request Act was submitted to Congress on July 8th.

Constitutional challenges are expected, especially in light of the physical presence standard set forth by the U.S. Supreme Court in Quill Corp. v. North Dakota.