State & Local Tax Impacts of COVID-19 for the District of Columbia – 2020

Thoughtware Alert Published: Dec 11, 2020 | Updated: May 05, 2021
SALT GOV COVID TW - 1

Information current as of December 31, 2020.

COVID-19 has changed life across the globe. Many taxing jurisdictions are taking mitigating actions to create social distance and aid taxpayers. The following is a running list of actions by jurisdiction, which generally result in additional time to file and/or pay. Further, many jurisdictions have closed their offices to in-person use by taxpayers and suspended their audit and administrative functions. This alert doesn’t cover similar waivers from local-level taxing authorities. These developments continue to quickly evolve; check with your BKD Trusted Advisor or visit our COVID-19 Resource Center for current information as needed.

Information Specific to the District of Columbia

  • The real property tax payment due date for hotels and motels related to the first-half installment of the 2020 tax year is extended until June 30.
    • COVID-19 Response Emergency Amendment Act of 2020 and DOR Notice 2020-01, March 18, 2020.
  • The District is providing sales/use tax relief as follows: Monthly filers must file by March 20, 2020, for the period ending February 29, 2020, and returns must be filed by April 20, 2020, for the period ending March 31, 2020. Quarterly filers must file by April 20, 2020, for the period ending March 31, 2020. All sales tax due for these must be paid in full by July 20, 2020, to receive full relief abatement of interest and penalties.
    • OTR Notice 2020-02, March 20, 2020.
  • The District has extended filing and payment deadlines for 2019 individual and fiduciary income tax returns, partnership tax returns and franchise tax returns to July 15.
    • OTR Release, March 23, 2020.
  • The District announced that the deadlines for individual and business taxpayers to file their tax year 2020 estimated tax payments remain unchanged, with first quarter payments due April 15, 2020, and the second quarter payments due June 15, 2020.
    • OTR Release, March 26, 2020.
  • The District issued an emergency regulation: 1) allowing a hotel or motel to pay its real property tax installment for the first half of tax year 2020 through June 30; 2) clarifying that penalty and interest owed for prior periods are unaffected by the COVID-19 Response Emergency Amendment Act of 2020; and 3) clarifying that a hotel or motel may not benefit from sales and use tax penalty and interest relief.
    • D.C. Emergency Reg. §313.6, effective March 27, 2020, to July 21, 2020.
  • The District is automatically extending the deadline to file and pay individual income, trust income, and corporate income tax returns until July 15. Taxpayers can request a further extension by July 15 to file income, partnership, and franchise tax returns until October 15. The deadlines to file and make estimated tax payments remain unchanged.
    • OTR Notice 2020-03, April 9, 2020.
  • During the COVID-19 emergency, and including any further extensions, the OTR won’t seek to impose franchise tax nexus or unincorporated business franchise tax nexus solely based on employees or property used to enable employees to work from home being temporarily located in the District. Examples of property include computers, computer equipment, and similar property.
    • OTR Notice 2020-05, April 10, 2020.
  • The COVID-19 Response Supplemental Emergency Amendment Act of 2020 provides that small business loans awarded and subsequently forgiven are excluded from District gross income for purposes of the income and franchise tax.
    • Act 22-286, effective April 10, 2020, and expires July 9, 2020.
  • The District has further extended real property tax deadlines, including setting May 15 for first-level assessment appeals for tax year 2021 assessments and filing the Exempt Property Annual Use Report. June 1 is the new due date for filing the Income and Expense Report.
    • OTR Announcement, April 30, 2020.
  • The District enacted the Coronavirus Omnibus Emergency Amendment Act of 2020, which among other provisions excludes from the computation of District gross income public health emergency small business grants issued under the COVID-19 Response Emergency Amendment Act of 2020 to small businesses, nonprofits, and independent contractors or self-employed individuals ineligible for unemployment insurance.
    • Act 23-317, Laws 2020, effective May 13, 2020, and expires August 11, 2020.
  • The COVID-19 Response Supplemental Temporary Amendment Act of 2020 provides that small business loans awarded and subsequently forgiven under §1106 of the Coronavirus Aid, Relief, and Economic Security Act (Pub. L. No. 116-136) are excluded from District gross income for purposes of the income and franchise tax.
  • The chief financial officer may waive penalties and abate interest for failure to timely pay sales and use tax for periods ending on February 29, 2020, or March 31, 2020, provided that all taxes for such periods are paid in full on or before July 20, 2020. The waiver doesn’t apply to hotels or motels that are permitted to defer property tax under another provision of the temporary legislation.
  • The chief financial officer may waive penalties and abate interest for the first installment of real property tax for the 2020 tax year (due on or before March 31), provided the property owner pays the installment by June 20, 2020.
    • Act 23-323, Laws 2020, effective March 11, 2020, and expires July 9, 2020; pending congressional review and publication in the D.C. Register. This legislation extends the temporary provisions in Act 23-247 and 23-286.
  • District of Columbia recently enacted an emergency legislation law repealing all COVID-19-related emergency and temporary acts in effect and consolidating income, excise, sales and use, and property tax relief from them with some additional tax relief in a single legislation. The law includes measures 1) allowing an exclusion for public health emergency small business grants awarded pursuant to the Small and Certified Business Enterprise Development and Assistance Act and public health emergency grants authorized pursuant to the Advisory Neighborhood Commissions Act from the computation of gross income for individual income, corporate income, and trust income tax purposes; and 2) allowing corporations, unincorporated businesses, or financial institutions an 80 percent deduction for apportioned state net operating loss carryover to be deducted from their net income after apportionment for years beginning after December 31, 2017.
    • Act B23-0757, Laws 202, effective May 27, 2020, and expires on August 25, 2020.
  • District of Columbia legislation provides the same relief as the Coronavirus Support Emergency Amendment Act, which expired on June 8. The law also excludes public health emergency grants from the computation of gross income and allows corporations, unincorporated businesses, or financial institutions an 80 percent deduction for apportioned state net operating loss carryover to be deducted from their net income after apportionment for years beginning after December 31, 2017.
  • The emergency legislation repeals the following previously enacted COVID-19 legislation: (1) the COVID-19 Response Emergency Amendment Act of 2020 (Act 23-247); (2) the COVID-19 Response Supplemental Emergency Amendment Act of 2020 (Act 23-286); (3) the COVID-19 Supplemental Corrections Emergency Amendment Act of 2020 (Act 23-299); (4) the Coronavirus Omnibus Emergency Amendment Act of 2020 (Act 23-317); and (5) the COVID-19 Response Supplemental Temporary Amendment Act of 2020 (Act 23-323).
    • Act 23-328 (B23-759), Laws 2020, effective June 8, 2020, and shall remain in effect until no longer than September 6, 2020.
  • The District has provided additional clarification on sales and use tax in response to the COVID-19 pandemic. The guidance addresses legislation passed by the Council and confirms the extension of due dates for sales tax payments to July 20, 2020, for periods ending on February 29, 2020, and March 31, 2020, only. The guidance also specifies that penalties and interest for nonpayment of the tax will accrue from the original due date of March 20, 2020, and April 20, 2020, not the deferred due date of July 20, 2020. Lastly, the guidance explains the criteria for qualifying a taxpayer for tax relief under various scenarios of nonpayment.
    • OTR FAQs, July 24, 2020.
  • District of Columbia adopted individual income, corporate income, trust income, sales and use, excise, and property tax relief from the Coronavirus Support Congressional Review Emergency Amendment Act (set to expire on September 6). The law includes measures that 1) allow to exclude public health emergency small business grants awarded pursuant to the Small and Certified Business Enterprise Development and Assistance Act from the computation of gross income; 2) repeal certain COVID-19-related emergency and temporary acts; and 3) make technical amendments. 
    • Act 23-0334 (B23-0758), Laws 2020, applies June 9, 2020, effective July 7, 2020, for 225 days.
    • Act 23-0405 (B23-0869), Laws 2020, effective August 19, 2020, and expires November 16, 2020.
  • The District of Columbia won’t seek to impose franchise tax or unincorporated business franchise tax nexus solely based on employees or property used to allow employees to work from home temporarily located in the district during an emergency, including any further extensions, and for 90 days after the end to the emergency. 
    • OTR Notice 2020-07, September 3, 2020. 
  • The District of Columbia legislation clarified provisions of the Budget Support Act of 2020. The 1 percent gross sales tax is applicable on the sale of “to go” alcoholic drinks by restaurants. The definition of “COVID-19 relief” is amended to mean federal monetary unemployment assistance provided under the CARES Act, including tax credits but excluding federal economic impact payments or other stimulus relief not contingent on employment status. 
    • Act 23-0416 (B23-0908), Laws 2020, applies October 1, 2020, and in effect October 14, 2020.
  • The District of Columbia will allow income tax, withholding, and franchise business tax returns to be signed electronically, even those forms that cannot be filed electronically during the declared COVID-19 public health emergency. 
    • OTR Notice 2020-08, November 17, 2020.

For more information, reach out to your BKD Trusted Advisor or use the Contact Us form below.

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