taxes | entrepreneur road map | otr
DESCRIPTION
Stephen M. Cordi from the Office of the Chief Financial Officer gives entrepreneurs tips on new tax regulations at the Washington, DC Economic Partnership's Entrepreneur Road Map seminar (4/16/14).TRANSCRIPT
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Washington DC Economic Partnership
District of ColumbiaOffice of Tax and Revenue
Tax Update
Stephen M. CordiDeputy Chief Financial Officer
April 16, 2014
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Tax Revision Commission
Commission, chaired by former mayor Anthony Williams, released its recommendations to the Council on February 12, 2014
Made 10 major recommendations of which 5 have been picked up, at least in part, by Mayor Gray in his FY 2015 budget proposal
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Tax Revision Commission - 2
Mayor is proposing for business taxes Beginning for tax year 2015
Franchise tax rate of 9.4% Single sales factor An exemption for proprietary trading Unified treatment of tobacco tax –
essentially taxing other tobacco products on the basis of the rate the cigarette tax is applied to the wholesale price of cigarettes
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Tax Revision Commission - 3
Mayor is proposing for individual taxes Beginning for tax year 2015 New brackets:
0 - $10k @ 4% $10k - $40k @6.5% $40k - $60k @ 7.5% $60k - $350k @ 8.5% > $350k @ 8.95%
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Tax Revision Commission - 4
Failing to make the Mayor’s cut were: Expand the sales tax to more services – primarily
construction services Add a use tax line to income tax returns Increase general sales tax from 5.75% to 6% Increase standard deduction & personal
exemption to federal level & expand EITC to singles
Raise the estate tax threshold to $5.25 million Levy a local services fee of $25 per quarter on
non-governmental employers
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Qualified High Technology Company (QHTC) - 1
Revisions, enacted in March 2013: Eliminates exclusion for capital gain from
the sale of a QHTC asset held more than 5 years
Mandates that the minimum requirement for 2 employees work in DC
Requires that the 51% requirement of income from high tech activities relate to DC income only
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Qualified High Technology Company (QHTC) - 2
oEliminates technology zone requirementoBeginning 1/1/12, the 5-year period of the 0% franchise tax rate does not start until QHTC has taxable incomeoLimits the amount of franchise tax relief at the 0% rate to $15 million
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Sales Tax Rate Change
Effective October 1, 2013, the DC sales tax rate decreases to 5.75%
This decrease applies only to the general 6% sales tax.
It does not affect the sales tax on medical marijuana
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Clean Hands
Clean Hands certificate required for a wide variety of DC related activities
Failure to file a required return is now a basis for denying clean hands
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Restaurant Utility Tax
District restaurants are entitled to an exemption from sales tax on their utility use
Must be separately metered or sub-metered restaurants.
Includes: Pizzeria, delicatessen, ice cream parlor, cafeteria, take-out counter and caterer, and banquet and food processing areas in hotels.
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Motor Fuel Tax
Rate changes to 8%
2 different base periods per year
FY 2014 Rate – Revised Notice
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Individual Income Tax Changes
Personal Exemption & Standard Deduction The base CPI for the COLA changed last
year and indexing added. Amounts will be analyzed annually.
Interest on Out of State Bonds. Taxation of interest on out of state bonds is
repealed.
Schedule H Property Tax Relief
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Schedule H Property Tax Relief
Increases income eligibility
Increases maximum benefit
Allows > 1 filing unit per household
Adds a cost of living adjustment
Applicable as of 1/1/2014
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Same Sex Marriage Tax Issues
New law required that a clarification be added to the estate tax form for same sex marriage
The Supreme Court and subsequent IRS Ruling negates the need for preparing Dummy returns for income and estate tax and the required form clarification.