Sales Tax Obligations of a Purchaser in D.C.

April 13, 2006

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Although sellers bear the responsibility for paying the sales tax, the law in the District of Columbia requires that as a purchaser, you must reimburse the seller for the sales tax. Because you have ultimate liability for payment of the tax, we recommend that you review the following section to find out how to handle these sales tax issues.

Sales tax exemptions. The District of Columbia allows exemptions from sales tax based on the type of transaction (such as a resale exemption), the nature of the organization purchasing the product (such as a charitable organization), or the type of product (such as food and drink that is not snack food or sold for immediate consumption).

In addition, the District provides a resale exemption to you if you're a service provider who purchases tangible property that will be transferred to your customers as incidental to the provision of your services. If you want this exemption, you must present the seller with a valid resale exemption certificate that contains an active registration or resale number.

Resale exemptions. If you purchase goods or products and will resell them in your business, or include them as part of the service you provide, you may claim a resale exemption from sales or use taxes. However, you will have to collect sales tax from your customers when they purchase the goods or products.

Resale exemption certificate. In order to obtain a resale exemption, the seller may require you to present, in good faith, a resale certificate. The District provides a specific certificate form for you to use, but you're also free to develop your own resale certificate document. The resale certificate document should contain the following information:

your and the seller's name and address
an indication of the general character of the property you are purchasing (e.g. "For resale as tangible personal property in the same form as received from you.")
your District of Columbia certificate of registration number

Blanket resale certificate. The District of Columbia allows you to use blanket resale certificates. A blanket resale certificate is a resale certificate that you provide to a seller from whom you make numerous exempt resale purchases. The idea is that by providing a blanket resale certificate, both you and the seller can avoid the hassle of having to deal with a new certificate every time you make a purchase. The law does not set forth any specific procedures for accepting a blanket resale certificate. However, you should present, in good faith, a blanket resale certificate to the seller that includes the same information as a regular resale certificate. A blanket resale certificate will be valid until either you or the Director of Finance and Revenue revokes it in writing.

Use tax liability on out-of-state purchases. If you buy taxable property from an out-of-state seller, you're going to have to pay a use tax on the purchase price of the property. If the seller you made the purchase from is authorized by the District to collect the use tax, he can collect it. If the seller is not authorized to collect the use tax, you should pay this tax directly to the District.

Small business deductions or credits. The District of Columbia does not provide for any small business deductions from sales or use taxes. However, the District allows you to take a credit against use tax if you have already paid sales or use tax to another state on the property purchased. This credit cannot exceed the amount of sales tax assessed in the District of Columbia.