Opinion ID: 2819364
Heading Depth: 1
Heading Rank: 2

Heading: The Sales Tax Law

Text: Pursuant to D.C. Code § 47-2001, the District of Columbia imposes sales tax upon all “vendors” for “the privilege of selling at retail certain tangible personal property and for the privilege of selling certain selected services[.]” D.C. Code § § 47-2002 (a). Many of these terms are defined in the statute. A “vendor” is “a person or retailer selling property or rendering services upon the receipts from which a tax is imposed under this chapter.” D.C. Code § 47-2001 (w). A “purchaser” is “a person who purchases property or to whom is rendered services, receipts from which are taxable under this chapter.” D.C. Code § 47-2001 (j). A “sale” or “selling” is: [a]ny transaction whereby title or possession . . . of tangible personal property is . . . transferred . . . for a consideration, by a vendor to a purchaser, or any transaction whereby services subject to tax under this chapter are rendered for consideration or are sold to any purchaser by any vendor[.] D.C. Code § 47-2001 (q). Thus, a “sale” is either transferring possession of property, or rendering a taxable service, for consideration. The taxable services are laid out in the definition of “retail sale” in § 47-2001 (n)(1)(A)-(U), the only one at issue here being the following: 9 The sale or charge for any room or rooms, lodgings, or accommodations furnished to transients by any hotel, inn, tourist camp, tourist cabin, or any other place in which rooms, lodgings, or accommodations are regularly furnished to transients for a consideration. D.C. Code § 47-2001 (n)(1)(C) (emphasis added). The total tax rate imposed on the “sale of or charges for any [hotel] rooms” is 14.5% of the “gross receipts.” See D.C. Code § 47-2002 (2) (imposing tax of 10.05%); § 47-2002.02 (1) (imposing additional tax of 4.45%). Gross receipts are defined as “the total amount of the sales prices of the retail sales of vendors[.]” D.C. Code § 47-2001 (h). The statute imposes tax only on the vendor, but requires that “reimbursement for the tax imposed upon the vendor shall be collected by the vendor . . . from the purchaser on all sales the gross receipts from which are subject to tax imposed by this chapter so far as it can be done.” D.C. Code § 47-2003 (a). The statute further requires that the reimbursement be stated separately, mandating that [u]pon each sale of tangible personal property or services, the gross receipts from which are taxable under this chapter, the reimbursement of tax to be collected by the vendor from the purchaser under the provisions of this chapter shall be stated and charged separately from the sales price and shown separately on any record thereof at the time the sale is made or evidence of sale issued or employed by the vendor. D.C. Code § 47-2009. There is one additional wrinkle, and that is in the definition 10 of “sales price.” This is important because the tax is imposed upon “gross receipts” that are, in turn, defined in terms of “sales price.” The statute defines “sales price” as “the total amount paid by a purchaser to a vendor as consideration for a retail sale,” D.C. Code § 47-2001 (p)(1), and clarifies that the sales price includes “[a]ny services that are a part of the sale[.]” D.C. Code § 47-2001 (p)(1)(i). That definition of “sales price” is limited, however, by a number of exclusions that appear in § 47-2001 (p)(2). At issue in this case is the § 47-2001 (p)(2)(D) exclusion, which provides that “[t]he term ‘sales price’ does not include . . . [t]he amount of reimbursement of tax paid by the purchaser to the vendor under this chapter[.]” Finally, there is a municipal regulation on the subject. 9 DCMR § 408, enacted in 19542 and entitled “Sales Price: Taxes, Interest, and Other Charges,” begins with the preface: “In addition to the provisions of the Act”—meaning the D.C. Code § 47-2001 (p)(2) exclusions—“the term ‘sales price,’ as used in the Act, shall not include any of the exceptions set forth in this section.” 9 DCMR § 408.1. Section 408.2 goes on to provide that: “The amount of reimbursement of taxes paid by the purchaser to the vendor under the Act shall not be subject to the tax if 2 The District points out that the language from the 1954 regulation has its roots in an even earlier regulation, which was adopted under authority of the District of Columbia Revenue Act of 1949. See 1 D.C. Reg. 4 (July 19, 1954). 11 the reimbursement amount is stated separately from the sales price.” Since the District filed this lawsuit on March 22, 2011, the District’s sales tax statute has been amended several times. The D.C. Council inserted mention of “net charges and additional charges” as well as “room remarketer” into the definition of the taxable service in D.C. Code § 47-2001 (n)(1)(C) (2012 Repl.), which now reads: The sale or charge, to include net charges and additional charges, for any room or rooms, lodgings, or accommodations furnished to transients by any hotel, room remarketer, inn, tourist camp, tourist cabin, or any other place in which rooms, lodgings, or accommodations are regularly furnished to transients for a consideration. D.C. Code § 47-2001 (n)(1)(C) (emphasis added). The statute goes on to define “room remarketer” as: [A]ny person, other than the operator of a hotel, inn, tourist camp, tourist cabin, or any other place in which rooms, lodgings, or accommodations are regularly furnished to transients for a consideration, having any right, access, ability, or authority, through an internet transaction or any other means whatsoever, to offer, reserve, book, arrange for, remarket, distribute, broker, resell, or facilitate the transfer of rooms the occupancy of which is subject to tax under this chapter and also having any right, access, ability or authority to determine the sale or charge for the rooms, lodgings, or accommodations. 12 D.C. Code § 47-2001 (o-1) (2012 Repl.). Similarly, the tax provisions at § 472002 (a)(2)(B) and § 47-2002.02 (1)(B) were amended to clarify that [i]f the occupancy of a room or rooms, lodgings, or accommodations is reserved, booked, or otherwise arranged for by a room remarketer, the tax imposed by this paragraph shall be determined based on the net charges and additional charges received by the room remarketer. D.C. Code § 47-2002 (a)(2)(B); § 47-2002.02 (1)(B).