United States

District of Columbia: Corporate Franchise and Unincorporated Business Tax Rates to Drop in 2016 and 2017

Apr 11, 2016
From KPMG TaxWatch

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The District of Columbia’s Fiscal Year 2015 Budget Support Act of 2014 made several changes to the District’s tax structure, including certain rate reductions for businesses and individuals. Specifically, effective for tax years beginning on or after December 31, 2014, the 9.975 percent corporate franchise and unincorporated business tax rate was reduced to 9.4 percent. Further rate reductions were to occur if and when District revenue collections exceeded certain amounts. On February 26, 2016, the District’s Chief Financial Officer, in a letter to Mayor Bowser and the Chair of the D.C. Council, certified that revenue collections were sufficient to trigger a reduction in the corporate franchise and unincorporated business tax rate to 9.0 percent for tax years beginning after December 31, 2016. The CFO had previously certified that revenues were sufficient for the rate to drop from 9.4 percent to 9.2 percent for tax years beginning after December 31, 2015. Although the rate reduction to 9.2 percent was previously certified, D.C. Stat. Ann. 47-1807.02(a) (6), the statute specifying the contingent tax rates, did not include a 9.2 percent rate. Emergency legislation (Act 21-292) signed in January 2016 corrected this apparent technical glitch, thus enabling the rate reduction to 9.2 percent. Please contact Leighanne Scott at 703-286-8251 with questions.

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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.

The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.