District Of Columbia Tax And Revenue

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Income Tax Can Also Be Volatile In Part Because It Is Correlated With Stock Market Performance

Updated Income Tax Return(ITR U)

The greater reliance on income taxes is concerning not only because of the uncertainty of future migration trends, but also because income tax can be volatile. There is a strong correlation between stock market performance and income tax collections.53 When the stock market is down, particularly for long periods of time, the Districts individual income tax revenue trendline is also likely to be down. Importantly, the declines in sales and property tax collections have, to some extent, been hidden by robust income tax revenue growth. However, if and when the stock market turns , loss in revenue due to pandemic impacts will become apparent. This exhibits the volatility of income taxes when there is an economic downturn. If the city relies heavily on income tax returns, then revenue will be unpredictable in economic downturns.

District Of Columbia Employer Tax Information

To sign up for Squares online payroll services in the District of Columbia, you must be registered with the DC Office of Tax and Revenue and the DC Department of Employment Services so we can pay and file your state taxes.

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Dc Suppression Part Of A Broader Effort To Cement White Political And Economic Dominance

States across the South similarly pushed successful efforts to end biracial Reconstruction governance, disenfranchise Black voters, and restore a racial hierarchy with severe economic consequences. In 1890, Mississippi disenfranchised nearly all the states Black voters and enacted a supermajority requirement for all state tax increases, making it next to impossible to meaningfully raise property taxes and secure public investments in education, health care, and other public goods that would support Black people excluded from full participation in the economy. In Alabama, legislators overturned the state constitution written by a biracial group of delegates during Reconstruction to install highly restrictive caps on property tax rates and limit the amount white landowners would have to contribute for the benefit of the majority Black population that did not own property. These and other similar efforts that were paired with violence and voter suppression effectively pre-empted future efforts of multi-racial coalitions working to resource collective needs.

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Remote Work And The Future Of Dc : What Does Remote Work Mean For The District Of Columbias Tax Base

  • Bailey McConnell

This report is the second in a two-part series focused on building a better understanding of how remote work will impact the Districts future. The first report identified 1) How the geography of work might shift if remote eligible workers continue to work from home 2) How often workers will continue to work from home post-pandemic and 3) How many of the regions workers are eligible to do so.

In this second part, we use the information from part 1 to 1) Estimate how the shift to remote work might impact the citys tax base, and 2) Propose next steps to ensuring the District has an upward economic growth trajectory as the city recovers from the pandemic.

This report is a publication of the D.C. Policy Centers Alice M. Rivlin Initiative for Economic Policy & Competitiveness, which provides an in-depth and objective look at the factors that influence the District of Columbias attractiveness and competitive position in the region and the nation.

We wish to thank the Kimsey Foundation, Monumental Sports & Entertainment, Quadrangle Development, Tishman Speyer, and Ruben Companies for their support of the Rivlin Initiatives work.

Home Rule Was Critical Step Forward But Not Full Autonomy Or Representation

District, Measured

Nearly 100 years after Congress stripped District residents of their right to vote for local representation, Congress passed the Home Rule Act in 1973. The law provided residents with the right to vote for a city council, mayor, and advisory neighborhood commissioners. Today, DC residents can work through a democratically elected government to shape local decisions around raising revenue, spending priorities, and other legislation affecting their daily lives. This is the highest level of self-government the District has had since it became the seat of the federal government, and yet it does not offer full autonomy or representation.

If made a state, DC would have the highest proportion of Black residents of any state and help correct the underrepresentation of voters of color in the American political system. By recognizing DC residents rights to self-governance and federal voting representation, Congress would be correcting a historic harm that is rooted in anti-Blackness and perpetuates racial inequality.

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If Dcs 155500 Commuters Continue To Work From Home Three Days Per Week After The Pandemic The City Could Lose Up To $629 Million In Sales Tax Revenue

As shown in part one of this series, a permanent shift to remote or hybrid work can result in the loss of 155,500 full-time commuters. If this happens, the city also loses out on the economic activity those commuters brought to downtown.16 In 2012, the International Council of Shopping Centers estimated that nationally, the average office worker spent $115.60 per week in urban areas, excluding spending on transportation and online purchases.17 After adjusting for D.C.s higher cost of living and to 2021 dollars, this suggests that in D.C., office workers in-office five days per week spend about $167 per week near their workplaces. While this study is a decade old, it is one of the few that estimate office worker expenses in detail.

Using this data, we estimate that if D.C.s commuters work from home three days per week, which is the current average in D.C. according to Kastle data and the preference of the average worker who holds a remote eligible job according to survey data18, spending in the District may decline by $5,009 per commuter over a year, which amounts to $779.1 million across the city.19 This estimate aligns with data released by other researchers. In the Survey of Working Arrangements and Attitudes April 2022 update, researchers Jose Maria Barrero, Nicholas Bloom, and Steven J. Davis estimate a 46 percent reduction in days spent on business premises by workers that can work from home and a reduction in spending of $5,003 per worker per year.20

In Recent Years The District Has Become More Reliant On Income Taxes

In 2021, income taxes accounted for 38 percent of D.C.s gross local fund revenue. This is a 6-percentage point increase from 2019.37This is, in part, due to strong stock market performance throughout the pandemics first two years and growing withholding taxes paired with declines in sales tax collections.

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Where To Send Your District Of Columbia Tax Return

Income Tax Returns Office of Tax and RevenuePO Box 209

You can save time and money by electronically filing your District of Columbia income tax directly with the . Benefits of e-Filing your District of Columbia tax return include instant submission, error checking, and faster refund response times. Most tax preparers can electronically file your return for you, or you can do it yourself using free or paid income tax software, like the examples listed below.

Washington, DC does not provide any specific free programs for eFiling your tax return, but supports a list of paid providers and preparation services that can eFile on your behalf. The District of Columbia does offer faster refunds to taxpayers who take advantage of the eFile system.

To e-file your District of Columbia and Federal income tax returns, you need a piece of tax software that is certified for eFile by the IRS. While most in-depth tax software charges a fee, there are several free options available through the states, and simple versions are also offered free of charge by most tax software companies.

The two most popular tax software packages are H& R Block At Home, sold by the H& R Block tax preparation company, and TurboTax Federal & State, sold by the Intuit software company. Both companies produce multiple editions for simple to very complex tax returns, so be sure to carefully compare the features offered by each package.

Paid Family Leave Program

5 lesser known tax saving tips | Tax Planning 2022

The Washington, D.C. Paid Family Leave Program allows eligible employees to take time off to bond with a new child, care for a close relative with a serious health condition, or care for ones own serious health condition. The program begins July 2020 and the tax withholding, payment, and filing process is supported by Square Payroll.

Read more about the District of Columbia Paid Family Leave Program in our Support Center.

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Office Property And Commercial Property Tax Revenue

Property tax collections account for about a third of the citys gross local fund revenue, and nearly 40 percent of the citys property tax collections come from large office buildings.22 As workers continue to work from home, increased vacancy in the Districts office buildings will result in declining assessment valuations, with repercussions for local public finances.

Between tax years 2021 and 2022, the Office of Tax and Revenue reported a 7.73 percent decline in commercial property assessment values.23 That year, the Districts downtown office buildings lost $5 billion in value, reducing tax revenue by over $140 million. All of this loss is tied to weakened officed demand and higher vacancy rates.

And this decline is likely to continue. Recent research on the office market in New York City suggests that the impacts of remote work will continue to erode commercial office value. The authors show that lower current and expected future cash flow, combined with higher risks, could eventually destroy $500 billion in value in NYCs commercial office marketa 28 percent decline.24 That is a much greater loss than the District experienced, and while NYC is a different market with its own unique challenges, the research suggests that city office markets will likely continue to lose value. This section focuses on how remote work might impact the citys property tax revenue with an emphasis on large office spaces.

As We Enter The Pandemics Third Year There Is No Reduction In Sight In Vacancy Or Availability In The Citys Key Office Markets

The citys office vacancy rate is an indicator of how the market is currently performing, while availability ratespace that is vacant plus space with an expiring lease that will soon become vacantcan be used as a benchmark for where the market might be headed if leasing activity does not pick up.

It is normal to have some level of availability as the timing of lease expirations, and new leases do not always perfectly match up. In high-demand markets, however, availability is tight. This is no longer the case in D.C.: In the last two years, as leasing activity came to a slow crawl, the availability rate also continued to rise and has reached above 23 percent in the Districts most office-heavy neighborhoods. Compared to Q1 2019, at the end of Q1 2022, leasing activity, measured by total square feet leased, was down by 43 percent among large office properties and down 25 percent among small office properties . It is estimated that across the entire city, it takes about 15 months to find a lease for vacant office space, so unless leasing activity does not pick up, the citys available space will likely become vacant space.32

Citywide, the average vacancy rate as of late April 2022 stood at 16 percent. If leasing activity does not improve and available space becomes vacant, we estimate that this rate could increase to 23 percent and vacant space office space could increase by 11.8 million square feet, bringing total vacancy to over 30 million square feet.

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Recommendation : Focus On New Forward

In addition to addressing existing barriers that have been exacerbated by the pandemic, the city also needs new policies that directly address the shift to remote work. Incentivizing people to return to the office is backward looking and will likely not drive more people into the city, but there is an opportunity to offer incentives to businesses that employ workers that live in the District.

For example, the Virginia Economic Development Partnership adopted new statutory language for their incentive programs so that telework positions held by Virginia residents are rewarded the same as an in-person jobs.64 This strategy relinks the relationship between where people live and work, and in D.C., where there is a high density of job, it may be particularly effective in attracting new and retaining existing residents. However, with a high cost of living, equity concerns should be considered when implementing a similar strategy, such as only requiring a certain share of employees to be located in the District for a business to qualify.

Due To These Shifts In The Districts Components Of Population Change The Growth In The Citys Tax Base Has Been Driven By Income Growth Rather Than An Increase In The Number Of Households Filing For Taxes

District, Measured

Since 2013, the growth in the tax base has been driven by income growth. This suggests that prior to the pandemic, the Districts households, on net, were becoming more affluent and staying in the city. However, because population growth is primarily being driven by natural growth, the number of tax filers has become stagnant.47

As discussed, this trend has continued throughout the pandemic and has become more puzzling. There were 7,990 fewer tax filers in D.C. in 2020 but withholding tax collections have continued to increase.48 This means that the wage and salary incomes of District residents are growing despite the loss of jobs and people.49

Recent data confirms this, showing that the share of jobs in D.C. with a median annual wage greater than $150,000 has increased from 8.1 percent tin 2019 to 17.1 percent in 2010.50 This is despite a 6 percent decline in employment between 2019 and 2021. As a result, total wages grew by 7 percent in the same period and withholding tax collections have continued to increase.51 This is in part due to the disproportionate impact the pandemic has had on service-based industries while office-based industries have been able to easily adapt by shifting to remote work.52

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Recommendation : Diversify Downtown

While in the past, D.C. has been thought of as recession proof due to the strong presence of federal workers, downtown is not resilient to the current economic crisis or future economic downturns. In the long-term, downtown D.C. needs to have a greater mix of uses to guarantee attraction of residents, workers, and visitors regardless of economic trends. Office space is no longer being used efficiently and the demand for space is shifting.

The city needs to encourage a greater mix of uses and allow for a more creative use of vacant space downtown. This can be done by creating more flexible zoning, such as through an adaptive reuse ordinance. Such policies can be further enhanced by pairing with the option to remove of barriers to development, such as expediated review or less stringent building code.

In the near-term, the District needs to bring people downtown. This can be done through innovative uses of space , an expansion of the open streets program to downtown, or incentivizing new tenants to locate downtown .

What Can Cause A Delay In My District Of Columbia Refund

  • If the department needs to verify information reported on your return or request additional information, the process will take longer.
  • Math errors in your return or other adjustments.
  • You used more than one form type to complete your return.
  • Your return was missing information or incomplete.
  • Identify theft/tax refund fraud protection may result in longer processing times for some tax returns and associated refunds. The processing window for selected tax returns could be up to 25 days.

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Racist Roots Of District Disenfranchisement And Limited Self

White supremacy and the orchestrated efforts to suppress Black political and economic power have played a driving role in the disenfranchisement of DC residents. After a brief period in which Black men could vote and Black communities became increasingly politically active, all DC residentsBlack and whitelost all voting rights in 1874. Following Reconstruction, states across the South made moves to secure white political and economic dominance with lasting impacts on the power and resources available to communities of color.

DC was the first majority Black major city in the US and had a reputation as a haven for Black opportunity even during slavery. At the beginning of the 19th century, Washington City had 400 free Black peoplenearly double the number of eligible voters, or landowning white men. Within the first decade, that number had nearly quadrupled, and free Black people were more than 30 percent of the Black population. By 1830, most of DCs Black residents were free and despite the white-led government denying them the same employment opportunities and freedoms of their white counterparts, they secured jobs, established community organizations, and bought property.

Filing A Tax Petition

Revision | Final DT MAY/NOV-22 | Trust Taxation & Exit Tax | PART – 2

Property owners, a duly authorized agent of a property owner, or those with a demonstrated interest in a property have the right to appeal an assessment by the District of Columbia. All appeals must begin by discussing the basis of the assessment with the assigned assessor. The second step is a review by the Board of Real Property Assessment and Appeals within the Office of Tax and Revenue . Finally, if the property owner or party with an interest is not satisfied after a BRPAA hearing, an appeal may be filed at the Superior Court.

For additional information on the Office of Tax and Revenue, including how to initiate the first and second steps of appeal with the BRPAA, please click here.

Attorneys must file new Civil Tax cases electronically through CaseFileXpress. Parties who are not represented by counsel may choose to eFile their petition, or may file the petition in person at the Tax Division. Once a petition is accepted, a judge will be assigned and Tax Division staff will serve the District’s Office of Attorney General and Office of Tax and Revenue.

For more information on starting a case electronically or to register with CaseFileXpress, .

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