By Aaron M. Fox, CPA – Senior Tax Manager at Raffa, P.C.
Effective October 1, 2014, DC sales and use tax will become applicable to some specific services at the rate of 5.75%. If your organization was already registered to collect sales and use tax, it should start collecting on these services. If not, the organization will need to register first. That can be done by going to www.taxpayerservicecenter.com
or by filing Form FR-500 which is available online. During registration, forms for remitting the tax are provided.
The services now taxable are as follows:
Bottled Water Delivery Service. The sale by a bottled water delivery service of bottled water by the gallon generally for use with and to be dispensed from a water cooler or similar type of water dispenser is subject to sales tax. Persons operating a bottled water delivery service business must report and pay the sales tax on the gross proceeds derived from that business. A security deposit is not part of the taxable purchase price.
Bowling Alley or Billiard Parlor Services. The sale of or charge for the service of a bowling alley or a billiard parlor is subject to sales tax. The total amount charged for bowling is subject to tax. Taxable receipts for bowling shall include all fees or charges, including entry fees and league fees. The total amount charged for billiards is subject to tax, including charges for coin-operated pool tables. Taxable receipts for participation in billiards shall include all fees or charges for billiards, whether by the game, by the hour, or by other measure.
Car Washing Services. The sale of or charge for the service of car washing, including cleaning, washing, waxing, polishing, or detailing an automotive vehicle is subject to sales tax. The sale of or charge for self-service car washing is not subject to sales tax.
Carpet and Upholstery Cleaning Services. The sale of or charge for the service of carpet and upholstery cleaning, including the cleaning or dyeing of used rugs, carpets, or upholstery, or for rug repair is subject to sales tax.
Health-Club Services. The sale of or charge for the services of a health club subject to sales and use tax. Health-club means a fitness club, fitness center, or gym the purpose of which is physical exercise, includes the use of, access to, or membership to, an athletic club, fitness center, gym, recreational sports facilities featuring exercise and other active physical fitness conditioning or recreational sports activities including swimming, skating, or racquet sports, or other facility for the purpose of physical exercise.
Charges for sale of or charge for the services of a health club include any amounts paid to participate, enter, use, or access the health club, including but not limited to membership dues, drop-in fees, and entrance fees. Charges for the use of facilities for non-fitness-related purposes, including room rentals, or for other services or charges covered by a separate contract with the user, such as a lease or occupancy agreement, are not subject to tax. Sales by nonprofit organizations of the services of a health club will be subject to tax unless the purchaser holds a valid exemption or issues a resale certificate.
Storage of Household Goods. The sale of or charge for the service of the storage of household goods through renting or leasing space for self-storage, including rooms, compartments, lockers, containers, or outdoor space, except general merchandise warehousing and storage and coin-operated lockers, are subject to sales and use tax.
Tanning Services. The sale of or charge for tanning services are subject to sales and use tax. Tanning services means providing individuals a manmade tan, including sun tanning and spray tanning, whether or not assisted by an employee of the tanning business. Charges for tanning services include any amounts paid to for the tanning service, including but not limited to monthly membership fees and appointment fees.
The DC Office of Tax and Revenue Notice 2014-09
provides more detailed information about these services.
For more information regarding this alert or how Raffa, P.C. can help you interpret and apply these changes for your organization, please contact Aaron Fox at firstname.lastname@example.org or 202-955-6701.