LawFlash

Update to DC Requirement for Nonprofits to Renew District Tax Exemptions

June 24, 2019

The District of Columbia Office of Tax and Revenue will no longer require nonprofit organizations that received determination letters from the Internal Revenue Service more than four years ago to provide affirmation letters from the IRS confirming their federal tax-exempt status in order to renew their DC tax-exempt status.

As of January 1, 2019, the District of Columbia (DC) Office of Tax and Revenue (OTR) instituted a new requirement that all nonprofit organizations with DC tax-exempt status will need to renew their exempt status every five years in order to maintain their DC tax exemptions. DC OTR also began sending “Notices of Upcoming Exemption Expiration” to organizations with current DC tax-exempt status to inform them of the upcoming requirement. Organizations will also receive notices at least 30 days before the actual expiration date of their tax exemptions.

To complete the renewal process, organizations are required to log into their MyTax.DC.gov accounts and complete the online form FR-164 application for all of their current tax exemptions. An organization that has not created a MyTax.DC.gov account will need to do so before it can complete the form. DC OTR no longer accepts paper applications for tax exemption.

Revised Requirements to Complete the Renewal Process

As part of the renewal application, an organization is required to submit a copy of its Internal Revenue Service (IRS) determination letter. DC OTR had initially required organizations with determination letters that are more than four years old to also provide affirmation letters from the IRS dated within the past year to confirm their current federal tax-exempt status. This requirement was recently removed, so organizations that received IRS determination letters more than four years ago are required to submit the determination letters but do not need to include affirmation letters as well.

To complete the renewal process, organizations will therefore need to provide the following documents:

  1. Certificate of incorporation (if incorporated in DC) or certificate of registration (if not incorporated in DC)
  2. IRS determination letter
  3. Current certificate of occupancy and/or lease showing proof of physical location in DC if applying for sales and use/personal property tax exemption

Once the application is approved, DC OTR will provide a new exemption certificate that will include an expiration date. Organizations will need to reapply every five years from the issuance date on the new exemption certificate by recompleting the form FR-164 online.

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash please contact any of the following Morgan Lewis lawyers:

Washington, DC
Celia Roady
Caroline Waldner
Shira M. Helstrom
Chelsea Rubin