DC tax-exempt

DC Issues New Rules for Tax-Exempt Status

Marc Friedman, CPA Tax Planning For Businesses, Non-profit Leave a Comment


If you have a tax-exempt organization in the District of Columbia, changes are coming your way in 2019. Effective January 1st, the Office of Tax and Revenue (OTR) now requires every single non-profit (yes, that means yours) to recertify its exempt status from property, franchise, sales and use taxes every five years.

OTR is sending out notifications at least thirty days in advance before terminating an entity’s tax-exempt status under the new system. Nonprofits that fail to reapply for exempt status will lose it. The good news is that most groups that meet the IRS’s standards for tax-exempt status will also be considered non-profit under OTR’s rules.

How do I re-apply for tax-exempt status?

The application process is done completely online at MyTax.DC.gov and requires form FR-164. Paper applications aren’t accepted anymore. To meet OTR’s requirements, you’ll need to have either a determination letter from the IRS that is less than five years old or an affirmation letter dated within the last five years declaring that the organization is still federally tax-exempt.

Beware that because the IRS could be a little slow in sending out affirmation letters on request; we recommend that organizations ask for them more than a month in advance.

If your nonprofit has a determination letter older than five years, here are the steps to follow to keep your tax-exempt status:

  1. Go to MyTax.DC.gov and log in using your username and password. (If you don’t have login credentials, click here to set up an account.)

  2. Once on your profile, click the ‘More’ tab in the upper right-hand corner.

  3. Scroll down and click ‘Request for Exemption to File (FR-164).’  Doing so will generate the instructions page.

  4. Read the instructions carefully and make sure you have the required information and documents. Then click next.

  5. Click on ‘Select Exemption’ for the account type you want.

  6. Complete the organization summary.

  7. For personal property tax exemptions, provide the physical location of the tangible personal property in DC.

  8. Complete the exemption questionnaire and provide any required attachments.

  9. Click OK on the confirmation page.

What other information do I need to re-apply?

In addition to the affirmation or determination letter mentioned above, applicants also need to provide the name of the organization, tax ID, the address, sales tax account number, NAICS code, organization details and articles of incorporation (or articles of organization for an LLC, or a certificate of registration for an entity not incorporated in DC).

Organizations that apply for sales, use or personal property tax exemptions must also submit a current lease or certificate of occupancy showing proof of physical location in the District.

Once issued, the new exemption certificate will have an expiry date on it. This is the deadline for the exempt organization to file form FR-164 again.

Need additional advice?

If you still have questions about re-applying for tax-exempt status, contact a Glass Jacobson non-profit accountant today.

About the Author

Marc Friedman, CPA

Tax Principal at Glass Jacobson Learn More>>


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