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D.C. Mayor Signs CEAA into Law

Coronavirus Support Emergency Amendment Act of 2020

The Bowser “Wowzer” – Mayor Muriel Bowser’s Recently Signed Legislation Showing DC-CARES

On May 27, 2020, Mayor Muriel Bowser signed the Coronavirus Emergency Amendment Act of 2020 ( “CEAA”) into District of Columbia (“D.C.”) law. The CEAA includes exclusions from income;  net operating loss provisions; sales and use tax relief; and property tax due date extensions for hotels. Highlights of the new laws are discussed below:

Corporate Income Tax

  • In 2020, The Coronavirus Aid, Relief, and Economic Security Act (“CARES”) was signed into federal law. Part of CARES was to award small businesses forgivable loans, subject to certain requirements. Small businesses located in D.C. were eligible for such loans. It is important to note that this recently enacted federal legislation wasn’t the only available option for D.C. small businesses in need of financial assistance.  Fifteen years before CARES was signed, D.C. actually enacted very specialized legislation, the Small and Certified Business Enterprise Development and Assistance Act  (“SBEDA”). SBEDA  granted awards to small businesses for public health emergencies.  Additionally, forty-five years ago, D.C. enacted the Advisory Neighborhood Commissions Act of 1975 (“ANCA”) additionally allowing for public health emergency grants.
  • The CEAA, recently signed by Mayor Bowser, amends the SBEDA and the ANCA, and clarifies CARES for D.C. purposes. The CEAA provides that the following items are now excluded from “district gross income” for purposes of the income and franchise tax: certain small business loans awarded and forgiven under CARES; emergency small business grants under SBEDA; and public health emergency grants under ANCA..
  • The CEAA also permits financial institutions, corporations, and unincorporated businesses an 80% deduction for apportioned D.C. net operating loss carryover to be deducted from net income after apportionment.
For questions or additional assistance in interpreting these changes, please contact a member of Withum’s State and Local Tax Team.

Sales and Use Tax

  • Under the CEAA, the Office of Tax and Revenue (“OTR”) may automatically waive penalties and abate interest for failure to timely pay sales and use tax, whether the sales and use tax returns are filed monthly or quarterly. The specific periods to which the amendment applies to are attributable for periods ending on February 29, 2020 or March 31, 2020. Additionally, in order to be effective, all taxes for the above periods must be fully remitted on or before July 2020.  Furthermore, it is prudent to note that the waiver of penalties and interest abatement do not apply to every industry. For example, hotels and motels that are allowed similar waiver and abatement due to other D.C. Code sections do not apply under this provision.

Property Tax

  • Despite the fact that hotels and motels are expressly carved out from the sales and use tax provisions above, there is still great news for property tax purposes. Regarding commercially improved and occupied hotels or motels (definition subject to further guidance), the OTR may waive penalties and abate interest for the first installment of real property tax due for the 2020 tax year (due on or before March 31) provided the owner pays the installment by June 20, 2020.

There are some wow-worthy provisions in the CEAA that Mayor Muriel Bowser just signed into law. They are very taxpayer-friendly and truly show that D.C.-CARES. The Withum SALT team can assist you with the specifics of the above legislation summary.  Please do not hesitate to contact us.

Author: Jeffrey Clayman, CPA, JD, LLM | jclayman@withum.com

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