| 1 | 1 | | COUNCIL OF THE DISTRICT OF COLUMBIA |
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| 2 | 2 | | The John A. Wilson Building |
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| 3 | 3 | | 1350 Pennsylvania Avenue, nw |
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| 4 | 4 | | Washington, D.C. 20004 |
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| 5 | 5 | | |
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| 6 | 6 | | |
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| 7 | 7 | | Statement of Introduction |
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| 8 | 8 | | Personal Property Tax Simplification Amendment Act of 2024 |
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| 9 | 9 | | October 11, 2024 |
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| 10 | 10 | | |
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| 11 | 11 | | Today, I am proud to introduce the Personal Property Tax Simplification Amendment Act of 2024 |
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| 12 | 12 | | along with Councilmembers Janeese Lewis George, Matthew Frumin, Charles Allen, and Anita |
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| 13 | 13 | | Bonds. This legislation would raise the current personal property tax exemption for businesses in the |
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| 14 | 14 | | District from $225,000 to $325,000, tie prospective annual increases to the Consumer Price Index, |
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| 15 | 15 | | and remove the requirement for filers under the threshold to file the personal property (FP-31) tax |
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| 16 | 16 | | return form. |
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| 17 | 17 | | |
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| 18 | 18 | | The District of Columbia levies a personal property tax on all tangible business property, excluding |
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| 19 | 19 | | inventories. The rate is $3.40 per $100 of taxable value, with the first $225,000 exempt. Taxable |
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| 20 | 20 | | property includes machinery, equipment, and furniture, but excludes software unless integrated into |
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| 21 | 21 | | hardware. Nonprofits and specific businesses (such as solar systems and qualified supermarkets) are |
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| 22 | 22 | | exempt. Currently, all businesses, regardless of tax owed or exemptions, must file an FP-31 form, |
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| 23 | 23 | | detailing each asset's value and depreciation. This requirement creates significant administrative |
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| 24 | 24 | | burdens, particularly for smaller businesses with little to no taxable property. According to data |
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| 25 | 25 | | provided by the Tax Revision Commission, about 60,000 personal property tax returns were filed |
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| 26 | 26 | | from July 2022 to June 2023, but fewer than 1,500 filers had a tax liability. Additionally, the current |
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| 27 | 27 | | $225,000 exemption was established in 2008. If adjusted for inflation, the exemption value would be |
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| 28 | 28 | | $324,000 today. |
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| 29 | 29 | | |
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| 30 | 30 | | Currently, twelve states do not tax businesses’ personal property at all: Delaware, Hawaii, Illinois, |
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| 31 | 31 | | Iowa, Minnesota, New Hampshire, New Jersey, New York, North Dakota, Ohio, Pennsylvania, and |
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| 32 | 32 | | South Dakota. In addition, many other states are pursuing strategies to reduce or eliminate tangible |
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| 33 | 33 | | personal property taxes. Nationwide, nearly 100 bills have been introduced in 23 states to reduce |
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| 34 | 34 | | personal property taxes. Aligning with these efforts ensures that D.C. remains an attractive place for |
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| 35 | 35 | | small businesses, reducing administrative burdens and promoting economic vitality. |
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| 36 | 36 | | |
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| 37 | 37 | | I look forward to continuing to work with my Council colleagues to advance these critical reforms, |
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| 38 | 38 | | ensuring that the District remains competitive for small businesses while alleviating unnecessary |
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| 39 | 39 | | administrative burdens. |
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| 40 | 40 | | Christina Henderson Committee Member |
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| 41 | 41 | | Councilmember, At-Large Hospital and Health Equity |
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| 42 | 42 | | Chairperson, Committee on Health Judiciary and Public Safety |
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| 43 | 43 | | Transportation and the Environment |
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| 44 | 44 | | ______________________________ ______________________________ 1 |
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| 45 | 45 | | Councilmember Janeese Lewis George Councilmember Christina Henderson 2 |
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| 46 | 46 | | 3 |
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| 47 | 47 | | 4 |
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| 48 | 48 | | ______________________________ ______________________________ 5 |
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| 49 | 49 | | Councilmember Matthew Frumin Councilmember Charles Allen 6 |
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| 50 | 50 | | 7 |
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| 51 | 51 | | 8 |
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| 52 | 52 | | ______________________________ 9 |
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| 53 | 53 | | Councilmember Anita Bonds 10 |
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| 54 | 54 | | 11 |
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| 55 | 55 | | 12 |
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| 56 | 56 | | A BILL 13 |
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| 57 | 57 | | 14 |
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| 58 | 58 | | ________ 15 |
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| 59 | 59 | | 16 |
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| 60 | 60 | | 17 |
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| 61 | 61 | | IN THE COUNCIL OF THE DISTRICT OF COLUMBIA 18 |
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| 62 | 62 | | 19 |
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| 63 | 63 | | ________________ 20 |
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| 64 | 64 | | 21 |
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| 65 | 65 | | 22 |
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| 66 | 66 | | To amend Chapter 15 of Title 47 of the District of Columbia Official Code to increase the dollar 23 |
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| 67 | 67 | | threshold for levying the personal property tax, and to exempt filers from including the 24 |
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| 68 | 68 | | value of their tangible personal property on their tax returns if the value is below the 25 |
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| 69 | 69 | | dollar threshold for taxation. 26 |
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| 70 | 70 | | 27 |
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| 71 | 71 | | BE IT ENACTED BY THE COUNCIL OF THE DISTRICT OF COLUMBIA, That this 28 |
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| 72 | 72 | | act may be cited as the “Personal Property Tax Simplification Amendment Act of 2024”. 29 |
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| 73 | 73 | | Sec. 2. Chapter 15 of Title 47 of the District of Columbia Official Code is amended as 30 |
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| 74 | 74 | | follows: 31 |
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| 75 | 75 | | (a) D.C. Official Code § 47-1522(a) is amended to read as follows: 32 |
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| 76 | 76 | | “(a) Each year the District shall levy a tax against every person on the tangible personal 33 |
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| 77 | 77 | | property owned or held in trust in that person’s trade or business in the District. The rate of tax 34 |
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| 78 | 78 | | shall be as follows: 35 |
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| 79 | 79 | | “(1) For tax years ending before June 30, 2024, the rate of tax shall be $3.40 for 36 |
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| 80 | 80 | | each $100 of value of the taxable personal property, in excess of $225,000 in value; 37 “(2) For the tax year beginning on July 1, 2025, the rate of tax shall be $3.40 for 38 |
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| 81 | 81 | | each $100 of value of the taxable personal property, in excess of $325,000 in value; and 39 |
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| 82 | 82 | | “(3) For each tax year thereafter, the rate of tax shall be $3.40 for each $100 of 40 |
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| 83 | 83 | | value of the taxable personal property, in excess of $325,000 multiplied by the percentage that the 41 |
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| 84 | 84 | | local Consumer Price Index as defined in § 47-1807.14(2), has risen during the calendar year in 42 |
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| 85 | 85 | | which the tax year began, rounded to the nearest whole dollar.”. 43 |
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| 86 | 86 | | (b) D.C. Official Code § 47-1523(a) is amended to read as follows: 44 |
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| 87 | 87 | | “(a) The full and true value and the current value of tangible personal property, including 45 |
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| 88 | 88 | | taxable leasehold improvements, having a taxable situs in the District shall be reported on the 46 |
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| 89 | 89 | | return if, for the tax year, the value exceeds the threshold for taxation under § 47-1522. The full 47 |
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| 90 | 90 | | and true value shall be the original costs of the tangible personal property in an arms-length 48 |
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| 91 | 91 | | transaction, computed as of July 1st of the tax year. The current value of the tangible personal 49 |
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| 92 | 92 | | property shall be the full and true value less a reasonable allowance for straight line depreciation 50 |
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| 93 | 93 | | in accordance with rules promulgated by the Mayor and the provisions under subsections (b), c), 51 |
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| 94 | 94 | | (d), and (e) of this section. Tangible personal property items with a useful life of one year or less 52 |
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| 95 | 95 | | shall be reported at cost. No proration of value shall be permitted in anticipation of the 53 |
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| 96 | 96 | | disposition of an item of tangible personal property. In no event shall the current value reported 54 |
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| 97 | 97 | | be less than 25% of the original cost or exchange value of the tangible personal property, except 55 |
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| 98 | 98 | | as permitted under subsection (b) of this section.”. 56 |
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| 99 | 99 | | Sec. 3. Fiscal impact statement. 57 |
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| 100 | 100 | | The Council adopts the fiscal impact statement in the committee report as the fiscal 58 |
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| 101 | 101 | | impact statement required by section 4a of the General Legislative Procedures Act of 1975, 59 |
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| 102 | 102 | | approved October 16, 2006 (120 Stat. 2038; D.C. Official Code § 1-301.47a). 60 Sec. 4. Effective date. 61 |
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| 103 | 103 | | This act shall take effect following approval by the Mayor (or in the event of veto by the 62 |
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| 104 | 104 | | Mayor, action by the Council to override the veto), and a 30-day period of congressional review 63 |
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| 105 | 105 | | as provided in section 602c)(1) of the District of Columbia Home Rule Act, approved December 64 |
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| 106 | 106 | | 24, 1973 (87 Stat. 813; D.C. Official Code § 1-206.02c)(1)). 65 |
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