Accounting & Tax Tips
July 25, 2023

Navigating the DC Franchise Tax for Businesses

At Wendroff & Associates, CPA, we pride ourselves on proactively staying apprised of national and regional tax developments. In this article, we provide an overview of the DC Franchise Tax and DC Corporate Franchise Tax, highlighting how they each may affect business clients operating within the District of Columbia.

DC Franchise Tax Overview

The DC Franchise Tax, alternatively referred to as the DC Unincorporated Business Franchise Tax, is a tax levied on certain businesses operating in the District of Columbia that generate gross receipts of $12,000 or more. The tax encompasses a range of entities, including partnerships, S corporations, Limited Liability Companies (LLCs), and even some individuals.  

Unincorporated businesses (Partnership and Sole Proprietors), with gross incomes of more than $12,000 from District sources, must file Form D-30 (whether or not it has net income). This includes any business carrying on and/or engaging in any trade, business, or commercial activity in DC with income from DC sources. The minimum payable tax is $250, provided the gross D.C. receipts range between $12,000 and $1 million.

DC Corporate Franchise Tax Overview

Corporations with operations or income from DC need to file the District of Columbia Corporate Income Tax Form D-20 with the DC Office of Tax and Revenue. A minimum tax of $250 applies for businesses with DC gross receipts of $1 million or less, and $1,000 for receipts exceeding the $1 million mark.

Key Dates for Filing and Extensions

Filing the DC Franchise tax on time is important. Businesses and Corporations with operations in DC have to file within four months and 15 days following the tax year-end.

Fling extensions can be granted for the Unincorporated Business Franchise Tax using Form FR-130. Corporations may also seek an extension using Form FR-120, which allows six or seven months more time (for Combined Reporting filers).

Strict rules apply concerning payments and the timeline for extension requests.

If you’re currently operating or considering starting a business with operations in D.C., we highly recommend consulting with one of our tax specialists to assess your unique tax circumstances and identify potential options, particularly if you’re not a D.C. resident. 

At Wendroff & Associates, we are always ready to help you navigate this process. Simply click on the Free Consult button below to schedule an appointment today.

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