On March 1, 2012, the Committee on Finance and Revenue of the Council of the District of Columbia passed out of committee, by unanimous vote, the Vendor Sales Tax Collection and Remittance Act of 2012, which would require vendors in the District to collect sales taxes from patrons and remit them to the District, like other businesses. Both Virginia and Maryland require food vendors to collect sales tax.
Councilmember Jack Evans (D-Ward 2) first introduced the bill last year to amend a section of the District’s tax code that exempts sidewalk and mobile street vendors from sales tax requirements. Currently, sidewalk and mobile street vendors, including food trucks, pay a quarterly fee of $375 to the District in lieu of having to pay the 10% retail sales tax on prepared food the way other food service businesses must.
Food truck operators’ main objection to the bill focuses on how the District will tax each street vendor. Food truck operators claim that there exists the threat that they will be taxed multiple times because some trucks hold multiple operating licenses.
Stephen Cordi, Deputy Chief Financial Officer for the District’s Office of Tax and Revenue, is quoted in a Washington Post article on the subject as stating, “the way [he] reads the proposed bill, each business vendor — not the individual licensees tied to the business vendor — would be required to submit sales taxes.”
Food truck operators also argue that this issue should be dealt with under the proposed vending regulations that the D.C. Department of Consumer and Regulatory Affairs issued in January. The new regulations created controversy between the food truck community, which largely supports the regulations, and the brick-and-mortar restaurants, who argue that the rules grant food trucks an unfair competitive advantage.
The public comment period for the new vending regulations closed last week. More than 3,200 comments were submitted to the DCRA and the department plans to spend the next week or two reviewing the opinions and talking with city agencies and various stakeholders about how to resolve the conflicts between food trucks and bricks-and-mortars. The DCRA hopes to bring the final regulations to the D.C. Council before the end of the year. The Council could reject the regulations and force all parties to operate under the current ones.
Evans said to the Washington Post that he could not wait any longer for the Council to approve the new vending regulations before moving ahead with the tax bill. “My position is, if I give you enough time and if you don’t do it, [expletive] you, I’m going to move ahead and put the tax in place. That’s how I operate. People know that’s how I operate.”
The Vendor Sales Tax Collection and Remittance Act, which is expected to pass the full Council, could receive its first reading in April and go into effect October 1st.