Tax Administration Framework

Title 47 of the D.C. Official Code forms the cornerstone of the District's tax system, establishing the core rules for key revenue streams, including income, sales, property, and various business taxes. This extensive legislative framework grants the Office of Tax and Revenue the essential authority to issue detailed regulations, perform rigorous audits, and efficiently collect all mandated payments. Title 47 also provides the statutory basis for taxpayers' rights, including the process for requesting a formal review or initiating an appeal.

The Office of Tax and Revenue (OTR) possesses significant statutory authority to uphold tax compliance across the District and take firm action against non-compliant taxpayers. This enforcement power extends beyond simple collections to include a range of legal mechanisms designed to compel adherence to D.C. tax law.

The OTR has statutory authority to:

• Issue tax assessments
• Impose penalties and interest
• Initiate audits and investigations
• Refer cases for prosecution when necessary

Taxpayers are required to strictly follow established procedures for submitting their returns, ensuring transparency and accuracy in their financial disclosures to the District. These requirements are in place to streamline the administrative process and prevent common errors.

Taxpayers are required to:

• File electronically using the MyTax D.C. portal.
• Submit required forms by statutory deadlines.
• Include all supporting documentation.
• Adhere to Deadlines which vary by tax type, but non-compliance often results in immediate penalties.

The OTR issues formal Notices of Proposed Assessment (NOPAs) when a taxpayer's self-assessment is deemed inaccurate or incomplete, initiating a critical stage in the administrative process. These notices formally advise the taxpayer of the District’s proposed adjustments to the tax liability.

The OTR issues formal Notices of Proposed Assessment when:

• A return is not filed.
• A return is filed with discrepancies.
• An audit adjustment is necessary.
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Taxpayers have 30 days from the notice date to formally respond, request an informal review with the OTR, or initiate the official formal appeals process.

The OTR enforces several key penalties to ensure taxpayers submit correct returns and payments on time. These penalties can significantly increase the total tax liability due.

Common Penalties enforced include:

• Late Filing Penalty: Assessed at 5% of the unpaid tax per month, up to 25% of the net tax due.
• Late Payment Penalty: Applied at a rate of 0.5% per month of the unpaid balance.
• Underreporting Penalty: A substantial penalty of 20% of the underreported amount for negligence.
• Fraud Penalty: The most severe civil penalty, set at 75% of the tax due, applied for intentional tax evasion.

Taxpayers are granted several clear and defined options to formally dispute tax assessments, starting with an internal review and escalating to independent administrative hearings. Navigating this process correctly is crucial for achieving a favorable resolution.

• Informal Review: An informal protest may be submitted to the OTR within 30 days of the assessment notice, allowing the taxpayer to submit documentation and legal arguments to the agency.
• Office of Administrative Hearings (OAH): If the informal review is denied, taxpayers may file an appeal with the OAH. This independent body conducts formal hearings and issues binding decisions.
• Superior Court Review: Taxpayers may also seek final judicial review through the D.C. Superior Court following OAH decisions or in complex disputes involving constitutional claims, though the tax liability must often be satisfied beforehand.