legal information
We provide a variety of legal knowledge and information, and inform you about legal procedures and response methods in each field.
Business License Name Lending Washington D.C.: Legal Risks and Penalties
In Washington D.C., lending your name for the purpose of business licensing—whether to a friend, spouse, or third party—is a serious violation of municipal and federal law. This practice, known as business license name lending, is often used to evade taxes, obscure the identity of the actual business operator, or circumvent enforcement actions. However, D.C. law strictly prohibits such arrangements, and violators may face fines, imprisonment, and civil liabilities.
contents
1. Business License Name Lending Washington D.C.: Definition and Family Use
Business license name lending refers to the act of registering a business under one person’s name while allowing another person to operate it. Even if the registered person does not participate in the business, they assume legal responsibilities and tax liabilities under Washington D.C. law.
Business License Name Lending Washington D.C.: Family Members Included
Many people mistakenly assume that lending a business license to a family member is legally permissible. This is not the case. Whether the name is lent to a spouse, parent, or child, the legal consequences remain the same. Washington D.C. law treats all such arrangements as misrepresentations or fraudulent registrations under D.C. Code §§ 47–2828 and related tax enforcement regulations.
2. Business License Name Lending Washington D.C.: Criminal and Tax Penalties
Lending or borrowing a name for business registration can result in both parties being prosecuted under tax fraud, identity misuse, and licensing fraud provisions.
Business License Name Lending Washington D.C.: Key Criminal Liabilities
For the Lender (Person allowing their name to be used):
- Up to 1 year imprisonment
- Fines up to $1,000 per offense
- Personal liability for unpaid taxes, wage claims, and penalties
For the Borrower (Actual business operator using another’s name):
- Up to 3 years imprisonment for tax evasion
- Fines up to $25,000 under D.C. and IRS codes
- Possible business license revocation and tax lien enforcement
These penalties are further compounded when the name lending results in false statements on tax filings or licensing applications, or when the activity is conducted to evade outstanding debts or judgments.
3. Business License Name Lending Washington D.C.: Legal and Financial Consequences
Even without formal charges, name lending can lead to severe collateral damage, especially when debts, taxes, or legal violations accumulate under the registered party’s name.
| Risk Type | Lender Consequences | Borrower Consequences |
|---|---|---|
| Tax Liability | Held liable for unreported sales tax, employment taxes | Charged with tax fraud and intentional misreporting |
| Credit Damage | May face garnishment or lien if taxes unpaid | Subject to civil suits and criminal asset forfeiture |
| Licensing Sanctions | Permanent ban from holding D.C. business licenses | Closure of business and blacklisting from future licensing |
These outcomes often arise without the lender fully realizing their exposure. For example, if the borrower fails to pay sales tax or is caught operating an unlicensed business (e.g., unpermitted alcohol sales), the lender may receive notice of enforcement, fines, or even criminal summons from the Office of Tax and Revenue or Department of Consumer and Regulatory Affairs (DCRA).
4. Business License Name Lending Washington D.C.: Legal Response if Accused
If you are being accused of illegal name lending in Washington D.C., whether as the lender or operator, the following legal strategies are critical:
Business License Name Lending Washington D.C.: Responding as the Lender
If your name appears on business records but you did not actually operate the business:
- Immediately file a formal notice with DCRA or OTR disputing the registration.
- Submit proof of non-involvement, such as lack of access to business bank accounts, no income received, or communications showing you were unaware.
- If a tax notice is issued, file a protest within 30 days to avoid default judgments or lien enforcement.
Business License Name Lending Washington D.C.: Responding as the Borrower
If you operated a business using someone else's name:
- Cease operations under the fraudulent registration immediately.
- If charged, consult legal counsel to assess options for plea negotiation, especially if there is no intent to defraud.
- Provide mitigating context such as financial hardship or family pressure—but this may not relieve criminal liability.
In both cases, providing detailed documentation such as message exchanges, transaction records, or even social media evidence can be critical in building your defense.
The information provided in this article is for general informational purposes only and does not constitute legal advice. Reading or relying on the contents of this article does not create an attorney-client relationship with our firm. For advice regarding your specific situation, please consult a qualified attorney licensed in your jurisdiction.
