ASAE Opposes DC’s “Option 36” in Tax Code Revisions

As a DC commission weighs whether to levy a "local services tax" on employers in the city, including nonprofits, ASAE is urging the commission to consider the economic and other contributions that associations make to the nation's capital.

ASAE wants officials considering changes to the District of Columbia’s tax code to know that “Option 36” should not be an option for raising additional revenue for the city.

ASAE submitted comments last week to the DC Tax Revision Commission seeking to clarify what it said was a misconception about the nonprofit community and opposing a recommendation that could be forwarded to the DC Council this winter.

A ‘service’ tax on associations would completely misunderstand how much of a financial commitment associations already have made to the District.

The letter addresses specifically Option 36, one of a number of proposals the commission is considering to revise and update the DC tax code. Option 36 would impose a flat fee on nongovernmental employers in the city of somewhere between $50-$100 per employee. The tax is aimed at forcing employers to pay for the public utilities used by nonresident employees, although the option paper does not recommend exempting DC resident employees.

During the course of an open hearing on employer tax options, some commissioners expressed support for this option as a way to have noncontributing employers pay their fair share, with some specifically citing “nonprofits” as those particularly avoiding contributing financially.

“This assertion is false,” wrote ASAE President and CEO John H. Graham IV, FASAE, CAE, laying out nine different taxes and fees associations pay to the District government. Graham noted the nontax economic contributions that associations make to the city, including economic development through employment and benefits for residents, as well as association educational meetings.

“If the District ultimately assessed a ‘service’ tax on associations within the city, it would not only hurt its revenue stream long-term but completely misunderstand how much of a financial commitment associations already have made to the District,” Graham wrote.

The DC Tax Revision Commission is considering which of more than 60 tax options it will include in a final recommendation on tax reform to the DC Council. The commission is expected to finalize its list of recommendations in December and transmit language to the DC Council in January.

Chris Vest, CAE

By Chris Vest, CAE

Chris Vest, CAE is vice president, corporate communications and public relations at ASAE. MORE

Got an article tip for us? Contact us and let us know!