Bill > B26-0324

This bill amends the District of Columbia's tax code to establish a new tax framework for pass-through entities (such as S corporations, partnerships, and certain business trusts) that allows these entities to elect to pay taxes at the entity level for nonresident and nonresident entity members. The bill provides two primary tax payment options: entities can either pay taxes only for nonresident and nonresident entity members, or they can elect to pay taxes for all members. The tax rate will be calculated using the top marginal individual tax rate for individual members and the corporate tax rate for entity members. The tax cannot exceed the entity's distributable cash flow, and each member can claim a tax credit for their proportionate share of the entity-level tax paid. The bill includes specific exemptions for certain entities like real estate investment trusts and tax-exempt organizations, and allows the Mayor to establish regulations for filing composite returns. The new tax provisions will apply to income tax years beginning after December 31, 2023, providing pass-through entities with a new method to potentially simplify tax reporting and provide tax benefits for their members.

Business and Industry

https://lims.dccouncil.gov/Legislation/B26-0324