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D.C. plans crackdown on street vendors to collect sales taxes

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Local,DC,Eric P. Newcomer

Fewer than one in five D.C. street vendors have complied with a recent law requiring them to report sales taxes every three months, the city says.

"These are street vendors who are competing with brick-and-mortar shops, and they need to pay taxes," said Ward 2 D.C. Councilman Jack Evans.

On Oct. 1, a new law took effect that changed how street vendors -- including food stands and food trucks -- pay sales taxes.

Sales taxes for street vendors used to be pretty easy. Vendors simply paid $375 every three months, regardless of how much income they earned, making it simple to operate an all-cash business.

The new law requires food vendors to track their income and pay either $375 a month or 10 percent of their sales, whichever is larger.

However, only 237 vendors filed taxes, reporting $148,000 in revenue. The city estimates there are 1,295 active street-vendor accounts. The city says it has sent vendors information about the new law.

The largest filer so far paid $5,400 -- meaning the business made $54,000 in sales in just three months.

It's not altogether surprising that so many street vendors have not complied with the law. In the past, many vendors delayed paying the fee.

"A number of the people tended to comply only at the moment the license was about to not be renewed," said Stephen Cordi, deputy chief financial officer for the D.C. Office of Tax and Revenue.

The city says it will begin to pressure vendors to comply. Eventually, the city will unilaterally assess delinquent taxes owed by vendors and pressure them to pay up, in part, by denying licenses.

However, Doug Povich, chairman of the Food Truck Association of Metropolitan Washington, said he is concerned the city won't do enough to ensure that all-cash food stands comply with the law.

"Some of those vendors make upwards of $100,000 a year and they don't collect and pay taxes," Povich said. "They know that nobody in the city is going to come out and audit them."

Meanwhile, many food trucks accept credit cards making it much easier for the government to track sales tax compliance.

Povich said it was only fair that food trucks, food stands and other restaurants join brick-and-mortar establishments in paying normal sales taxes. However, he said taxes are too high.

"I think it's completely fair. I think it's ridiculous that it's 10 percent," he said.

enewcomer@washingtonexaminer.com

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