DC Council to Consider RAMW-Supported Legislation to Exempt Service Fees from Sales Tax, Increase I-82 Awareness

Image by Mr.TinDC licensed under Creative Commons.

DC Ward 6 Councilmember Charles Allen intends to introduce the “Helping Small Businesses Recover and Thrive Amendment Act of 2023” soon. The bill, which per Allen’s staff is supported by the Restaurant Association of Metropolitan Washington (RAMW), notably

  • Prohibiting sales tax from being charged on service charges
  • Excluding service charges from being calculated as sales for leases based on sales
  • Allow option for small biz to get notifications via mail (not just email) for license renewals from DLCP (formerly DCRA)
  • Allow bars and restaurants to pay for manager licenses annually instead of for 3 years
  • PR/education campaign about changes to minimum wage due to I-82
  • Prohibit charging of credit/debit card swipe fees for the sales tax portion of bills
  • Doubling rent/property tax credit for certain businesses

Full email below

Many of our small businesses are still recovering from the pandemic, and the District needs to provide the necessary support to help them not only make ends meet, but thrive. This is a critical juncture for the District’s economic recovery, and small businesses are drivers of growth, innovation, and safe and vibrant neighborhoods. But many encounter frustrating bureaucratic red tape and unnecessary fees, making their difficult jobs even harder. For example, bars and restaurants are on the hook for alcohol licensing fees for employees that have moved on to other jobs, and many small businesses fail to receive important notices about critical license renewals. They also regularly encounter widespread public confusion about recent changes to the District’s minimum wage laws, and they’re nickeled and dimed by transaction fees.


The Helping Small Businesses Recover and Thrive Amendment Act of 2023 fosters economic growth and makes life easier for small business owners by:

  • Increasing the tax credit available to qualifying businesses for a portion of rent or property taxes paid and reducing the taxable value of the commercial property if it is rented or owned by the qualifying business. The bill would also allow this real property tax credit to increase year-over-year with the annual average Consumer Price Index.Existing law allows for a $5,000 credit to be claimed by qualified businesses, and this would raise the credit to $10,000.
  • Prohibiting sales tax from being imposed on service fees at restaurants, ensuring parity between service fees and tips.Existing law allows for a tax on service charges in connection with serving food or beverages (including alcohol) in cafes, bars, and similar establishments where food or drink is served.
  • Clarifying that, absent any contrary language, service fees are not considered sales for the purposes of calculating rent in a commercial lease agreement.Existing commercial leases may be unclear as to whether service fees are considered “sales” for the purposes of calculating rent.
  • Allowing small businesses to receive written notice of license renewals by the Department of Licensing and Consumer Protection (“DLCP”) to ensure ample notice of upcoming deadlines. Existing law allows DLCP to provide either written or electronic methods of communication about license renewals, but DLCP only provides notice through electronic means. This has caused numerous small businesses to reach out to our office on the brink of losing their basic business license because they missed or didn’t receive an email.
  • Modifying requirements for bar manager licensure, allowing businesses to cover the credential on an annual basis or three-year basis. This would allow bars and restaurants to avoid paying for a license for a worker who might not otherwise remain with the business for the three-year license period. Current law requires payment for the license at the time of the application and is tied to the employee, not the business, leaving the business holding the bag if an employee leaves before their license expires.
  • Mandating the development and launch of a public awareness campaign to educate District residents, visitors, and others who frequent food and drink establishments across the city about upcoming changes to the tipped minimum wage. The current status of the tipped minimum wage is confusing to consumers, given recent changes to the law.
  • Allowing sexual harassment training to be administered virtually instead of in person forall employees, including managers, like many other businesses, companies, and non-profit organizations. Current law requires harassment prevention training every two years for all employees of restaurant operators with at least one tipped employee, with the law allowing for tipped employees and owners and operators of businesses to attend virtually via a real-time video stream. However, managers must attend the training in person. The bill makes this important training more accessible to industry staff.
  • Prohibiting the charging of swipe fees on the sales tax portion of a credit or debit card transaction.Current law allows credit and debit card companies to tack fees onto the entire amount of the transaction, however many small businesses won’t accept a card payment under a certain dollar amount because of the impact of the swipe fee. The bill would provide some relief to small businesses who accept credit or debit cards at payment.

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