Evans is referring to the fact that mobile vendors, unlike restaurants, do not collect the 10 percent sales tax on food and pass it along to the city. At least not yet.
Noting that the “world has changed . . . and people are taking credit and keep better records,” Evans, as chair of the city’s finance and revenue committee, forwarded a bill last week that would require vendors to start collecting and remitting sales taxes. The bill, a revision of the Vendor Sales Tax Collection and Remittance Act of 2011, could receive its first reading before the D.C. Council in April; it’s expected to pass the full council and go into effect Oct. 1.
That few people outside of Evans’s office have a clear grasp on how taxes would be collected under the proposed law strikes some truck operators as a sign that the city just wants a quick fix on the sales-tax issue, which bricks-and-mortars have argued gives mobile vendors a competitive advantage over restaurants. Because trucks don’t apply a sales tax, they essentially can offer their food at a 10 percent discount vs. the dishes purchased at traditional restaurants.
The rewritten tax code would replace the existing arrangement under which vendors pay an annual $1,500 in lieu of taxes, a plan that Evans himself helped create in the early 1990s. The new bill boasts a two-tiered structure: Vendors who collect $375 or less in sales taxes per quarter will continue to submit $375 for that period (which, over the course of the year, equals the old $1,500 annual fee).
But those who collect more than $375 per quarter will be required to submit taxes from all sales made during the period. So if a truck sells $10,000 worth of food in the quarter, it would have to remit $1,000 in sales taxes; the new law would affect both mobile and sidewalk vendors alike.
The complication, as interpreted by some truck owners, is that each licensed vendor will be required to pay sales taxes. Many trucks in the District hold multiple licenses, because the city requires that a licensee always be on board, and the same person, say vendors, cannot be on the truck at all hours. That situation has the potential to double or triple the taxes of a food truck, because the city considers each licensee a sole proprietor and doesn’t connect licensees to specific trucks, says Che Ruddell-Tabisola, executive director of the D.C. Food Truck Association and co-owner of the BBQ Bus.
“We just need to know how to implement this,” says Ruddell-Tabisola. “Not understanding how the District would like us to collect sales tax puts us at tremendous risk.”