Section 9-102. EXEMPT ORGANIZATIONS

 

102.1The responsibility for establishing the right to exemption from the tax, as provided by Title 2 of Article 1 of the Act shall rest upon the organization claiming the exemption.

 

102.2An organization shall not be exempt merely because it is not organized and operated for profit.

 

102.3In order to establish an exemption, each organization claiming exemption shall file an affidavit with the Deputy Chief Financial Officer showing the character of the organization, the purpose for which it was organized, its actual activities, its sources of income, whether any of its income is credited to surplus or may inure to the benefit of any private shareholder or individual, and in general all facts relating to its operations which affect its right to exemption.

 

102.4A copy of the charter or articles of incorporation, the by-laws of the organization, and the latest financial statement showing the assets, liabilities, receipts, and disbursements of the organization shall be attached to the affidavit filed under § 102.3.

 

102.5If the organization has received a ruling on its exemption status for federal income tax purposes from the U.S. Internal Revenue Service, a copy of that ruling shall be submitted to the Deputy Chief Financial Officer.

 

102.6The granting of exempt status to any organization under Title 2 of the Act shall not relieve that organization of its responsibility to withhold tax from its employees as required by the Act.

 

102.7A corporation, community chest, fund, or foundation which is organized for and operated exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals (no part of the net earnings of which inures to the benefit of any private individual or shareholder, and no part of the activities of which is carrying on propaganda) shall not qualify for exemption under § 1(d) of Title 2 of the Act unless it operates "to a substantial extent within the District."

 

102.8Operations within the District do not include those activities confined solely to the solicitation of funds, or to the situs of its organizational adjuncts; but do include the actual dispensing within the District to a substantial extent of the religious, charitable, educational, or other benefits which the organization affords.

 

102.9In the case of an institution which is national in scope, that is, its activities extend to a majority of the States, dispensing of benefits to a substantial extent means at least five percent (5%) of the total benefits conferred in the institution's prior calendar or fiscal year, as the case may be, were conferred upon District of Columbia residents. In the case of an institution which is not national in scope, that is, its activities extend to less than a majority of the States, dispensing of benefits to a substantial extent means at least twenty-five percent (25%) of the total benefits conferred in the institution's prior calendar or fiscal year, as the case may be, were conferred upon District of Columbia residents.

 

102.10The following activities shall be considered to determine whether an institution is dispensing substantial benefits within the District:

 

(a)Dispensing of direct benefits, including but not limited to, grants, scholarships, and other forms of direct assistance conferred upon residents of the District;

 

(b)Expenditures within the District in connection with scientific and research studies, conferences, seminars, and similar activities if the activities result in identifiable benefits to District residents; and

 

(c)Expenditures for payroll, rent, services and supplies incurred in the District in order to provide the benefits for which the institution was formed; Provided, that the expenditures shall be considered only if it can be clearly shown that the expenditures result in direct benefits for District resident individuals or businesses. Expenditures (such as payments for social functions, lobbying, etc.) not incurred to produce benefits shall not be considered.

 

102.11The aggregate benefits and expenditures referred to in §§ 102.10(a), (b), and (c) shall equal or exceed the following percentages of similar benefits dispensed and expenditures incurred everywhere the institution conducts its activities:

 

(a)Five percent (5%), if the institution is national in scope (activities extend to a majority of the States); or

 

(b)Twenty-five percent (25%), if the institution is not national in scope (activities extend to less than a majority of the States).

 

source

Commissioner's Order 56-1431 effective July 24, 1956, 16 DCRR H302.1 and 302.2; as amended by the Third Amendment to the Revenue Act of 1975 Act, D C Law 1-61, 22 DCR 4283 (February 17, 1976), by Final Rulemaking published at 30 DCR 1922 (April 29, 1983); by Final Rulemaking published at 30 DCR 3263 (July 1, 1983); and by Final Rulemaking published at 32 DCR 1354 (March 8, 1985).