DC Tax Exemption Certificate: Who Qualifies, Form FR-164, and Renewal

A DC tax exemption certificate is issued by the District’s Office of Tax and Revenue and can relieve a qualifying organization from up to three local taxes: income and franchise tax, sales and use tax, and personal property tax. You apply on Form FR-164 through the MyTax.DC.gov portal, attach a defined set of supporting documents, and renew when the OTR sends notice that your certificate is set to expire. With the District’s general sales tax at 6.5% as of October 2025 and rising to 7.0% in October 2026, the savings for an organization that buys regularly in DC can be significant.¹

What the Certificate Covers

One FR-164 application can request exemption from three separate DC taxes, each with its own statute.

Income and franchise tax under D.C. Code § 47-1802.01. Qualifying organizations are exempt from the District’s corporate franchise tax once the Mayor issues a letter confirming entitlement.²
Sales and use tax under D.C. Code § 47-2005. The exemption applies to property or services used to operate the organization for its exempt purpose.³
Personal property tax under D.C. Code § 47-1508. Tangible personal property of organizations formed exclusively for religious, scientific, charitable, or educational purposes (including hospitals) is exempt.⁴

One boundary worth knowing before you apply: the certificate exempts your organization from paying sales tax on its own purchases. It does not excuse you from collecting sales tax on items your organization sells. Even fully exempt nonprofits must collect and remit DC sales tax on sales of tangible personal property.⁵

Who Qualifies

Semipublic Institutions

Most sales tax exemption applicants come in as “semipublic institutions.” D.C. Code § 47-2001(r) defines the term as any corporation, community chest, fund, or foundation organized exclusively for religious, scientific, charitable, or educational purposes (including hospitals), where no part of the net earnings benefits any private shareholder or individual.⁶ In practice this closely tracks the federal 501(c)(3) classification, and although DC law does not explicitly require 501(c)(3) status for sales tax exemption, the OTR asks for your IRS code section and requires the IRS determination letter as an attachment.

To make tax-free purchases as a semipublic institution, three things have to line up: you hold a certificate from the Mayor (issued through the OTR), you are physically located in the District, and the purchase is used to operate the organization for its stated exempt purpose. Vendors have to keep records of each exempt sale, including the buyer’s name, date, and certificate number.³

Government Entities

Sales tax exemption also runs to the federal government and the DC government (including their instrumentalities), and to other states and their political subdivisions if those states grant a reciprocal exemption to the District.³

Broader Categories for Franchise Tax

The income and franchise tax exemption under § 47-1802.01 reaches further than the sales tax exemption. Beyond charities and religious organizations, it covers civic leagues operated for social welfare, labor and agricultural organizations, business leagues, chambers of commerce, fraternal societies, and several other categories that parallel federal exempt-organization types. Each still needs a letter from the Mayor confirming eligibility before the exemption takes effect.²

Documents to Have Ready for Form FR-164

Form FR-164, the Application for Exemption, is the single form used for all three exemption types. The OTR looks for a specific set of attachments, and a missing one will stall your application.

A copy of the IRS determination or affirmation letter approving (or denying) federal income tax exemption. This is required for every applicant.⁷
Formation documents. If incorporated in DC, a copy of your Certificate of Incorporation from the DC Department of Licensing and Consumer Protection (formerly DCRA). If not incorporated, your constitution, articles of association, declaration of trust, or other founding documents, plus any amendments. Organizations incorporated outside DC provide a Certificate of Authority or Certificate of Registration.⁸
Proof of a DC physical location for the sales and use tax exemption: a signed lease, a DC Certificate of Occupancy issued to the organization, or comparable documentation.⁷
For the personal property tax exemption, documentation of where your tangible personal property sits in DC and its total cost.
Any prior DC exemption letter or certificate the organization has held.
Form FR-500 (Combined Business Tax Registration Application) alongside the FR-164, if you have not already registered with the OTR.

The online application also runs you through a questionnaire about the organization’s purpose and principal income sources, so it helps to have your financial records at hand even though they are not a listed attachment.

How to Submit the Application

Submit the FR-164 through MyTax.DC.gov. Log in, click “More” at the top of your homepage, and open the “Request for Exemption to File (FR-164)” link under Payments & Returns. The portal walks through a series of screens: select which tax accounts should receive exemption, describe your organization’s purpose and federal exemption status, and enter your physical location.⁸

Near the end, upload your supporting documents under the “Add Attachment” tab. Confirm each file uploaded before you submit. The portal returns a confirmation number you can use to track the request from your dashboard. Older versions of the FR-164 pointed to a paper filing address; the online process has replaced that for most applicants, so start with MyTax.DC.gov unless the OTR directs you otherwise.

When Each Exemption Takes Effect

Effective dates depend on the tax. Income and franchise tax exemptions generally take effect on the date the OTR receives your FR-164. Personal property tax exemptions become effective on July 1 following the date of your initial application.⁷ An organization applying in August will not see a personal property tax exemption until the following July 1, close to a full year later.

The FR-164 instructions do not state an effective date rule for sales tax exemptions. Practically, you cannot make tax-free purchases until you have the certificate in hand and can give vendors the certificate number.

Renewal and Ongoing Obligations

DC exemption certificates are not permanent. The OTR requires exempt organizations to renew through MyTax.DC.gov once notice arrives that the certificate is set to expire.⁵ The cycle depends on the certificate type rather than a single universal renewal date. Utility exemption certificates are valid for five years; residential parking exemption certificates last two years or the length of the DC lease, whichever is shorter.⁹

Beyond renewal, report significant changes in your corporate purpose, physical location, or operations. If your mission shifts substantially or you move, update the OTR. Missing a renewal or failing to report a material change can cost you exempt status, with standard taxes assessed retroactively.

Unrelated Business Income Is Still Taxed

Holding a DC exemption certificate does not shield income from activities unrelated to your exempt purpose. Under § 47-1802.01, unrelated business income is taxed even when the rest of your operations are fully exempt.² Personal property used to generate unrelated business income also loses its exemption under § 47-1508.⁴

At the federal level, the IRS defines unrelated business income as revenue from a trade or business that is regularly carried on and not substantially related to your exempt purpose. Gross unrelated business income of $1,000 or more triggers Form 990-T, with tax at the 21% corporate rate on the net income. If expected tax is $500 or more, quarterly estimated payments are required. Dividends, interest, royalties, and some rental income are excluded even when unrelated to your mission.¹⁰

Keeping Federal Status, or You Lose DC Status Too

Your DC exemption rests on your federal exemption. Lose one and you will almost certainly lose the other. The most common way organizations lose federal status is by failing to file annual returns for three consecutive years, at which point the IRS automatically revokes exemption on the due date of the third missed return.¹¹

Which return you file scales with your size. Organizations with gross receipts of $50,000 or less file Form 990-N (the e-Postcard). Organizations under $200,000 in gross receipts and under $500,000 in total assets file Form 990-EZ. Larger organizations file the full Form 990, and private foundations file Form 990-PF regardless of size. Returns are due the 15th day of the 5th month after the end of your tax year — May 15 for calendar-year filers. After automatic revocation, the organization loses eligibility to receive tax-deductible contributions and drops off the IRS’s public exempt organization database. Reinstatement requires a new federal exemption application, and you may need to reapply for DC exemption as well.¹¹

1
Office of Tax and Revenue. District of Columbia Tax Changes Take Effect October 1st
2
D.C. Law Library. District of Columbia Code 47-1802.01 – Exempt Organizations, In General
3
D.C. Law Library. District of Columbia Code 47-2005 – Exemptions
4
D.C. Law Library. District of Columbia Code 47-1508 – Exemptions
5
Office of Tax and Revenue. Other Business Taxes FAQs
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D.C. Law Library. District of Columbia Code 47-2001 – Definitions
7
Office of Tax and Revenue. Application for Exemption FR-164
8
MyTax.DC.gov. How to Request an Exemption to File FR-164
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Office of Tax and Revenue. Exemptions – Audit Division
10
Internal Revenue Service. Unrelated Business Income Tax
11
Internal Revenue Service. Automatic Revocation of Exemption for Non-Filing – Frequently Asked Questions