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The Constitutionality of The District Columbia’s Residency Requirement for Semipublic Non-Profit Organizations to Obtain a Sales and Hotel Tax Exemption is Now Ripe for Determination by the Court

For over thirty years, the District of Columbia has discriminated against semipublic institutions (principally, nonprofit scientific, educational and charitable organizations) who do not have an office in the District. It has done so by prohibiting them from obtaining a sales and room tax exemption when they hold meetings at a hotel in the District – an exemption given only to semipublic institutions that have an office in the District. This discrimination is embodied in D.C. Code § 47-2005(3)(c). In 2017, two non-resident semipublic institutions (the American Philosophical Association and American Anthropological Association) commenced a lawsuit in the Superior Court of the District of Columbia seeking to have this residency requirement be found to violate the Commerce Clause of the U.S. Constitution. That Clause prohibits a State, including the District, from discriminating against out-of-State entities when they participate in the State’s economy. No other State imposes a residency requirement on semi-public institutions for tax such exemptions.

The Court has certified the case as a class action on behalf of the following Class:

All semipublic institutions that do not have offices within the District that paid a sales or hotel tax to any of certain specified hotels in connection with any meetings held at any such hotels for the purpose for which the institution was organized or for honoring the institution or its members from December 12, 2016, and continuing until there is a final determination that the requirement under D.C. Code § 47-2005(3)(C) that a semipublic institution must reside in the District in order to obtain an exemption from sales and hotel taxes violates the Commerce Clause of the United States Constitution (the “Class Period”).

The case is now proceeding to a determination on the Constitutional claim following an unsuccessful attempt at settlement. Plaintiffs have filed a motion for the Court to address this legal issue and when the briefing is complete on Plaintiffs’ motion over the next two months, the issue will be ripe for the Court to rule D.C. Code § 47-2005(3) is unconstitutional. Plaintiffs’ motion can be found here.

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