Quarterly: Winter 2003 - GWCAR - Greater Washington Commercial Association of REALTORS

CBQ >> Winter 2003 Issue

Delayed Again, But Still the Law
The District of Columbia's Master Business License Program

by Jacques B. DePuy, Esquire, and Lyle M. Blanchard, Esquire
Greenstein, DeLorme & Luchs, P.C.

Previously unlicensed businesses in the District of Columbia have once again received a reprieve from the deadline to apply for a Master Business License (MBL). Thanks to an end-of-year 2002 effort by the DC Council, emergency legislation was approved to delay the filing deadline to May 31, 2003. That's the good news.

The bad news is that no consensus has developed on the DC Council to dramatically reform or scale back the MBL program. In addition, MBL license fees increased on January 1 and the DC Department of Consumer and Regulatory Affairs (DCRA) has created a new application form which is more complicated than the previous form.

The MBL program was established by a law enacted by the DC Council in 1998 and substantially amended in 1999. It is administered by DCRA. The new licensing program has a broad reach.

It applies to all "businesses" (broadly defined, as discussed below) that generate more than $2,000 in gross receipts in any calendar year. The new law only applies to employers/business owners who are self-employed, or maintain a business address in the District of Columbia.

The MBL license is intended to cover every business that is located in the District of Columbia or based elsewhere but operates in the District of Columbia. The Omnibus Regulatory Reform Amendment Act of 1998, as amended, which authorized the MBL program, defines a business as including any individual, sole proprietorship, partnership, association, cooperative, corporation, nonprofit organization, and other organizations that engage in any trade, profession, or activity which provides, or holds itself out to provide, goods and services to the public for hire or compensation, and which pays (or is subject to payment of) taxes on earnings (or fees in lieu of taxes) to the District of Columbia. This definition includes businesses which qualify for tax-exempt status under District law and nonprofit organizations.

HISTORY OF THE MBL PROGRAM
The Omnibus Regulatory Reform Amendment Act originally dates from 1998. However, DCRA only began implementation of the MBL program in 2002. Previously, affected businesses were licensed under licensing programs pursuant to the General Licensing Law of 1902. Affected businesses and organizations under the 1902 law included slaughterhouses, slot machine operators, livery stables, secondhand dealers, fortune tellers, undertakers, dealers in dangerous weapons, private detectives, public baths, pool halls, wholesale fish dealers, dairies, mattress manufacturers, and circuses, among other categories of business. These businesses, except those categories that were repealed, are subject under the 1902 law to additional filing requirements, testing and on-site inspections. All businesses, new or existing, are now on a two-year license cycle.

The MBL concept was a recommendation by the Business Regulatory Reform Commission (BRRC). The goals of the District of Columbia program were to streamline the licensing process and create a dedicated fund from licensing fees that could be used to fund improvements in DCRA staff training and technology.

The MBL licensing program is evolving. The DC Council approved "emergency" legislation in 2002 (DC Act 14-415) that exempts churches which are "exclusively religious in nature and do not constitute business activity that would otherwise require licensure." In addition, Councilmembers Sharon Ambrose and Harold Brazil introduced a bill in 2002 (Bill 14-845), and will most likely reintroduce this bill in 2003, that will exempt most businesses that have gross receipts of less than $20,000 per year and homeowners who own rental property and earn less than $20,000 in rental income. Similar proposals may be introduced by other councilmembers in the months to come. Bill 14-687, introduced at the request of Mayor Anthony Williams, clarifies existing law by allowing only a "natural" person to sell property he or she owns without a real estate license. These bills died in December 2002 and may be reintroduced in 2003.

THE APPLICATION PROCESS
There are two broad MBL categories: Class A and Class B. Class A consists of businesses that were previously licensed under the 1902 law and require an inspection prior to licensure. Class B consists of businesses from the 1902 law that did not require inspection, and the "catch-all" category of "general business." MBL applications for Class A and Class B businesses may be obtained in person.

This year a new application form was unveiled by DCRA. This form can be downloaded from the Business Services page on DCRA's Web site (www.dcra.dc.gov). While the new form is even more detailed than the original application form, DCRA is still accepting applications submitted using the original form.

For business conducted from home, a home occupancy permit is required. This form is also available on the Web site under "Permits"

In addition, please be aware that the filing fees have recently increased from $30 to $40. This license fee increase is one of hundreds of fees increased to balance the District of Columbia budget shortfall in 2002.

NEXT STEPS
What does the future hold for the MBL program? The legislation adopted by the Council to exempt certain "non-business" church activities presages amendments to the statute from other sectors of the community, which may seek to restrict the application or reach of the MBL law.

We also expect that organizations or trade associations will continue to question the appropriateness of the threshold amount of $2,000 in gross receipts, as does a bill introduced by Councilmembers Ambrose and Brazil in September 2002. These issues and others were raised at a DC Council public hearing on October 23, 2002, held by Councilmember Ambrose, Chairperson of the Committee on Consumer and Regulatory Affairs. Various business organizations and individuals testified in favor of either excluding their particular business or repealing the law altogether.

This later recommendation, while discussed by the DC Council in its late December legislative session, was not acted upon because the city's Fiscal Year 2003 budget is reliant, in part, on the revenue generated by license fees including those for the MBL program.

Our advice and parting words: Stay on top of potentially fast-moving developments and changes in the law, but do not wait until the last minute to get a Master Business License for your company, association or other business.

There are simply too many requirements and too many potential hurdles to wait until the "11th hour" to file a Master Business License application.

About the Authors
Jacques B. DePuy concentrates his law practice on land use and development in the District. Mr. DePuy is a principal at Greenstein, DeLorme & Luchs, P.C.

Lyle M. Blanchard also focuses his practice on land use and development matters. Prior to joining Greenstein, DeLorme & Luchs, he worked as Legislative Director of the Finance & Revenue and Judiciary Committees of the DC Council and as Legislative Advisor at DCRA. Mr. Blanchard is an associate attorney at the firm.