(Washington, DC) Robert J. Spagnoletti, the Attorney General for the District of Columbia, announced today that his Office has won a key lawsuit which could save the District hundreds of millions of dollars in business taxes.

Today's ruling by the DC Court of Appeals in District of Columbia v. Kenneth Bender reversed a March 2006 decision by DC Superior Court Judge José M. Lopéz which found the District is illegally taxing certain unincorporated businesses owned by non-District residents. Had the decision been allowed to stand, the loss of revenue would have been monumental. The Office of Tax and Revenue (OTR) estimates that the cost to the District would have exceeded $580 million over the next four years. The DC Court of Appeals today reversed the decision in an opinion written by Senior Judge James Belson and joined by Chief Judge Eric Washington and Judge John Fisher.

The Office of the Solicitor General appealed the case on behalf of the District. "I am extremely pleased with the outstanding work done by the Office of the Solicitor General, and Senior Assistant Attorney General James McKay Jr., who argued this case. Clearly, the city's tax on unincorporated businesses in the District whose owners live outside the District is not a violation of the Home Rule Act, nor does it amount to a commuter tax," said General Spagnoletti.

OTR Deputy Chief Financial Officer Sherryl Hobbs Newman says the decision will have a significant impact. "We are gratified that the Court of Appeals has vindicated the District. This is a victory for all District residents," said Hobbs Newman.

As a general rule under District law, an unincorporated business (UB) with more than $12,000 of gross income must file a UB tax return. In fiscal year 2005 alone, the UB tax generated approximately $117 million dollars.

Bender has the right to file a petition for rehearing before the full Appeals Court. OTR will not act on any claims for refunds until all legal proceedings have concluded in the matter.