Legislation passed by the Vermont House of Representatives, the miscellaneous tax bill, includes amendments to corporate income, personal income, sales and use, meals and rooms, fuel gross receipts, and telephone company tax laws. Highlights of the proposed changes, which are discussed below, include an update to the IRC conformity date, new sales and use tax notice and annual statement requirements for certain noncollecting vendors, changes to the thresholds requiring certain out-of-state vendors to collect and remit sales and use tax, an increase in the fuel gross receipts tax rate on certain fuels and coal, and an annual assessment on ambulance agencies. The introduced version of the miscellaneous tax bill was previously reported. (TAXDAY, 2016/03/23, S.16)
The proposed legislation would update the IRC conformity date for personal and corporate income taxes so that Vermont generally conforms to the IRC as in effect for the 2015 taxable year, applicable to tax years beginning on and after January 1, 2015.
The legislation would also repeal the requirement that the character of any S corporation item not taken into account by a shareholder of an S corporation will be determined as if the item were received or incurred by the S corporation and not its shareholder. Further, if an S corporation is subject to the minimum tax, the payment will not be due by the due date for the filing of S corporation returns under IRC §6072(b). Currently, these returns are due at the same time as Vermont C corporation returns.
The proposed legislation would also amend the due dates for quarterly, monthly and annual withholding returns and payments. The legislation would not change the due dates for semi-weekly withholding payments. If a person estimates that taxes to be withheld during any calendar quarter will not exceed $2,500, the legislation provides that quarterly payments are due by the last day of the first calendar month following the period. Currently, quarterly payments are due by April 25, July 25, October 25 and January 25. If a person estimates that taxes to be withheld during any calendar quarter will exceed $600, but the quarterly or semi-weekly payment requirement does not apply, the legislation provides that the payments are due by the 15th day of the first calendar month following the period for which it is made. Currently, monthly returns are due the 25th day of every month (by the 23rd day of February) for the previous calendar month. Finally, the legislation would also change the due date for the annual withholding return to on or before January 31st. The annual return is currently due by February 28th.
Sales and Use Tax
Noncollecting vendor notice and annual statement requirements: The bill would require noncollecting vendors making sales into Vermont to notify certain purchasers that sales or use tax is due on nonexempt purchases from the vendor and that Vermont requires the purchaser to file a sales or use tax return. In addition, certain noncollecting vendors would be required to file an annual statement with the Vermont Department of Taxes for each purchaser who made Vermont purchases. “Noncollecting vendor” would be defined as a vendor that sells tangible personal property to purchasers who are not exempt from Vermont sales tax and that does not collect the tax.
The notice to purchasers would have to be provided to Vermont purchasers who have made purchases amounting to $500 or more from the noncollecting vendor in the previous calendar year. The legislation would provide specific requirements for the timing, content, and mailing of the notices.
The annual statement would be required of noncollecting vendors that made sales amounting to $50,000 or more into Vermont in the previous calendar year. The statement would be required to show the total amount paid for Vermont purchases by the purchaser during the previous calendar year or portion of the year.
Out-of-state vendor thresholds: The legislation would change thresholds that, if met, require certain out-of-state vendors to collect and remit Vermont sales and use tax. Persons making sales of tangible personal property from outside Vermont to a destination in Vermont, who do not maintain a place of business or other physical presence in Vermont, would meet the definition of “vendor” required to collect and remit Vermont sales or use tax if the person engages in regular, systematic, or seasonal solicitation of sales of tangible personal property in Vermont through various means of communication and has made sales from outside Vermont to destinations in Vermont of at least $100,000 or totaling at least 200 individual sales transactions during any 12-month period preceding the monthly period at issue. Currently, the threshold is sales from outside Vermont to destinations in Vermont of at least $50,000 during any 12-month period preceding the monthly or quarterly period at issue.
Manufacturers and retailers making real property improvements:
Manufacturers and retailers that purchase materials and supplies to be used in erecting structures or otherwise improving, altering, or repairing real property would be treated as contractors unless they elect, by filing a form with the Department of Taxes, to be treated as a retailer on their purchase of such materials and supplies. If the manufacturer or retailer makes the election, the purchase of such materials and supplies would not be considered a retail sale.
Meals and Rooms Tax
The Department of Taxes would be required to negotiate with persons who provide a platform for short-term property rentals and enter into contracts with such persons for the collection and remittance of the meals and rooms tax.
Fuel Gross Receipts Tax
The legislation would increase the fuel gross receipts tax rate from 0.5% to 0.75% on retail sales of heating oil, propane, kerosene, and other dyed diesel fuel delivered to a residence or business; natural gas; and coal. The 0.5% tax rate would continue to apply to retail sales of electricity.
The fuel gross receipts tax would be levied and collected monthly (previously, quarterly).
The legislation would also extend the sunset date of the fuel gross receipts tax from June 30, 2016, to June 30, 2021.
Telephone Company Tax
If enacted, the bill would change the payment dates for the net book value tax on telephone companies from the 25th day of the third, sixth, ninth, and twelfth months of each taxable year, to the 25th day of each month.
If enacted, the bill would create an annual assessment on ambulance agencies. The assessment would be 3.3% of the ambulance agency’s annual net patient revenues for services delivered to Vermont patients during the most recent annual fiscal period. Assessments would be required to be remitted annually by March 31, beginning March 31, 2017.
VT HB 873 passed House 3-24-16
H.B. 873, as passed by the Vermont House of Representatives on March 24, 2016