In 2017, specific types of machinery and repair parts were exempted from the Vermont Sales and Use Tax. The exemption created by Acts 75 and 77 of 2017 targeted the types of machinery specifically used in timber cutting, timber removal, and the processing of timber or other solid wood forest products intended to be sold at retail.
Act 29 (2019) takes this exemption a step further, allowing additional accessories sold for use on machinery listed in the 2017 exemption to also be exempt.
The exemption for machinery is a product-based exemption. That means the purchase of those specific types of machinery does not require an exemption certificate at the time of purchase - they are exempt no matter who is making the purchase.
Since many repair parts and accessories can be used on both taxable and exempt purchases, sellers will require a completed Form S-3W, Vermont Sales Tax Exemption Certificate for Forestry and Wood Products Machinery and Repair Parts for each specific type of machinery for which you are purchasing repair parts or accessories.
More information can be found in our fact sheet, Vermont Sales and Use Tax Exemption for Forestry Machinery, Repair Parts, and Accessories, the FAQs below, and the instructions in Form S-3W, Vermont Sales Tax Exemption Certificate for Forestry and Wood Products Machinery and Repair Parts. Please contact the Business Tax Section if you have additional questions.
Frequently Asked Questions
What is eligible for the exemption?
Under this exemption, only the following machinery is exempt from sales and use tax:
- Skidders with grapple and cable
- Feller bunchers
- Cut-to-length processors
- Forwarders
- Delimbers
- Loader slashers
- Log loaders
- Whole-tree chippers
- Stationary screening systems
- Firewood processors, elevators, and screens
These types of machinery are exempt from sales and use tax, no matter who is purchasing the item. The repair parts to be used in or with these types of machinery are also exempt from sales and use tax with a properly completed S-3W.
Additionally, the following accessories are exempt from sales and use tax with a properly completed S-3W:
- Traction enhancement accessories
- Tire chains
- Track systems
- Winch cables
How do I claim this exemption?
All purchases of this type of machinery are exempt from sales tax, regardless of who is purchasing them. Some retailers may ask you to complete the Form S-3W when purchasing equipment. However, it is not considered required by the Department when purchasing the eligible equipment.
Since the repair parts and accessories used for these types of machinery can also be used for non-exempt machinery, an exemption certificate will be required for purchases of repair parts eligible for this exemption. A purchaser must fill out an S-3W and present it for all repair parts and accessories eligible for the exemption.
What if a retailer does not grant the exemption?
If a seller is not willing to grant the exemption on either repair parts or accessories, the Department recommends paying the sales tax at the time of purchase and then requesting a refund from the Department directly. You can file for a refund using Form REF-620, Application for Refund of Vermont Sales and Use Tax, Meals and Rooms Tax, or Local Option Tax.
What about fuel used in this machinery?
Dyed diesel (commonly referred to as "off-road dyed diesel") used in these types of machinery is exempt from sales tax. If you are using dyed diesel in other types of machinery, it is exempt if it is used to propel the machinery. To make sure it is being used for forestry equipment, your fuel dealer will ask you to complete a Form S-3F, Vermont Sales Tax Exemption Certificate for Fuel or Electricity.