Vermont law places two notice requirements on vendors that lack sales tax nexus and do not collect Vermont sales tax when making sales into Vermont. A noncollecting vendor must follow the instructions below to ensure compliance with the law and to avoid penalties. The Vermont Department of Taxes is authorized to adopt rules and procedures and create forms necessary to implement the notice requirements explained in this guidance. 32 V.S.A. § 9712.
What is a “Noncollecting Vendor?”
A “noncollecting vendor” is a vendor that
- makes sales into Vermont that are subject to sales tax but
- does not collect sales tax and
- lacks sales tax nexus with Vermont.
A vendor that has sales tax nexus through a presence or business activity is not a “noncollecting vendor” and is legally liable for any tax due but not collected. A vendor with sales tax nexus shall not follow these notice requirements in lieu of collecting and remitting sales and use tax.
If you are a noncollecting vendor, please see the chart below to determine what requirements apply to your business.
|Type and Size of Vendor
|Summary of Requirements
|All noncollecting vendors
Provide a transactional notice with every Vermont reportable purchase not exempt from sales and use tax.
|Every noncollecting vendor for every Vermont purchaser who made $500.00 or more in total purchases in the previous calendar year
Send notification to all Vermont purchasers with $500.00 or more total, showing the total amount paid by the purchaser for Vermont purchases made in the previous calendar year.
|Noncollecting vendors who made $100,000.00 or more in sales into Vermont in the previous year
Transmit an annual customer information report to the Department of Taxes on or before January 31 of each year for every purchaser required to receive an annual purchase summary.
Transactional Notice for Every Vermont Purchase
Required by: All noncollecting vendors
General Rule: A noncollecting vendor must provide a transactional notice with every Vermont reportable purchase that is not exempt from sales and use tax. A Vermont reportable purchase is one involving sales taxable property delivered to Vermont or taxable property or amusements electronically delivered to, accessed by, or used by a person located in Vermont. A noncollecting vendor may use a commercially reasonable method to determine whether an electronic transaction is sourced to Vermont. A commercially reasonable method includes a purchaser’s existing billing address, a customer-tracking system, or other similar system.
When the purchaser and recipient are different parties, the noncollecting vendor should provide the transactional notice and annual purchase summary to the purchaser, not the recipient.
The transactional notice must contain the following information:
- That the vendor does not collect Vermont sales and use tax.
- Sales tax is due on the purchase and it is not exempt from Vermont sales and use tax.
- Vermont requires the purchaser to pay the use tax due on his or her tax return.
Specific Rules for Online Purchases
The transactional notice must be prominently displayed in close proximity to the “Tax,” “Sales Tax,” or “Total Price” lines shown at check out.
A vendor may use a hyperlink to the transactional notice if it is impractical to display the notice in close proximity to the “Tax,” “Sales Tax,” or “Total Price” lines. If a hyperlink is used, the link must state: “See here for information on the tax you may owe Vermont” and the link must direct the purchaser to the principal transactional notice.
The use of an online marketplace does not relieve a noncollecting vendor from the legal obligation to provide a transactional notice. However, a marketplace may provide the notice to Vermont purchasers on behalf of the noncollecting vendor.
Specific Rules for Purchases Not Made Online
The transactional notice must be prominently displayed in close proximity to the “Total Price” line on an order form.
A vendor may instead attach a supplemental document to an invoice or confirmatory communication if it is impractical to display the transactional notice in close proximity to the “Total Price” line on an order form. If a supplemental document is used, the invoice or confirmatory communication must direct the purchaser to the attached supplemental document by stating near the “Total Price” line: “See attachment for information on the tax you may owe Vermont.” The supplemental notice must contain the principal transactional notice.
Additional Information Allowed in the Transactional Notice
A transactional notice may contain the following additional information.
- The vendor will provide the purchaser an annual purchase summary of all purchases made by the purchaser during the previous calendar year to assist the purchaser with paying use tax due.
- Learn more about how to pay Vermont use tax.
Using One Transactional Notice to Comply with Multiple States
Vermont allows a noncollecting vendor to use a single transactional notice that is generalized to any state, provided the notice contains substantially the same information as required by Vermont law and it substantially complies with the procedures set out in this guidance.
Annual Purchase Summary
Required by: Every noncollecting vendor for every Vermont purchaser who made $500.00 or more in total purchases in the previous calendar year.
General Rule: Each noncollecting vendor must send notification to all Vermont purchasers with $500.00 or more total on or before January 31 of each year showing the total amount paid by the purchaser for Vermont purchases made from the noncollecting vendor in the previous calendar year. The purchase summary must be sent by first class mail to the last known address of the purchaser or by electronic mail. The annual purchase summary must be sent separately from any other shipment.
If sent by first class mail, the outside of the envelope must be marked with “Important Tax Document Enclosed.” If sent electronically, the electronic communication must be prominently marked with the words “Important Tax Document Enclosed.”
All notification letters and statements must clearly identify the noncollecting vendor as the sender. The purchase summary itself must expressly associate the purchases with the correct noncollecting vendor. A failure to comply with these requirements is considered a failure to send an adequate purchase summary that is subject to the penalty for failure to comply with the law.
The vendor is responsible for following any applicable opt-in marketing, privacy, or other laws when choosing to send the annual purchase summary electronically. The only time a vendor may be required to send the annual statement electronically is when the vendor lacks a physical address for the purchaser.
The annual purchase summary must contain the following information:
- The name of the noncollecting vendor.
- The total amount paid by the Vermont purchaser in the previous calendar year, including any fees associated with taxable products that were charges for labor to create the product sold, charges for services necessary to complete a sale, or delivery charges.
- That the State of Vermont requires a purchaser to pay sales and use tax on nonexempt purchases through myVTax or on his or her tax return when a purchase is made from a noncollecting vendor.
- Optionally, any additional information the noncollecting vendor thinks may be helpful for the purchaser to comply with his or her use tax obligations, including the dates of purchases, descriptions of items, whether items are exempt in Vermont, and links to information on the Vermont Department of Taxes website.
Minimum Purchase Amount
When determining whether a Vermont purchaser made $500.00 or more in total purchases for the previous year, a noncollecting vendor may exclude nontaxable purchases from the calculation. However, when associated with the sale of a taxable product, charges for labor to create the product sold, charges for services necessary to complete the sale, and delivery charges must be included in the calculation.
Penalties for Failure to Follow Noncollecting Vendor Reporting Requirements
- The penalty for a failure to provide a transactional notice for a Vermont purchase is $5.00 for each such failure, unless the noncollecting vendor shows reasonable cause for the failure.
- The penalty for a failure to send the annual purchase summary is $10.00 for each such failure, unless the noncollecting vendor shows reasonable cause for the failure.