What's New: Repeal of Telephone Taxes and Communications Property Taxed as Real Property
Under Act 145 (H.657) of 2024, the Telephone Personal Property Tax is repealed on July 1, 2025.
The final monthly installment payment of the Telephone Personal Property Tax calculated on the taxpayer’s personal property as of December 31, 2024, shall be due on or before July 25, 2025. Any taxpayer who paid the Telephone Personal Property Tax prior to its repeal on July 1, 2025, shall become subject to property tax on its communications property. See below for more information on what constitutes “communications property.”
The Alternative Telephone Gross Revenues Tax is repealed on January 1, 2026. The final quarterly payment of the alternative tax shall be due on or before January 25, 2026.
Any taxpayer who paid the Alternative Telephone Gross Revenues Tax prior to its repeal on January 1, 2026, shall become subject to the income tax imposed under 32 V.S.A. Chapter 151 beginning with the taxpayer’s first income tax year starting on or after January 1, 2025. Additionally, any taxpayer who paid the Alternative Telephone Gross Revenues Tax prior to its repeal shall become subject to property tax on its communications property. See below for more information on what constitutes “communications property.”
No Alternative Telephone Gross Revenues Tax shall be due for any period included in the taxpayer’s income tax filing for tax years starting on or after January 1, 2025.
Communications Property Taxed as Real Property Beginning July 1, 2025
Instead of the repealed telephone taxes, certain communications network infrastructure will be set in the State and local grand list as real property and taxed at its fair market value beginning with the 2025 grand list and property tax year. Communications property will not be considered business personal property, and accordingly will be exempt from the local option to tax business personal property pursuant to 32 V.S.A. § § 3618 and 3849.
“Communications property” is defined as tangible personal property used to enable the real-time, two-way, electromagnetic transmission of information, such as audio, video, and data. To be considered communications property, tangible personal property must be fitted and attached in such a way as to become part of a local, state, national, or international communications network, such as telephone, cable television systems, and broadband facilities. Communications property includes wires, cables, conduit, pipes, antennas, poles, and wireless towers.
Telephone Personal Property Tax
Effective Until July 1, 2025
Until July 1, 2025, every person or entity owning or operating a telephone line or business is subject to a tax equal to 2.37 percent of net book value as of the preceding December 31 of all personal property located in Vermont used in whole or in part for conducting a telecommunications business. See 32 V.S.A. § 8521.
Until July 1, 2025, some taxpayers may be eligible to pay a "gross revenues" tax as an alternative to the telephone personal property tax 32. See V.S.A. § 8522. The Alternative Gross Revenues Tax is further discussed below.
Owning or Operating a Telephone Line or Business
Effective Until July 1, 2025
Any person or entity that owns or operates a telephone line or that owns or operates a business that provides telecommunications services is subject to the telephone personal property tax. Persons or entities that provide traditional telecommunications services through a public switched telephone network (PSTN) are subject to the telephone personal property tax. Persons or entities that provide telecommunications services through mechanisms other than a PSTN, including Voice over Internet Protocol (VOIP) technology, are also subject to the telephone personal property tax.
What Property is Subject to This Tax
Effective Until July 1, 2025
All personal property used in whole or in part for conducting a telecommunications business is subject to this tax, including personal property under construction, materials, and supplies. Property subject to tax as real property is not subject to the Telephone Personal Property Tax.
Net Book Value
Effective Until July 1, 2025
“Net book value” of personal property means the original cost less depreciation of the property as computed for the federal income tax return required to be filed with the federal authorities for the corresponding tax year. Accelerated depreciation taken in accordance with Federal income tax law, including “bonus depreciation” under IRC § 168(k), is includable when calculating net book value.
Alternative Gross Revenues Tax
Effective Until January 1, 2026
Until January 1, 2026, in place of the telephone personal property tax and any income tax imposed under 32 V.S.A., Chapter 151, a person or entity owning or operating a telephone line or business may instead be eligible to elect to pay an alternative gross revenues tax. To be eligible to elect to pay the gross revenues tax, the person or entity must have received less than $50 million in annual gross operating revenues within the State in the preceding taxable year.
Until January 1, 2026, a person or entity that elects to pay the gross receipts tax will be taxed on its entire gross operating revenues from its operations within the State for the fiscal year ending June 30. The tax is computed as follows:
Where the gross operating revenues during the quarter:
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exceed $250.00 and do not exceed $1,250.00, the tax shall be 2 1/4 percent;
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exceed $1,250.00 and do not exceed $2,500.00, the tax shall be 2 1/2 percent;
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exceed $2,500.00, and do not exceed $5,000.00, the tax shall be 2 3/4 percent;
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exceed $5,000.00 and do not exceed $10,000.00, the tax shall be 3 percent; and
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the rate of tax shall be increased 1/4 of 1 percent for each additional $5,000.00 or fractional part thereof of such gross operating revenue. However, the rate shall in no event exceed 5 1/4 percent of the gross operating revenues.
Taxpayers who elect to file on gross revenues under 32 V.S.A. § 8522(b) must file Verrmont Form TGR-652 and pay the applicable tax to the Commissioner of Taxes no later than 25 days following the last day of the third, sixth, ninth, and twelfth month of each taxable year.
How to File
Online: Taxpayers may file returns and pay tax due using myVTax, our free, secure online filing site. If you have any questions, contact us at (802) 828-2551 or tax.business@vermont.gov.
Paper Returns: You may still use the paper forms if you cannot file and pay through myVTax.