2016 Legislative Highlights

Here is a list of significant legislative changes for 2016. Select the tax type or topic to see more information and available resources pertaining to these important changes.

Agricultural Community

 

  • Sales and Use Tax Exemption for Agricultural Machinery and Equipment
    Starting July 1, 2016, agricultural machinery and equipment is exempt from sales and use tax if it is used predominately in the production of agricultural or horticultural commodities for sale. “Predominately” means 75 percent of the time it is in use. This is a change from the “direct and exclusive use” standard, which required the machinery or equipment to be used 96 percent of the time for production. Please use the updated Form S-3A, Agricultural Fertilizers, Pesticides, Supplies, Machinery & Equipment, to properly claim the exemption. Learn more about S-3A or by reviewing Act 100.
  • Certification for Agricultural Land Enrolled in Current Use
    The requirement of owners of agricultural land enrolled in use value appraisal to certify that the land continues to be eligible on or before September 1 of every year was codified into law. During the first week of August, the Current Use Program is sending forms to landowners who must certify by Sept. 1, 2016. If you do not receive a form, you are not required to certify. More information is available here. This requirement was law starting last year but was not codified. Sec. 4 of Act 134.

Bank Franchise Tax

  • Quarterly to Monthly Filing
    Starting January 1, 2017, the return and payment for the bank franchise tax must be made to the Department of Taxes on or before the 25th of every month. Previously, it was quarterly. Sec. 37 of Act 134.

Businesses

  • Income Tax Withholding
    • Withholding Filing Frequency
      Employers are now required to make Vermont tax withholding payments quarterly if they are required to make federal payments quarterly or annually. Previously, quarterly withholding was linked to a dollar amount, which caused some employers to have schedules for state and federal withholding payments that were out of synch with one another. Sec. 12 of Act 134.
       
    • W-2 Due Date
      Employers are now required to file W-2s with Vermont on or before January 31 of every year. The previous due date was February 28. Sec. 12 of Act 134.
       
  • S-Corp Minimum Tax Due Date
    A change was made clarifying that the return due date for S corporation minimum tax is the same as the due date for federal S corporation returns. Changes in federal law made the clarification necessary. Sec. 14 of Act 134.
     
  • Zero Returns for Solid Waste Tax
    Persons required to pay the solid waste tax can now be required to file a quarterly return even when no tax is due for a particular quarter. Sec. 15 of Act 134.
     
  • Landlord Certificates
    People who rent out property for homestead use are now required to file a landlord certificate with the Department of Taxes in addition to providing one to the renter. The due date for sending landlord certificates is the same as before—January 31. Sec. 17 of Act 134.
     
  • Election for Sales Use Tax Collection and Remittance When Manufacturers and Retailers Act as Contractors
    Act 134 of 2016 clarified that manufacturers and retailers who occasionally act as contractors will be treated as contractors when purchasing materials and supplies for use in improving real property. By filing an election with the Department, manufacturers and retailers may now charge customers sales tax for the materials, supplies, or finished product instead of remitting use tax. Businesses are required to follow the default method of remitting use tax if they do not file an election and must charge customers if they do file an election. Learn more about manufacturer or retailer election. Secs. 22-24 of Act 134.
  • Rewrite of the VEGI Statute
    The Vermont Employment Growth Incentive statute was moved to a different part of title 32 and was rewritten using plain language. Education property tax stabilization is no longer an optional method for receiving an incentive payment. The aggregate annual upper cap on initial incentive payments has been increased and the approval process for increasing the cap amount for a year has been somewhat changed. The new language takes effect January 1, 2017. Sec. H.1 of Act 157.

Current Use

  • Certification for Agricultural Land Enrolled in Current Use
    The requirement of owners of agricultural land enrolled in use value appraisal to certify that the land continues to be eligible on or before September 1 of every year was codified into law. The requirement was made law in 2015 but was not codified. Sec. 4 of Act 134.
     
  • Current Use Advisory Board Hearing Date
    The Current Use Advisory Board’s annual public hearing was changed to take place on or before October 15. Previously, the hearing was required to occur in August. Sec. 3 of Act 134.
     
  • Notice that Development Occurred and Tax is Due
    The form describing developed land, the amount of land use change tax payable, and the fair market value of the land will be distributed to the land owner, the local assessing official, the town office, the Agency and Agriculture, Food, and Markets, and Department of Forests, Parks, and Recreation when the Department of Taxes receives the completed and signed form from the assessing official. Previously, the form was distributed when tax was paid, which occurs at a later time. Sec. 5 of Act 134.
     
  • Releasing a Current Use Lien
    The law was changed to clarify the circumstances in which the Department of Taxes will release a current use lien. This includes when land use change tax is paid, when tax is abated, and when land becomes statutorily exempt from land use change tax. Owners of exempt land must request a release of the lien if has not yet become developed. Additionally, an exemption was added for lands acquired by certain state agencies for public use. Sec. 20 of Act 171.

Estate Tax

  • Restructure of Estate Tax
    The Vermont estate tax no longer relies on the federal credit calculations that were repealed by Congress in 2005. Vermont now has an independent estate tax rate schedule and exemption amount. Estates are now taxed at a rate of 16% of any value over $2.75 million. The changes apply to decedents dying after December 31, 2015. Act 146.

Fuel Dealers

  • Election for Sales Use Tax Collection and Remittance When Manufacturers and Retailers Act as Contractors
    Act 134 of 2016 clarified that manufacturers and retailers who occasionally act as contractors will be treated as contractors when purchasing materials and supplies for use in improving real property. By filing an election with the Department, manufacturers and retailers may now charge customers sales tax for the materials, supplies, or finished product instead of remitting use tax. Businesses are required to follow the default method of remitting use tax if they do not file an election and must charge customers if they do file an election. Learn more about manufacturer or retailer election. Secs. 22-24 of Act 134.
  • Fuel Tax Change
    Starting July 1, 2016, the fuel gross receipts tax becomes the fuel tax. The fuel tax is imposed on the retail sale of heating oil, propane, kerosene, and other dyed diesel fuel delivered to a residence or business. The rate is $0.02 per gallon. There is a new gross receipts tax on retail sales of coal and natural gas at the rate of 0.75 percent. There is a gross receipts tax on the retail sale of electricity at the rate of 0.5 percent. Secs. 35-36 of Act 134.
     
  • Quarterly to Monthly Filing
    Starting January 1, 2017, returns and payments for the fuel tax, gross receipts tax on coal and natural gas, and gross receipts tax on electricity must be made to the Department of Taxes every month. Previously, the fuel gross receipts tax was remitted quarterly. Additionally, fuel dealers may choose to itemize a receipt to show the amount of tax but must include a statement explaining the purpose of the tax as required by law. Sec. 39 of Act 134.

More information on all of these changes can be found on the Fuel Tax page.

Manufacturers of Beer, Wine, and Spirits

  • Malt and Vinous Beverage Tax
    • Change of Return Due Date and Quarterly Filing Option
      Starting July 1, 2016, returns for the malt and vinous beverage tax must be filed on the 25th day of the month. Previously, it was the tenth day of the month. Additionally, for businesses that were required to pay $2,000.00 or less malt and vinous beverage tax in the preceding calendar year, the tax can now be paid quarterly instead of monthly. Quarterly returns must be filed on or before the 25th day of the calendar month succeeding the quarter ending the last day of March, June, September, and December of each year. Sec. 8 of Act 144.
       
    • Transfers Between Manufacturers
      A manufacturer of malt and vinous beverages can transfer beverages to a different manufacturing location that shares common ownership. The malt and vinous beverage tax will be due when the receiving manufacturer makes a retail sale or when a bottler or wholesaler sells the beverages to a retailer. Sec. 13a of Act 144.
       
  • Free Samples of Alcoholic Beverages
    No tax is imposed on free samples of malt and vinous beverages provided for immediate consumption. The meals and rooms tax applies when there is a charge for samples provided for immediate consumption. Secs. 11-12 of Act 144.

Check back here for more information, including a new fact sheet.

Miscellaneous Technical Changes

  • Tax Information Confidentiality Exemptions
    The Department of Taxes may now disclose confidential tax information in some situations with Vermont municipalities that have a local option or local gross receipts tax, the Department of Financial Regulation, and the Vermont Student Assistance Corporation. Sec. 1 of Act 134.
     
  • Employer Immunity
    The law now clarifies that an employer is immune from liability when complying with a request from the Department of Taxes to garnish wages. Sec. 2 of Act 134.
     
  • Annual income tax update
    The Vermont income tax was updated to adopt federal law for the purpose of computing tax liability for taxable year 2015. This update is done annually. Sec. 11 of Act 134.
     
  • Characterization of Income
    A provision in the income tax chapter was repealed because it possibly conflicts with other provisions of Vermont law and with the federal law that Vermont income tax is based on. Sec. 13 of Act 134.
     
  • Homestead Declaration
    There was a technical correction in the law to acknowledge that the final due date for homestead declarations for a homestead property tax adjustment is October 15 of every year. Declarations cannot be accepted after that date. Sec. 16 of Act 134.
     
  • Corporate Tax Penalties and Interest
    There was clarifying language added that the penalties and interest provisions that apply to corporate taxes are the general penalties and interest provisions within the tax title and not those used for other specific tax types. Sec. 18 of Act 134.
     
  • Vending Machines and Meals and Rooms Tax
    Some changes were made to conform to the change in law from last year that made food provided by a vending machine subject to the meals and rooms tax. Sec. 20 of Act 134.

Municipal Officials

  • Property Hearing Officer Name and Inspection
    The property tax hearing officer is now called the property valuation hearing officer in statute. Additionally, the hearing officer is no longer required to inspect a property before issuing a determination but must conduct an inspection if one of the parties requests it. Secs. 7-8 of Act 134.
     
  • Lister Education
    Municipalities are no longer paid for lister education from the equalization and reappraisal account within the education fund. Instead, the Division of Property Valuation and Review will receive up to $100,000.00 to provide free trainings for listers and scholarships to external trainings. Sec. 6 of Act 134.
     
  • Tax Increment Financing Changes
    The audit of the Milton TIF district by the State Auditor is delayed one year. Additionally, Burlington is allowed to extend the period to incur indebtedness for three properties in its waterfront TIF district up until July 1, 2021. Secs. 9-9a of Act 134.
     
  • Release of a Current Use Lien
    The law was changed to clarify the circumstances in which the Department of Taxes will release a current use lien. This includes when land use change tax is paid, when tax is abated, and when land becomes statutorily exempt from land use change tax. Owners of exempt land must request a release of the lien if has not yet become developed. Additionally, an exemption was added for lands acquired by certain state agencies for public use. Sec. 20 of Act 171.
     

Property Owners

  • Education Property Tax Rates
    For fiscal year 2017 only, the nonresidential property tax rate is lowered to 1.535, the property dollar equivalent yield is $9,701 and the income dollar equivalent yield is $10,870. For fiscal year 2018 and forward, excess spending penalties will be anchored to 2015 spending. Additionally, some expenses were excluded from the calculation of excess spending. Secs. 1-2 of Act 132.

Remote Vendor Requirements

  • Short-Term Rental Platforms Contract
    The Department of Taxes is directed to negotiate with operators of short term rental internet platforms for the collection and remittance of meals and rooms tax. Customers are required to pay meals and rooms tax for short term rentals but property owners conducting the rental are not always aware of the responsibility to collect it. Sec. 21 of Act 134.
     
  • Meals and Rooms Tax Informational Reporting
    Businesses that facilitate short term rentals through an internet platform are now required to provide the Department of Taxes with information related to every rental transaction. This requirement will take effect on the earlier of July 1, 2017 or when the State of Colorado implements a similar requirement. Sec. 21a of Act 134.
     
  • Noncollecting Vendors
    Vendors that are not required to collect sales tax because they lack a physical presence in Vermont are now required to notify purchasers of their duty to pay use tax on items for which sales tax was not paid. Vendors must also notify purchasers of the total amount of purchases made in the previous year so the purchaser knows how much use tax to remit when filing a personal income tax return. This requirement will take effect on the earlier of July 1, 2017 or when the State of Colorado implements a similar requirement. Sec. 25-26 of Act 134.
     
  • Economic Nexus
    Persons are liable for collecting and remitting sales tax when they lack a physical presence in Vermont but they conduct certain economic activities in Vermont. This change takes place on the later July 1, 2017 or when the controlling U.S. Supreme Court decision is overruled by the Court or by federal law. Sec. 27 of Act 134.

Renter Rebate

  • Landlord Certificate
    People who rent out property for homestead use are now required to file a landlord certificate with the Department of Taxes in addition to providing one to the renter. The due date for sending landlord certificates is the same as before—January 31. Sec. 17 of Act 134.

Telephone Property Tax

  • Quarterly to Monthly Filing
    Starting January 1, 2017, the return and payment for the telephone personal property tax must be made to the Department of Taxes on or before the 25th of every month. Previously, it was quarterly. Sec. 38 of Act 134.

Contact Us

Commissioner Kaj Samsom
133 State Street | Montpelier, VT 05633
(802) 828-2505

Taxpayer Assistance Window
Office Hours: 7:45 a.m. - 4:30 p.m. Monday - Friday

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