What businesses must collect and remit the meals and rooms tax?
The following is a non-inclusive list of types of businesses which must charge tax:
- Restaurants, bars, or catering businesses
- Grocery and convenience stores if they offer prepared foods
- Food carts and food trucks
- Vending machines
- Transient vendors (sell only once in Vermont)
- Hotels, motels, inns, bed & breakfasts, and conference room rentals
- Rental cottages, condominiums, campsites, and ski lodges
- Rooms in homes, homes, second homes, and other types of accommodation owned by private individuals for which a rental fee is charged
- Vendors with no permanent Vermont address
- Nonprofit organizations, even if applying for exemption
How frequently does my business need to file meals and rooms tax returns?
The tax period depends on the amount of meals and rooms tax liability in the immediately preceding calendar year. So, for example, if in 2014 the meals and rooms tax liability was over $500, the business should file monthly. If the business paid $500 or less in annual meals and rooms tax, then the business should file quarterly. Please note: The Department of Taxes will assign your filing frequency upon registration.
What are the due dates for the meals and rooms tax returns and payments?
The due date depends on the tax period:
- Quarterly filers: 25th day of April, July, October, and January, following the last day of the calendar quarters ending March 31, June 30, September 30, and December 31, respectively
- Monthly filers: 25th day of the month following the month for which tax is due. (Exception: 23rd of February).
How does my business file the meals and rooms tax return and make payments?
Meals and rooms tax returns should be filed electronically, and payments should be made, using myVTax.
Can I still file the meals and rooms tax return using a paper form, and make payment with a check?
If you must pay for multiple locations, or if your total Meals and Rooms Tax remitted for the year exceeds $100,000, the Commissioner of Taxes has mandated that you use myVTax. If you have a single location, and cannot file and pay through myVTax, you may still use the paper forms. File Form MRT-441, Meals and Rooms Tax Return.
Are coupons and gift certificates subject to the meals and rooms tax?
No meals and rooms tax is collected at the time of purchase of the gift certificate. Gift certificates are treated like cash. When used, the business collects the meals tax on the total amount of the charge, not the amount due after the certificate is used.
If you honor a coupon at your place of business and receive reimbursement from the coupon issuer in the amount of the discount, tax is due on the full cost. If you honor a coupon and are not reimbursed by the coupon issuer, then the tax is due on the final cost to the customer. The same is true if you offer a special or reduced price to customers.
Are tips taxable?
Generally, tips are not taxable, but there are exceptions. Tip means either:
- a sum of money gratuitously and voluntarily left by a customer for service, or
- a charge for service that is indicated by the seller on the bill, invoice, or charge statement that
- does not exceed 20% of the total charges and
- is separately accounted for and fully distributed to service employees, in addition and supplemental to normal salary and wages, which must meet or exceed state and federal minimum wage requirements.
Tips in excess of 20% must be reported as taxable, even if fully distributed to service employees. If any portion of the tip is retained by the operator, rather than by service employees, the portion retained becomes a part of the charge to the customer and is thus subject to tax. For meals and rooms tax purposes, business owners and operators are not service employees, even when they perform functions typically performed by service employees.
I want to include the tax in the price of the meal. Am I allowed to do that?
Yes, but you must display a message on the menu or near the cash register stating All prices include the Vermont meals and rooms tax.
I own a catering business. What taxes am I responsible for collecting?
Any private person, entity, institution, or organization selling meals, serving alcohol, or renting rooms to the public must collect the applicable Vermont business taxes from their customers on their gross receipts and remit the tax to the Vermont Department of Taxes.
Caterers provide more than just food as part of their service to customers. Tableware, linen, decorations, and the labor involved to prepare and serve the meal all contribute to the dining experience. If the catering service you offer is presented and billed as a “package,” you must collect and remit the 9% Vermont Meals and Rooms Tax on all items and services that are components of the package. You may choose to itemize components of your catering service on the bill for the customer, but costs for the meal, labor, and other components are subject to the meals and rooms tax even when itemized. These components include the following non-inclusive list:
- Food and beverages
- Labor for preparing, delivery, serving, and cleaning up after the meal
- Tableware, such as dishware, cutlery, glassware, linens, and other items necessary for serving the meal
- Flowers and any other decorative items provided as part of the service
- Room, banquet hall, building, or any space where the meal will be served
If you are delivering a catered meal to a customer within a municipality with a meals and alcohol local option tax, then you must collect and remit the tax.
What happens if an item subject Vermont to meals and rooms tax is made with a 3SquaresVT/SNAP EBT card?
Items purchased with 3SquaresVT are exempt from state and local taxes. 7 CFR § 272.1; 32 V.S.A. § 9741(13). 3SquaresVT benefits can be used to purchase food items such as breads and cereals, fruits and vegetables, meats, fish, poultry and dairy products, or any food or beverage with a Nutrition Facts label. Items with a Supplement Facts label are not eligible for purchase with 3SquaresVT benefits. Items purchased with EBT cash are subject to tax.
Even though the following items are subject to tax in Vermont, they are exempt from tax when purchased with a 3SquaresVT EBT card:
- Fewer than three single-serve bakery items (normally one to two items are considered a meal and subject to meals tax)
- Cold prepared sandwiches to be eaten off-premises
- Cold food from the salad bar to be eaten off-premises
Please note that items purchased with EBT cash are subject to tax. Review our SNAP Tax Guidelines for more information.
I own and operate a vending machine company, what do I need to know?
Vending machine purchases are subject to the Vermont Meals and Rooms Tax. If your business operates vending machines, you are required to hold a Vermont Business Tax License, but you do not need a license for each machine.
You must inform customers that tax is included in the purchase price by placing a sign on each vending machine.
If I rent a room or other lodging only occasionally, do I have to pay meals and rooms tax?
Sleeping accommodations offered to the public is subject to the Meals and Rooms Tax if those rentals total fifteen (15) or more days in any one calendar year.
If I rent a room for more than 30 consecutive days, do I have to pay meals and rooms tax?
A lease agreement for at least 30 consecutive days that creates a landlord-tenant relationship between the parties is exempt from meals and rooms tax.
Rentals for more than 30 days in other circumstances: On the 31st day, the renter is considered a permanent resident and the room rental is no longer subject to the rooms tax. However, the first 30 days are subject to the rooms tax.
I am promoting an event, what do I need to do?
Promoters of events with 25 or more vendors selling taxable items must provide a list of participating vendors at least one day prior to the event. The list must include the vendor’s name and business tax account number. The promoter must notify the Vermont Department of Taxes within 10 days after the event if there are changes to the original list of participating vendors. Examples of these events include flea markets, shows, exhibitions, etc. Fax a complete list to (802) 828- 5282 or send us an email.
What is a transient vendor?
Transient Vendors sell items for a limited time and have no permanent place of business at that location. Examples of places where transient vendor sales may take place are at fairs, bazaars, flea markets, art or craft shows, and concerts.
If you sell taxable items in Vermont, you must obtain a business tax account and license from the Vermont Department of Taxes and collect and remit tax on those sales. This requirement applies for all sales even if the sales are for one day or regularly throughout the year. You will receive your license after your application is processed. There is no fee for the license.
Please note: Out-of-state retailers coming into Vermont must obtain a Vermont license. The out-of-state license is not a substitute for the Vermont license.
Here are examples of food items subject to Vermont meals and rooms tax:
- candied apples and cotton candy
- food and beverage supplied by a restaurant
- french fries, onion rings, fried dough
- hamburgers and hot dogs
- heated food or beverages
- ice cream cones, slushie cones, or sundaes
- soda or other beverages by the glass/cup
Examples of food items exempt from Vermont meals and rooms tax:
- bread loaves, whole pies, and whole cakes
- candy sold in bulk
- individual bakery items sold three or more at a time