The Vermont Department of Taxes continues to carefully monitor the evolving situation related to the COVID-19 pandemic. We are working closely with the office of Gov. Phil Scott, the legislature, and community leaders. We are also following changes at the federal level and adhering to guidance from the Vermont Department of Health.
Here is a list of common questions we receive on the following topics:
Coronavirus-Related Relief for Retirement Plans and IRAs
Meals and Rooms Taxes and Sales and Use Taxes
Income Taxes and Due Dates
CORONAVIRUS-RELATED RELIEF FOR RETIREMENT PLANS AND IRAS
Are the COVID-related distributions included in AGI and therefore taxable in Vermont?
Yes, these distributions will be treated like other distributions, and taxed in AGI. The CARES Act affects AGI by allowing distributions to be taxed over three years. For individuals who choose this option, the distribution income will also be spread across three tax years in Vermont.
Are COVID-related distributions included in Household Income?
Household Income includes AGI, as well as ROTH IRA distributions that are not included in AGI. COVID-related distributions will be included in AGI, so will be included in Household Income. The distributions that are spread across three years will also be spread across three years of household income.
Will Vermont’s tax of 24% of a taxpayer’s federal liability for additional taxes on qualified retirement plans apply to these distributions?
No. Since the COVID-related distributions will be taxed as gross income and will not be subject to the Federal 10% additional tax on distributions from eligible plans, there will not be any additional Vermont tax under this section.
MEALS AND ROOMS TAXES AND SALES AND USE TAXES
What did the Department of Taxes announce on March 23 about Vermont Meals and Rooms Tax and Sales and Use Tax?
The Department announced on March 23 that it would temporarily not assess penalties or interest for those businesses that had been affected by the COVID-19 pandemic and could not meet the March 25, 2020, or April 25, 2020, sales and use tax or meals and rooms tax deadlines.
What about the meals and rooms and sales and use taxes that businesses collected in April? Were those still due on May 25?
Yes, sales and use and meals and rooms taxes collected from customers in April were due May 25, and penalty and interest were assessed for late payment or late filing. Businesses that were unable to pay these taxes were asked to file a return and contact the Department to enter into a payment plan. The temporary penalty and interest relief that the Department announced in March for the March 25 and April 25 payments is still active for businesses who were affected by the COVID-19 pandemic.
Can my meals and rooms taxes or sales and use taxes be abated?
No, by law the Commissioner of Taxes cannot authorize an abatement of a business’s obligation to pay the taxes it has collected from customers.
Did the March 23 announcement cancel my responsibility to collect meals and rooms or sales and use tax moving forward?
No, this announcement did not cancel collection of these taxes during March and April, or moving forward. Businesses are required to continue to collect and report the taxes as normal moving forward.
No, the Commissioner does not have legal authority to move the due dates for the taxes. However, the Department understands the unprecedented challenges that our small and local businesses are facing and is temporarily waiving penalty and interest for those who were not able to meet these March and April deadlines.
INCOME TAXES AND DUE DATES
Do I still have to file my federal and state taxes by April 15?
No, the filing dates for Vermont personal income tax, corporate income tax, and fiduciary income taxes have all moved to July 15, 2020. However, the Department is still processing returns and refunds, and we encourage anyone who is expecting a refund to file so that we can get that money back into your hands as soon as possible. We also strongly encourage electronic filing and direct deposit as that will get you your refund faster than if you mail your return.
Will I incur penalties or have to pay interest if I wait until July 15 to file?
No, all penalties and interest will be waived.
Do I still need to file my Homestead Declaration and my Property Tax Credit Claim by April 15?
No, the deadline for Homestead Declarations and Property Tax Credit Claims have also been extended to July 15. However, you are still allowed to file now and if you are able, you are encouraged to do so.
Will I have to pay the $15 late fee for my Property Tax Credit Claim if I wait until July 15 to file?
No, the late filing fee will not be deducted from your claim if you file before July 15.
What if I am able to file now?
If you can file now, we encourage you to do so. Electronic filing and online services are still available.
What if I am expecting a refund?
We recommend filing now if you are expecting a refund. We also recommend choosing direct deposit as your method of receiving your refund.
Will the Department of Taxes be able to process my return and my refund even with the national emergency?
Yes, most of our staff have transitioned to working remotely and will continue working hard to process returns and issue refunds in a timely manner.
I scheduled a payment with my commercial tax preparation software, how do I cancel?
The Department is able to cancel any scheduled payment upon written request. We recommend you email email@example.com with your request. In your email, be sure to specify the date of the scheduled payment you wish to cancel. To submit a payment for a different date, please visit myvtax.vermont.gov.
What if I still have questions?