Compliance Corner

The Compliance Division’s work contributes to the mission of the Department of Taxes by informing and educating taxpayers about complex tax laws, selecting and conducting audits, and collecting unpaid taxes. We have 55 auditors, collectors, technical, and support staff working on behalf of all Vermonters to ensure taxpayers are paying the right amount of tax.

One of our primary goals is to encourage “voluntary compliance” – that is, to enable Vermont taxpayers to accurately determine what taxes they are liable for and pay the correct amount on their own. Another goal is to provide a level playing field for Vermont taxpayers by making sure that everyone is paying their fair share, in accordance with current law.

Tax laws are complex, which can lead to honest mistakes. And there are people and businesses who under report taxes or do not file tax returns at all. We work diligently to identify people and businesses who are not reporting and paying the correct amount of tax and help bring them in to compliance. This is achieved through educational outreach, fact sheets, regulations, and audits conducted from our office in Montpelier and field staff located around the state.

We are continually looking for ways to improve service to Vermont taxpayers, and we welcome your feedback. You can contact the Compliance Division by phone at (802) 828-2514 or send an e-mail.


TIPS & NEWS

November 2, 2018

The South Dakota V. Wayfair Supreme Court decision now requires certain out-of-state vendors to register with the State of Vermont and collect/remit Sales Tax beginning July 1, 2018. We have received several inquiries about the Voluntary Disclosure Program (VDP) whereby the applicant is hoping to postpone the implementation date of this required registration, collection, and remission. The VDP is a program that allows qualifying taxpayers to voluntarily come forward to file and pay required taxes.  VDP is not a program that can waive or delay the collection and reporting mandated by legislation. Therefore, it should be expected that any qualifying taxpayer accepted into the VDP, in connection to this court decision, will need to file and pay returns starting with July 1, 2018 and forward.


Did you know you can save yourself money by being proactive in amending your Vermont State Income Tax return? Periodically we receive information from the Internal Revenue Service that reports changes made to a Federal Income Tax return. In many situations we find taxpayers did not amend their Vermont State Income Tax return, when required, which results in additional tax, interest, and penalties being imposed.


1099R -Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.  If you receive a distribution from these types of accounts or similar plans, it is important for you to know if the amounts received should be reported as income on your Federal Income Tax return. If the distribution is reportable income, you also need to consider the income when filing your Vermont State Tax return. Any time a taxable distribution is made, a 1099-R form is issued. Please review any 1099-R forms received carefully and refer to information provided by the IRS to determine if you should include this as income on your Federal return.

See more helpful tips & news >>


NOTABLE CASES

November 15, 2018

Proper classification of purchases in POS systems
We identified a business that was incorrectly exempting all purchases made by a customer who had previous purchases involving an exemption certificate.

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July 1, 2018

Multiple Home Businesses
We matched information and data to try to identify taxpayers who were misreporting expenses on Schedule C. In one case, we found that not only were deductions for one business being overstated, but that the individual was conducting multiple other lines of business but not reporting any of that activity on tax returns. Audit staff identified almost $50,000 of unpaid sales, use, and income tax across several years.


CURRENT WORK

November 2, 2018

Corporate/Business Income Non-Filers
In general, any business that operates or has any presence in Vermont is required to file an Income Tax return with the state, or report on 1040 Schedule C if it is a sole proprietor or single member LLC. Our Office Audit and Discovery teams have been working on ways to identify companies that are operating in Vermont, but not filing the required returns for Corporate or Business Income tax.

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Personal Income Tax Discoveries
The Office Audit team has three active Personal Income Tax (PIT) discoveries. Since July 1, 2018, the following discoveries have uncovered over $9M in unpaid taxes involving 1,648 taxpayers.

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Compliance Corner Archive