1099: tax form you fill out to report self-employment earnings, interest and dividends, government payments, and other forms of income
Adjusted gross income (AGI): gross income minus allowable reductions
Adjustment to income: an expense that can be deducted from taxable income even if the taxpayer does not itemize deductions when calculating personal income tax liability
Advance earned income credit: prepayments of the earned income credit by an employer to an employee
Aggregate ratio: for purposes of the equalization study, the ratio, or the weighted mean, equal to the sum of the listed values divided by the sum of the fair market values (sales prices)
Administrative Procedures Act (APA): provides a procedure for the adoption of rules, including maximizing public involvement in the development of rules and consistent inclusion of public participation in the rule-making processes (3 V.S.A. § 800)
Appraised value: estimated value of a property as determined by a lister/assessor before any adjustments are made to that value for taxing purposes. Adjustments could include an assessment ratio if the property is to be taxed at a value other than full fair market value, either a full or partial exemption, or at a value established under a stabilization agreement.
Assessed value: amount in dollars at which a property is put on the assessment rolls. It differs from the appraised value in three ways: fractional assessment laws, exemptions or stabilization agreements, and decisions by assessing officials to override appraised value estimates.
Audit: when the IRS or Vermont Department of Taxes examines and verifies your return or any other transaction with tax consequences
Automated Clearing House (ACH): an electronic network for financial transactions in the United States. ACH processes large volumes of credit and debit transactions in batches. ACH credit transfers include direct deposit, payroll and vendor payments.
Board of Civil Authority (BCA): a board consisting of the town clerk, the selectboard, and the elected justices of the peace, whose mandate is to assist with the running of elections, to act as a quasi-judicial board for grievances between taxpayers and listers, and to maintain the voter checklist.
Carryforward (CF): a special provision allowing part of a net loss or unused credit in a given year to be distributed over subsequent years, in order to ease the tax burden
Casualty loss: a loss caused by the complete or partial destruction of property resulting from an unexpected event, i.e. floods, storms, fires, etc.
Category (of taxable properties): all taxable properties in Vermont are classified into 15 categories based on their use. R1=residential properties <6 acres; R2=residential properties 6+ acres; MHU=mobile home unlanded; MHL=mobile home landed; S1=seasonal property <6 acres; S2=seasonal property 6+ acres; COMM=commercial property; CMA=commercial apartment w/5 and over; IND=industrial property; UE=utility electric; UO=utility other; MISC=open land; WOOD=woodland (see PVR annual report)
Charitable contribution: money or property donated to a qualified charity
Child and dependent care credit: a tax credit of a percentage of the amount spent on child or dependent care by an employed individual (a similar credit is available for non-child dependents)
Circuit breaker: additional adjustment a homeowner is entitled to when their household income is not more than $47,000, if the sum of the income-sensitized education taxes and municipal taxes exceed a certain percentage of the household income. The additional adjustment is for the amount the combined municipal and income-sensitized taxes exceed the threshold. The percentage of household income which determines the threshold depends on the household’s income bracket.
Class (of property): there are three classes of property that are formed by consolidating the 15 categories into like-use groups. They are Residential (R1, R2, MHU, MHL, V1 and V2), commercial/industrial (COMM, CMA and IND), and open land (Farm, Wood and MISC). The class grouping is used when equalization results are not reliable for smaller category groupings.
Coefficient of Dispersion (COD): a measure of uniformity of appraisals for all properties on the Grand List. E.g. if a town has valued every property at 100% FMV (every property has an assessment to FMV ration of 100%), there is 0 dispersion. Similarly, if every property is assessed at 80% of FMV, there is 0 dispersion. However, if the town average assessment to sales ratio is 80% but individual assessments vary markedly either above or below the average, then the disparity of assessments will reflect in a COD greater than 0%. Zero is a perfect COD score and indicates absolute fairness insofar as every taxpayer is appraised at the same percentage of FMV. The higher the number, the greater the dispersion (or disparity in how properties are assessed). Because of market fluctuations, a COD less than 10 is unusual. Statistically, it is the average absolute deviation of a group of numbers from the mean expressed as a percentage of the median. Vermont municipalities must reappraise the properties in their town when the COD rises above 20. (32 V.S.A. § 4041(a)).
Commercial: for purposes of property valuation, property used for commercial purposes such as office space or retail space; does not include rental of up to 4-unit structures
Common Level of Appraisal (CLA): a measure of how close a municipality’s local appraisals are to the actual Fair Market Value. The CLA is used to equalize education taxes statewide with the goal of having properties of equal value pay equal amounts of school taxes. VT municipalities must reappraise the properties in their town when the CLA falls below 85% % or rises above 115% (32 V.S.A. § 4041(a)). A town’s CLA has no effect on the amount of property taxes owed on the town portion of a property tax bill. In VT law, it is “the ration of the aggregate value of local education property tax Grand List to the aggregate value of the equalized education property tax Grand List.” (32 V.S.A. § 5401(3))
Compensation: wages, commissions, tips, fees, or self-employment income from services rendered
Corporation (Corp): an independent legal entity owned by shareholders
Credits: reductions of income tax liability allowed by Congress and/or the Vermont Legislature for various purposes
Current Use (CU): see Use Value Appraisal
Deduction: a subtraction from taxable income when calculating income tax liability
Dependent: a person who meets the five tests of dependency and thereby qualifies to be claimed as a dependent for income tax purposes
District Advisor (DA): oversees the listers/assessors of a municipality or region to assist with property valuation
Domicile: a legal concept of a person’s home (different than one’s residence) that has implications for Vermont income tax, the statewide education tax, and property tax credits. Reg. § 1.5811(11)(A)(i)
Earned income: income derived from personal services, including wages, tips, bonuses, and any other type of compensation
Earned income credit: a tax credit allowed to employed individuals whose income and modified gross income is less than a certain amount
Economic Advancement Tax Incentive (EATI): This program was repealed in 2006. Existing credits continue to be processed although the VT Economic Progress Council hasn’t granted EATI awards since December 31, 2006. See VEGI.
Education Grand List (EGL): see Grand List
Effective Tax Rate (ETR): also called Equalized Tax Rate, what the tax rate would be if all taxable property were appraised at full value. The effective school tax rate is calculated by dividing the school taxes assessed by the Equalized Education Grand List (EEGL).
Electronic Property Transfer Tax Return (ePTTR): system whereby property transfer tax returns are filed electronically
Electronic Current Use (eCuse): electronic filing application for the Use Value Appraisal (UVA) program, aka “Current Use”
Employer Identification Number (EIN): a unique nine-digit number assigned by the IRS to business entities operating in the United States for the purposes of identification
Employment expenses: for purposes of income tax, ordinary and necessary expenses for the employee to perform the duties for which they were hired
Entertainment expenses: for purposes of income tax, employment expenses that have an element of entertainment that is directly related to conducting business
Equalization study: annually, PVR conducts a study based on sales data that results in estimates of the fair market value of all taxable property in all VT school districts. The major product of the study is an estimate of the total fair market value of property that is taxable for school purposes (the equalized education Grand List – EEGL).
Equalized Education Property Tax Grand List (EEGL): 1% of the equalized education property value as defined in 32 V.S.A. § 5401(6)
Equalized Education Property Value: PVR’s estimate of the fair market value of all nonresidential and homestead real property that is required to be listed at fair market value, plus the aggregate value of property required to be listed at a stipulated value under a stabilization agreement, plus the aggregate use value of property enrolled in the Current Use program
Estimated tax: what the taxpayer expects to owe in income taxes over the course of the year, generally paid quarterly with vouchers
Estimated income tax voucher: a form to file with your tax return in order to pay tax on estimated earned income
Exemption: for purposes of income tax, a reduction of income that would otherwise be taxed
External offset: taxpayer overpayment is applied to a debt owed to another agency. A letter is generated that states what agency the money was sent to.
Factory: for purposes of property valuation, this includes property such as cheese-making facilities, microchip manufacturing plants, sawmills, creameries, ice cream factories, etc.
Fair Market Value (FMV): for purposes of property valuation, the price that property would sell for on the open market. It is the price that would be agreed on between a willing buyer and a willing seller
Farm Buildings: for purposes of the Current Use program, buildings or improvements such as barns that are actively used by a farmer as part of a farming operation, are owned by a farmer or leased to a farmer under a written lease for a term of three years or more, and are situated on land that is enrolled in a use value appraisal program or on a housesite adjoining enrolled land. 32 V.S.A. § 3752(14)
Fed/State E-file: income tax filing option open to taxpayers or their tax preparers that allows for the electronic filing of both the federal and Vermont income tax return
Federal Taxable Income (FTI): for federal income tax purposes, adjusted gross income minus allowances for personal exemptions and itemized deductions. The amount computed on the federal tax return is generally the starting point for computing Vermont taxable income.
Fee simple: in real estate transactions, 100% of all interests in property are being conveyed, and there are no interests being retained by the seller
FEIN: Federal Employer Identification Number (see EIN)
FICA: Social Security and Medicare withholding
FY/FYE: Fiscal Year/Fiscal Year End, which starts July 1 and ends June 30
Grand List (GL): 1% of the listed value established by the local assessing officials, and the value used to determine municipal taxes for a municipality. It includes any business personal property taxable at the local level and excludes locally voted exemptions. Properties subject to local stabilization agreements are included at their stabilized values. The education GL is 1% of the education property values per 32 V.S.A.§ 5404. It is the value to be used to determine the State Education Tax and the Local Share Tax and generally doesn’t include inventory or business personal property. It includes the value of properties exempted by local vote (if not “grandfathered”) as well as the full value of properties subject to local stabilization agreements as defined in 32 V.S.A. § 5401(5).
Head of household: for purposes of income tax, a filing status used by an unmarried taxpayer who pays over half of the cost of maintaining the home of a qualified individual
Home office expense: for purposes of income tax, expenses of operating a business in a qualified manner in your home
Homestead: the principle dwelling owned/occupied by a VT resident as the individual’s domicile. It includes the entire parcel of land surrounding the dwelling, determined without regard to any road, river or stream that intersects the land. It does not include buildings or improvements detached from the home and used for business purposes and does not include that portion of a principal dwelling used for business purposes if the portion used for business purposes includes more than 25% of the floor space of the building. The value of outbuildings and other improvements not used for business purposes includes more than 25 percent of the floor space of the building. The value of outbuildings and other improvements not used for business purposes are included in the value of the homestead, e.g. swimming pools, tennis courts, landscaping. See 32 V.S.A. § 5401(7) and Reg. § 1.5401(7) for details and examples.
HS-122: Homestead Declaration and/or Property Tax Credit
Health Savings Account (HSA): a tax-advantaged medical savings account available to taxpayers in the United States who are enrolled in a high-deductible health plan (HDHP). The funds contributed to an account are not subject to federal income tax at the time of deposit.
Industrial: for purposes of property valuation, property primarily used for industrial sites
Internal offset: taxpayer overpayment that is applied to a debt owed
Internal Revenue Service: the Treasury Department division responsible for collecting taxes for the U.S. government
International Association of Assessing Officers (IAAO): a non-profit educational association whose mission is to promote innovation and excellence in property appraisal and property tax policy and administration through professional development, education, research, and technical assistance
IRA: Individual Retirement Account, where you make tax-deferred investments to provide financial security when you retire
Itemized deductions: expenditures that the tax code deems appropriate for reducing adjusted gross income
LC: Landlord Certificate, LC-142
LLC: Limited Liability Company
LLP: Limited Liability Partnership
Local/Municipal Grand List: see Grand List
Married filing jointly (MFJ): a personal income tax filing status used by a couple that is married at the end of the tax year and uses one tax return
Married filing separately (MFS): a personal income tax filing status used by a couple that is married at the end of the year and chooses to file separate tax returns
Mean: also called the arithmetic mean or the average, the result of adding all the values and dividing by the number of values. For instance, the mean (average) of 3, 5 and 10 is 6. (3+5+10=18: 18/3=6).
Median ratio: as used in the equalization study and other data analysis, the midpoint or middle value when a set of values is ranked in order of magnitude; if the number of values is even, the midpoint or average of the two middle values
Modernized E-Filing or Electronic Filing (MeF): the IRS program which is an integrated, web-based electronic filing platform replacing the legacy e-file system which has been essentially unchanged for the IRS and the states since 1990
MSA: Medical Savings Account
Multi Family: for purposes of property tax, a residential structure with more than one residential unit, such as a duplex
myVTax: the secure online filing service provided by the Vermont Department of Taxes for Vermont taxpayers
Nonrefundable: for income tax purposes, a nonrefundable credit is subtracted from income tax liability, up to the total amount owed. But unlike a refundable tax credit, a nonrefundable credit cannot reduce a tax balance beyond zero. Any unused portion of a nonrefundable tax credit will expire in the year the credit is claimed and cannot be carried over.
NRW: Nonresident Shareholder Withholding
Open land: for purposes of property tax, land with no buildings
Operating farm: for purposes of property taxes, property that is or will be a working farm
Orthophotograph: a composite product made from overlapping aerial photographs. It appears similar to a standard enlarged aerial photograph, but because tilt and relief displacement have been eliminated (the land is essentially flattened out), the photo becomes close to being a map upon which property lines and other data can be plotted.
Other State Credit (OSCR): for purposes of income tax, credit for residents paying tax to another state and Vermont on the same income
Other types of building construction: for purposes of real estate transfer taxes, may include a garage, motels, hotels, filing station, restaurants, office buildings, telephone switching office, etc.
Outside Collection Agency (OCA): a collection agency under contract with the Vermont Department of Taxes to collect outstanding tax liabilities that have been inactive for more than sixty days. The collection agency contract is awarded through the competitive bidding process.
Parcel: for purposes of tax administration, the base unit to be reported in the Grand List book and defined as “all contiguous land in the same ownership, together with all improvements thereon” (32 V.S.A. § 4152(a) (3)). For purposes of property valuation, the following factors must be considered when determining whether land is one or more parcels: the highest and best use; whether or not the property was conveyed in one deed; the land’s character and use; whether separately deeded tracts are contiguous; and whether the property functions as one tract for the owner.
Payment-In-Lieu-of-Taxes (PILOT): a payment to a town or city to compensate for a part of the cost for services on property which is exempt from the regular tax. For example, the State of Vermont makes a PILOT for state-owned buildings. Towns and cities may enter agreements with owners of low- and moderate-income housing whereby a PILOT is paid, rather than the full tax based on fair market value. 32 V.S.A. § 3843.
Permanent and total disability: a disability that is expected to last at least a year and keeps an individual from any gainful activity (employment earning income)
Price-Related Differential (PRD): for purposes of property valuation and the equalization study, also called the regressivity index, the mean ratio divided by the aggregate ratio. This statistic is used to determine whether assessment practices are progressive or regressive. A PRD above 1.03 tends to indicate assessment regressivity (lower valued properties are assessed at higher ratios). A PRD below .98 tends to indicate assessment progressivity (higher valued properties are assessed at a higher ratio).
Primary residence: for purposes of land gains tax, includes a building with four apartments or less and non-operating farms with the highest and best use as a year-round residence. This does not mean that the seller or buyer used the property as their primary residence. The best use of the property is capable as being used as a primary residence. Even if the property will be a rental, it is still considered primary residence. By choosing primary residence for the buyer you are not stating that they will be using it as their primary. If primary is chosen it also does not automatically mean that the buyer is entitled to the lower rate; this only applies if the buyer will be using it as their primary residence. If someone is adding additional contiguous land to their primary residence you can use primary residence as the use of the property. Please note that additional acreage does not qualify for the lower rate.
Property tax credit: the Vermont Property Tax Credit assists many Vermont homeowners with paying their property taxes. Individuals who are eligible must file the HS-122 and HI-144. The property tax credit is sent directly to the town of residence and will be reflected on the property tax bill received by the taxpayer.
Qualified widow(er): for purposes of personal income tax, a filing status used by a qualified person for the two years following a spouse’s death
Reappraisal: for purposes of property valuation, having property reassessed in order to find the real market value and adjust taxes owed
Refundable: a refundable tax credit can reduce your tax liability to below zero. If the amount of a refundable tax credit is more than the amount of taxes due, the difference will be given back to you as a tax refund. If you are already owed a tax refund, the refundable credit will be added to increase the amount of your refund.
Resident Estate: is the estate of a decedent who was domiciled in Vermont at the time of death.
Residential New Construction: for purposes of real estate transfers, house or modular home that was placed on the property after the purchase by the seller, such as open land purchase where a home was constructed and is now being sold
REW: Real Estate Withholding
Regressivity Index (RI): see price-related differential
Schedules: for purposes of income tax, Vermont Department of Taxes and IRS forms used to report various kinds of income, deductions, and credits
Secondary residence: for real estate transfers, any residence that is not the primary residence of the buyer or seller nor will be used as a primary residence by anyone else (such as a tenant). Any seasonal dwelling would fall under secondary residence, as would time-shares. Any vacation property would be a secondary residence.
Self-employed (SE): a person who individually decides when and where to work, pays his or her own expenses, and must pay self-employment taxes
Sole Proprietor (Sole Prop): a person who is the exclusive owner of a business, entitled to keep all profits after tax has been paid but liable for all losses
School Property Account Number (SPAN): used in property taxation, a unique 11-digit identification number assigned by a municipality to each property. The property tax credit is credited to the property tax bill linked to this number.
Seasonal Dwelling: for purposes of real estate transfer taxes and property tax programs, properties that are for seasonal occupancy, including hunting camps, camps and cottages on lakes and ponds, etc., which cannot be occupied year round
Single Family Dwelling: for purposes of real estate transfers, an existing structure that is already on the property prior to purchase, including properties that were rentals and modular homes, but not mobile homes
Social Security Tax: tax deposits that are collected by the IRS to fund several social welfare programs
SSN: Social Security Number
Standard deduction: for purposes of income tax, a predetermined amount of income that is not subject to taxes and is claimed when an individual does not itemize deductions
Tangible personal property: for purposes of Vermont sales tax, personal property which may be seen, weighed, measured, felt, touched, or in any other manner perceived by the senses and can be moved (including furniture, clothing, jewelry, art, writings, or household goods, but not including real property or land). "Tangible personal property" includes electricity, water, gas, steam, and prewritten computer software. 32 V.S.A. § 9701(7)
Taxable income (TI): adjusted gross income minus deductions and exemptions
TC: Town Clerk
TCE: Tax Counseling for the Elderly
Tax Compliance Officer (TCO): employees of the Vermont Department of Taxes who perform audits and collection work on outstanding tax liabilities
Tax Examiner (TE): employees of the Vermont Department of Taxes who review, validate, and resolve issues related to tax filing obligations
Tax Increment Financing (TIF): used for property taxation, some Vermont municipalities have state-approved TIF districts, which can use property tax revenue created by new projects to fund those projects. The education grand list figure used in the determination of the CLA includes the value of the “increment” for those towns and cities with active tax increment financing districts. However, the education grand list figure for those municipalities that will be reported to the Department of Education and used to determine the education tax liability will not include the value of the increment.
Tax Implementation Group for E-Commerce Requirements Standardization (TIGERS): organization that standardizes and adopts what is referred to as Fed/State Modernized e-File for personal income tax
Taxpayer Identification (TI): as used in tax administration, the functions that manage the creation and editing of taxpayer data
Town Officers Education Conference (TOEC): held in the spring at three different locations around the state and organized by UVM Extension to provide training in the governmental operations of municipalities
TPS: the Vermont Department of Taxes’s Division of Taxpayer Services
Unearned income: for purposes of income tax, income that is not earned from services performed, such as interest, dividends, and royalties
Use Value Appraisal (UVA): more frequently referred to as “Current Use” or the Current Use program, UVA is a system under which the value of property is determined for a specific agricultural or forestry use, as opposed to the broader “highest and best use.” Qualifying farm and forest land and farm buildings may enroll. 32 V.S.A. § 3752(12)
Use Value Appraisal Program: also known as “Current Use,” it enables eligible private lands where owners practice long-term forestry or agriculture to be appraised based on the property’s value of production of wood or food rather than its residential or commercial development value. The Current Use Advisory Board sets the use values for farm and forest land annually. 32 V.S.A. § 3752(12)
VALA: Vermont Assessors and Listers Association
VEDA: Vermont Economic Development Authority
Vermont Employment Growth Incentive program (VEGI): a payroll-based growth incentive program which became law in Jan. 1, 2007
Vermont Income of a Nonresident Estate or Trust: the sum of the following items as long as they are required to be included in federal adjusted gross income:
- Rents and royalties from ownership of property located in Vermont
- Gains from the sale or exchange of Vermont property
- Wages, salaries, commissions or other income received for services performed in Vermont
- Income from every business, trade, profession or occupation conducted in Vermont, including money received:
- under an agreement not to compete with a business operation in Vermont,
- for goodwill associated with the sale of a Vermont business, or
- for contractual services associated with the sale of a Vermont business, unless it is shown that the compensation for services does not constitute income from the sale of the business.
- Vermont income previously deferred under a non-qualified deferred compensation plan and income derived from such previously deferred income.
- Examples of other income: gambling winnings including lotteries, raffles, or a lump-sum payment from the sale of a right to receive a future lottery annuity.
Vermont Income of a Resident Estate or Trust: the adjusted gross income of a resident estate or trust less income exempted from state taxation under the laws of the United States. 32 V.S.A. § 5823
VEP: Vermont Estimated Payments
VEPC: Vermont Economic Progress Council
VHEIP: Vermont Higher Education Investment Plan
VITA: Volunteer Income Tax Assistance
VITA/TCE: Vermont Income Tax Assistance and Tax Counseling for the Elderly
VLCT: Vermont League of Cities and Towns
VOVA: Vermont Office of Veterans Affairs
VSAC: Vermont Student Assistant Corporation
VTax: Vermont’s version of software known as GenTax, an integrated tax system used to administer all Vermont taxes
W-2: tax form that shows the amount of taxes withheld from your paycheck for the year
W-4: IRS form you fill out to tell your employer how much of your paycheck to withhold based on allowances
Weighted mean: see aggregate ratio
WHT: Vermont Withholding Tax
Withholding: some amount taken out of your income by your employer and paid to the Vermont Department of Taxes or IRS in your name
Worksheet: a Vermont Department of Taxes or IRS document provided to the taxpayer to compile information but not usually filed with the associated return