Vermont may repeal certain reporting requirements for non-collecting vendors

Update October 14, 2020: H.954 has been enacted. Additional details.

The Vermont House of Representatives has approved H.954, an act relating to miscellaneous tax provisions. If enacted, it would reduce the reporting requirements of certain non-collecting vendors and add a collection requirement for marketplace facilitators. 

Repealing a notice and reporting requirement for non-collecting vendors

Current Vermont law imposes certain notice and reporting requirements on non-collecting vendors making sales into Vermont. For example, non-collecting vendors must inform Vermont purchasers that sales or use tax is due on nonexempt purchases, and that Vermont requires purchasers to report and pay the tax due with their income tax. Non-collecting vendors must also provide an annual purchase summary to Vermonters who spent at least $500 on purchases from the non-collecting vendor during the previous calendar year. Finally, non-collecting vendors who made $100,000 or more of sales into the state in the previous calendar year must file a copy of the annual summary notice with the Vermont Department of Taxes.

H.954 would repeal the final requirement. Non-collecting vendors who made $100,000 or more of sales into Vermont in the previous calendar year would no longer be required to file a copy of the annual summary notice with the Department of Taxes.

Additionally, H.954 would repeal the information reporting requirement for short-term rental marketplaces (e.g., Airbnb, VRBO). Online short-term rental marketplaces are currently required to report the name, address, and rental terms of each marketplace seller. This requirement would be eliminated.

If enacted as written, the repeal of the use tax reporting requirements would apply to taxable years on and after January 1, 2020.

Amending use tax reporting on individual income tax returns

The measure would also change how use tax is reported on individual income tax returns. The amount of use tax a taxpayer may elect to report would be based entirely on the taxpayer’s adjusted gross income.

For example:

  • A taxpayer with an adjusted gross income of $20,000 or less would owe nothing
  • A taxpayer with adjusted gross income of $20,001 to $30,000 would pay $10
  • A taxpayer with adjusted gross income of $80,001 to $90,000 would pay $40
  • A taxpayer with an adjusted gross income of $100,001 or more would pay the lesser of $150 or 0.05% of adjusted gross income

Taxpayers wouldn’t be required to pay more than $150 in use tax liability on total purchases of items with a purchase price of $1,000 or less.

Adding a new collection requirement for marketplace facilitators

Taxable retail sales of prepaid wireless telecommunications services have been subject to a Universal Service Charge in Vermont since January 1, 2020. Currently, sellers are responsible for collecting and remitting it.

Under H.954, marketplace facilitators that collect and remit sales tax on behalf of third-party sellers would also be required to collect and remit applicable universal service charges. This would take effect upon enactment of the bill.

Additional details are available in the text of H.954.

See our Vermont sales tax guide for more information about sales tax in the Green Mountain State.

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