Vermont eliminates non-collecting seller reporting, adds requirements for consumers and marketplaces

Vermont recently enacted legislation affecting use tax reporting, non-collecting seller use tax reporting, and universal service charges for retail sales of prepaid wireless telecommunications.

Hello, use tax reporting requirement

House Bill 954 changes how individuals can report use tax on Vermont individual income tax returns. This requirement takes effect retroactively January 1, 2020, and applies to tax years beginning on and after that date. Vermont taxpayers can calculate the use tax due in one of two ways:

  • Report the exact amount of their use tax liability
  • Report a percentage of their adjusted gross income

Taxpayers opting to report use tax based on their adjusted gross income should use the following table to calculate use tax owed on items with a purchase price of $1,000 or less:

If adjusted gross income is:         The tax is:  
$20,001 to $30,000 $10  
$30,001 to $40,000  $15  
$40,001 to $50,000  $20  
$50,001 to $60,000  $25  
$60,001 to $70,000  $30  
$70,001 to $80,000  $35  
$80,001 to $90,000  $40  
$90,001 to $100,000  $45  
$100,001 and over  The lesser of $150 or 0.05% of adjusted gross income  

The maximum use tax owed in a year based on income is $150. However, taxpayers will still owe use tax on items with a purchase price exceeding $1,000.

Goodbye, non-collecting seller use tax notice requirement

H.954 also repeals a use tax reporting requirement for certain non-collecting vendors.

As of July 1, 2017, Vermont requires out-of-state non-collecting vendors with no obligation to collect Vermont sales tax to provide a transactional notice explaining consumer use tax obligations with every taxable Vermont purchase. Non-collecting vendors are also required to send a list of total purchases made during the previous calendar year to consumers who made at least $500 worth of taxable purchases during that time. Finally, non-collecting vendors with $100,000 or more in annual Vermont sales are required to give the Vermont Department of Taxes an annual customer information report listing every purchaser that received an annual purchase summary. See this state-by-state guide to non-collecting seller use tax for additional details.

However, as of July 1, 2018, Vermont requires out-of-state sellers with $100,000 in sales or 200 separate transactions in the state in the preceding 12-month period to register with the Department of Taxes and collect and remit sales tax. Since this economic nexus law renders the non-collecting use tax reporting requirement for out-of-state vendors with $100,000 or more in Vermont sales moot, it’s being repealed.

Hello, Universal Service Charge collection requirement

Effective July 1, 2021, marketplace facilitators that are required to collect and remit sales tax on behalf of third-party sellers are required to collect the Universal Service Charge owed on retail sales of prepaid wireless telecommunications services made through the platform.

Retail sales of prepaid wireless telecommunications services have been subject to a Universal Service Charge since January 1, 2020. Sellers are currently responsible for collecting and remitting it.

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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