The Vermont Department of Taxes created an interesting self-audit program last year—use tax liabilities and other tax obligations, it encourages businesses to audit themselves and report any owed taxes to the state. Those who do this prior to the termination of this program on May 1, 2014, will have penalties and 50% of interest waived.
Now the state has issued a fact sheet explaining individual use tax obligations. It reminds that it is important for individuals to “have a good understanding of use tax because individual taxpayers have the responsibility to either file and pay use tax owed on the Vermont Income Tax Return or ‘certify’ that they do not owe use tax.”
According to the Department of Taxes, use tax is generally owed in the following situations:
- “The purchase is made in another state that does not impose a sales tax;” or
- “The purchase is made from an internet vendor” and sales tax was not charged.
Vermont buyers shopping online are encouraged to look at receipts to determine whether or not sales tax was applied to the transaction.
The whole (sales and use) tax is owed
Vermont has a general state sales tax rate of 6.0%. According to the use tax fact sheet, when a Vermont taxpayer pays less than 6% sales tax on purchases, the difference is due.
For example, the Maine state sales and use tax rate is 5.5%. Vermonters who travel to Maine, purchase tangible personal property there, and bring it back home owe the 0.5% difference between the state rates. Vermonters who cross the border to tax free New Hampshire to shop owe the entire 6% on their taxable purchases.
Note: local option taxes bring the rate to 7% in many Vermont localities. States often expect taxpayers to pay use tax at the combined state and local rate; the Vermont fact sheet, however, does not reference local option taxes.
Who has to pay?
Both residents and non-residents who purchase without sales tax a taxable item that is delivered or used in Vermont must pay use tax on that item.
How accurate is accurate enough?
Folks who keep accurate records of all purchases (receipt-savers) should have no trouble calculating the amount of Vermont use tax due: simply multiply the purchase price by 6%.
Folks who do not keep accurate records (receipt-tossers) should refer to the Use Tax Reporting Table on the fact sheet for guidelines.
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