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Vermont Use Tax – Pay It If You Owe It

  • Jan 5, 2015 | Gail Cole

 Do you owe Vermont use tax?

Vermont use tax is owed when sales tax is not paid on taxable goods and services at the time of purchase. This can occur for a number of reasons, most typically when the seller is from out-of-state and is not required to collect Vermont sales tax. While sales tax is generally collected and remitted to the state by the seller, use tax must be paid directly to the state by the buyer. Use tax applies to both businesses and individuals, and if you owe it, you have to pay it.

The Vermont Department of Taxes recently published updated information on individual use tax. It reminds that “use tax must be paid by the purchaser” when:

  • The purchase is made in a state that does not impose use tax (such as Vermont’s neighbor, New Hampshire).
  • The purchase is made from an internet or catalog vendor that did not charge sales tax (such as Amazon, which is not required to collect sales tax in Vermont).

Additionally, a percentage of use tax is owed when a “vendor collects sales tax from the purchaser using a lower rate than Vermont’s 6% rate.” For example, if a Vermont resident purchases a taxable item in Maine, where the rate of sales tax can be as low as 5.5%, the Vermonter owes the Department of Taxes the 0.5% difference on the purchase. This is only in the event that the item is brought back to Vermont for use or storage. Use tax would not apply to items used and discarded out-of-state.

Nonresidents who take possession of- or use- a taxable good in Vermont may also be liable for Vermont use tax.

The easiest way to remit Vermont use tax is to complete line 27 on the Vermont Income Tax Return. Alternatively, use tax may be remitted directly to the Department of Taxes. Additional information, including the best way to calculate use tax, is available on the department’s fact sheet.

Do you owe use tax? Find out in this Whiteboard Video.

photo credit: cmerlo441 via photopin cc

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.