If You Sell in Vermont, You Probably Have Nexus. Here’s Why
- Sales Tax
- May 11, 2016 | Suzanne Kearns
Just when you thought you had sales tax nexus all figured out, along comes the Vermont Department of Taxes with rules that seem to fly in the face of Quill, the Supreme Court decision that makes it necessary for sellers to have some sort of connection to a state before they have to register to collect sales tax.
For instance, most states require that sellers have a physical location, inventory, warehouse (including Amazon FBA warehouses), employees, commission deal with an in-state resident, or a relationship with an affiliate in the state before they ask them to collect sales tax on their behalf.
But Vermont has approached the idea of nexus a little differently. Here’s why you probably have nexus in Vermont if you sell to its residents.
Vermont’s Definition of “Vendor”
In order to understand the law, you must first know how the state defines the term vendor. This is because every business that is considered a vendor by their laws automatically has nexus in Vermont. In addition to some of the typical definitions of the term, you’ll also find this:
A person making sales of tangible personal property from outside this State to a destination within this State and not maintaining a place of business in this State who engages in regular systematic or seasonal solicitation of sales of tangible personal property in this State.
Did you get that? Vermont’s law states the definition of a vendor is an out-of-state business that advertises to and sells to customers in the state -- regardless of the fact that the business has no physical business there. But wait, there’s more. The statute continues to say that if you fall under the definition of a vendor, you must also be:
A person who has made sales from another state to residents of Vermont of at least $50,000 during any twelve month period preceding the monthly or quarterly sales tax filing periods.
In other words, if you advertise to residents in Vermont, even online, and then make sales to them of at least $50,000 a year, you have nexus in Vermont -- without any other ties to the state.
Is Vermont's Nexus Law Legal?
That's a bitter pill for online sellers. What’s worse is that Vermont seems to know it’s on shaky ground with this law. In a PDF document from the Vermont legislature titled "Sales Tax Nexus Issues," the state plainly says that its law is in violation of Quill.
But for now, it’s the law. If you have nexus with the State of Vermont and haven’t yet registered, the Department of Taxes allows business owners to register their business online using myVTax.