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Vermont Enacts Notice & Reporting Requirements and Economic Nexus Legislation


Nexus

Vermont Gov. Peter Shumlin has signed legislation containing sales and use tax notice and reporting requirements and economic nexus provisions. The notice and reporting requirements are more stringent than the provisions enacted in 2011 which only required posting information on order sites and information.  The new legislation requires non-collecting vendors making sales into Vermont to notify purchasers that sales or use tax is due on nonexempt purchases they make from the vendor and that Vermont requires the purchaser to file a sales or use tax return. "Noncollecting vendor" is defined as a vendor that sells tangible personal property to purchasers who are not exempt from Vermont sales tax and that does not collect the tax. The notice must be provided by January 31 of each year to Vermont purchasers who have made purchases amounting to $500 or more from the vendor in the previous calendar year. The notice must include the total amount paid by the purchaser for Vermont purchases made from the vendor in the previous calendar year. The notice must also state that Vermont requires a sales or use tax return to be filed and tax to be paid on nonexempt purchases made by the purchaser from the vendor. The notice must be sent separately to all Vermont purchasers by first-class mail or email and must not be included with any other shipments. The notice must include the words "Important Tax Document Enclosed" on the mailer and must include the name of the vendor. Failure to send the notice will subject the vendor to a $10 penalty for each such failure, unless the vendor shows reasonable cause for the failure. These notice and reporting requirements provision is effective on the earlier of July 1, 2017, or beginning on the first day of the first quarter after the sales and use tax reporting requirements challenged in Direct Marketing Assoc. v. Brohl are implemented by the state of Colorado. For more information on the Colorado case, see our news item U.S. Court of Appeals Upholds Colorado’s Use Tax Reporting Requirements.

 

In addition to the click through nexus legislation that was originally passed in 2011 and effective December 1, 2015, economic nexus legislation has now also been enacted.  Per the enacted legislation, a remote seller making sales of tangible personal property from outside Vermont to a destination in Vermont, who does not maintain a place of business or other physical presence in Vermont, meets the definition of "vendor" required to collect and remit Vermont sales or use tax if the person:

  • engages in regular, systematic, or seasonal solicitation of sales of tangible personal property in Vermont through various means of communication, and
  • has made sales from outside Vermont to destinations in Vermont of at least $100,000 or totaling at least 200 individual sales transactions during any 12-month period preceding the monthly period at issue. Previously, the threshold was sales from outside Vermont to destinations in Vermont of at least $50,000 during any 12-month period preceding the monthly or quarterly period at issue.

 

The changes to the economic nexus thresholds are effective on the later of July 1, 2017, or beginning on the first day of the first quarter after a controlling court decision or federal legislation abrogates the physical presence requirement of Quill Corp. v. North Dakota, 504 U.S. 298 (1992). (H.B. 873, Laws 2016, effective May 25, 2016, except as noted)

 

For an update on this news item, see Vermont Enacts Additional Notice Requirement for Noncollecting Vendors.

(06/06/2016)
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