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May 9 — The Vermont Legislature gave a final thumbs up to a measure that would impose use tax notification requirements on out-of-state vendors.
The provision was in an omnibus bill (H. 873) that contained numerous tax and policy provisions. Language pertaining to a fuel tax, home health care and other subjects caused the final bill language to be decided by a House-Senate conference committee.
The Senate passed the final bill May 6 by voice vote, and the House passed it by a vote of 86-55.
H. 873, which is expected to be signed by Gov. Peter Shumlin (D), expands on the notification and collection requirements of earlier versions of the bill .
It is similar to a first-in-the-nation Colorado law that the U.S. Court of Appeals for the Tenth Circuit upheld in February (Direct Mktg. Ass'n v. Brohl, 10th Cir., No. 12-01175, 2/22/16).
The Tenth Circuit ruled that Colorado's law was constitutional, although the decision is expected to be appealed to the U.S. Supreme Court (66 DTR K-2, 4/6/16).
H. 873 is aimed at large, out-of-state retailers who do business in Vermont and don't collect the state's 6 percent sales tax.
Under the bill, non-collecting vendors who have sold property or services in Vermont in the previous year would be required to notify Vermont residents who purchased more than $500 in products or services in the previous year by Jan. 31 that they are obligated to pay sales or use taxes on nonexempt purchasers. The notice would have to state the amount of purchases made, and failure to notify purchasers would result in a $5 penalty per purchaser.
Under the conference report, purchasers would have to be notified by July 1, 2017, or first day of the first quarter after the sales and use tax reporting requirements at issue in DMA are implemented in Colorado, whichever happens first.
Non-collecting vendors who fail to provide these notices would be fined $10 per failure.
Non-collecting vendors who did more than $100,000 in sales in Vermont during the previous year also would need to file an annual statement with the Vermont Department of Taxes. The statement would list all purchasers and show how much they paid for purchases that year. Failure to notify the department would result in a $10 fine per purchaser.
The bill would expand the definition of vendor to include those who made $100,000 or more in sales outside of Vermont or engaged in 200 or more individual transactions within the preceding 12 months in which taxes are due.
The conference report takes into account the possibility that another landmark legal case, Quill Corp. v. North Dakota, 504 U.S. 298 (1992), could be overturned. The U.S. Supreme Court in Quill limited the collection of sales and use tax to vendors with a physical presence in the state.
According to a conference committee report summary, any collection of taxes would have to happen by either July 1, 2017, or when Quill is overturned, whichever is later. If Quill is no longer good law, the collection would take place beginning on the first day of the first quarter after it is overturned, the report said.
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