Vermont: Miscellaneous Tax Changes Enacted

House Bill 954, which makes numerous substantive and administrative changes to Vermont’s tax laws, was signed into law on October 8, 2020. On the indirect tax side, the bill requires marketplace facilitators to collect the Universal Service Charge on behalf of marketplace sellers on all retail sales of prepaid wireless telecommunications services subject to Vermont sales and use tax. This change would take effect on July 1, 2021. In addition, House Bill 954 repeals provisions that required non-collecting retailers with over $100,000 of Vermont sales to report certain information to the Department of Taxes. Another change is that the Department may, but is longer required, to collect information from an Internet platform on those individuals renting Vermont properties for short-term occupancy through the platform. For individual purchasers, the bill reduces the amount of use tax an individual must remit on his/her personal income tax return to 0.05 percent of AGI, not to $150, beginning in tax year 2020. The amounts were 0.10 percent of AGI, not to exceed $500, previously.

On the income tax side, the bill would update the state’s connection to the Internal Revenue Code to reflect the laws of the United States related to federal income tax as in effect on December 31, 2019. This change applies retroactively to tax years beginning on and after January 1, 2019.  Historically, Vermont offered corporate income taxpayers that had been granted a federal extension an automatic extension of 30 days beyond the federal income tax return due date to file the Vermont corporate income tax return. House Bill 954 changes that extension from 30 days to a month. The bill also increases the time frame for reporting federal changes to the Vermont tax authorities from 60 to 180 days. Finally, there are provisions in the bill that appear to recognize that certain taxpayers may not have timely filed income tax refunds for 2016 tax years due to COVID-19. The bill clarifies that tax year 2016 refund claims filed between April 15, 2020 and July 15, 2020 will be considered timely filed.  Please stay tuned to TWIST for additional legislative updates.