View the complete text of this act

Act No. 160

(H.783)

Miscellaneous tax provisions

The following is a section-by-section summary of this act.

Sec. 1. The act amends the definition of a tax expenditure to include items of exclusion, deduction, credit, or other adjustment at the federal level that flow through to Vermont taxable income.

Sec. 2. The act sets forth additional tax expenditures that are to be included in the next three biannual reports and requires the department of taxes, the joint fiscal office, and the legislative council to report to the general assembly by January 15, 2012, on additional tax expenditures that may be identified and quantified.

Sec. 3. The act amends Sec. B.503 of the Big Bill, H.789 (Act No. 156). The amount of $15,700,000 in an appropriation for grants for state-placed students is amended to be $15,300,000.

Sec. 4. The act authorizes the commissioner of the department of taxes to charge travel expenses and a reasonable per diem to companies that are unable or unwilling to provide books and records for audit at either the department's Montpelier office or at an in-state location of the company.

Sec. 5. The act allows municipalities to transmit tax rate information to the department of taxes in forms other than electronic media.

Sec. 6. The act amends the state's offset statute to provide that the fee is taken out of the taxpayer's refund instead of from the general fund. The amendment also allows the department of taxes to annually adjust the per-offset fee.

Sec. 7. The act allows the department of taxes to enter into reciprocity agreements with other states to offset refunds.

Sec. 8. The act sets the per-return administrative fee for local option taxes at $9.52 and makes the fee subject to review in the fee bill.

Sec. 9. The act allows a municipality to place a lien on an uninhabitable property in order to recoup expenses associated with keeping the property safe.

Sec. 10. The act amends the recapture provisions in the Vermont Employment Growth Incentive (VEGI) tax credits as follows:

The changes in this section take effect retroactively on January 1, 2010.

Sec. 11. The act requires the director of property valuation and review to meet with listers and other stakeholders regarding increases or decreases in the assessed value of land based on whether the land includes or abuts recreation trails such as those maintained by the Vermont Association of Snow Travelers. The director is to report the results of that meeting to the house committee on ways and means and the senate committee on finance no later than January 15, 2011.

Sec. 12. The act amends the definition of "development" for purposes of the use value appraisal program in chapter 124 of Title 32. The subdivision of land that creates a parcel of less than 25 acres constitutes development under current law, but an exception exists if the subdivision results from a transfer to a specified close relative and the transferee/relative re-enrolls the newly created parcel. The act amends the law so that if it is the transferor's parcel that is less than 25 acres following subdivision and the land is re-enrolled, the exception will also apply.

Sec. 13. The act deems the current use advisory board's methodology for calculating land use values to have the force and effect of rules adopted pursuant to the rulemaking process and requires that any modification to the methodology be subject to the rulemaking process.

Sec. 14. The act provides that the fair market value of property in a tax increment financing district is to be used in equalization studies rather than the original taxable value. This change will apply to equalization studies in 2010 and after.

Sec. 15. The act makes technical amendments to clarify when towns must refund an excess property tax adjustment amount to a taxpayer (20 days after notification of the adjustment amount) and corrects the source of the notice (from the commissioner of the department of taxes, not the commissioner of the department of education).

Sec. 16. The act amends the statutes concerning the property transfer tax (PTT) to make the PTT payable to the department of taxes instead of the town clerk of the town in which the property is located. The act also makes the PTT payment due on transfer rather than on recording. This section and Secs, 17, 18, 19, and 20 all take effect on January 1, 2012.

Sec. 17. The act provides that the PTT return must be delivered to the town clerk at the same time as the deed. The act also eliminates the requirement that all buyers and sellers must sign the return, and it replaces the dollar amount of the recording fee with a reference to the statute in which the fee is set out.

Sec. 18. The act deletes the requirement that the return be "complete and regular on its face."

Sec. 19. The act deletes the reference to "tax payment" in 32 V.S.A. § 9608 to conform with the change to the law that the tax be paid to the department of taxes and not to the town clerk.

Sec. 20. The act makes conforming changes to 32 V.S.A. § 9610(a) and provides for electronic transmission of the deed but allows the commissioner to make an exception for paper-filed returns because some towns will not have the capacity for electronic transmission immediately.

Sec. 21. The act allows the town of Clarendon to receive an adjustment to its education payment amount. The lower amount received from the department of education last year was due to a filing error.

Sec. 22. The act extends for the 2011 fiscal year the education property tax exemption for skating rinks that are used by a school.

Sec. 23. The act doubles the amount of interest and dividend income above $10,000 when modified adjusted gross income is calculated for purposes of property tax adjustments and renter rebates. This will apply to homeowner adjustment claims in 2010, 2011, and 2012 and to renter rebate claims in 2011 and 2012.

Sec. 24. For all claims in 2011 and after, the act amends the definition of modified adjusted gross income to add back several deductions that are taken before adjusted gross income on the federal Form 1040. The act also amends the definition of household income so that it may not be reduced below zero and changes the term "rent constituting property taxes" to "qualifying rent." Additionally, the act amends the definition of "qualifying rent" to be 21 percent of gross rent in every case, removing the alternative calculation of "rent constituting property taxes. These changes take effect for claims filed in 2011 and after.

Sec. 25. The act amends the property tax adjustment calculation for income sensitivity on the equalized value of a housesite in excess of $500,000. This change applies to claims filed in 2010, 2011, and 2012. The act also removes the $10 per-acre adjustment amount for up to five additional acres for claimants with household income under $90,000. This change applies to claims filed in 2010 and after.

Sec. 26. The act amends the requirement for a landlord to provide a tenant with a certificate of rent as follows: (1) it changes from four or more to two or more the number of units the landlord rents to require the landlord to provide the certificate; (2) it increases penalties from $100 per act to $200 per act for landlords who fail to provide the certificate or provide a falsified certificate; and (3) it removes language allowing a tenant to waive rights to a certificate. This change will affect landlords beginning in 2011.

Sec. 27. The act directs the legislative council to amend statutes to conform to the changes made in Sec. 24 regarding "qualifying rent."

Sec. 28. The act sets the education property tax rates for fiscal year 2011 as follows: $1.35 for nonresidential property and $0.86 multiplied by the district spending adjustment for homestead property. The act also sets the applicable percentage in 32 V.S.A. § 6066(a)(2) at 1.8 percent.

Sec. 29. The act links Vermont's income tax laws to the federal government's income tax laws, except for the tax rates. This section is effective retroactively to January 1, 2009.

Sec. 30. The act amends the downtown and village center tax credit program to allow insurance companies to accept credit certificates in the same manner as banks. This section and Sec. 31 take effect retroactively on January 1, 2010.

Sec. 31. The act amends the downtown and village tax credit recapture provisions to track the change made in Sec. 30.

Sec. 32. The act amends an estate tax provision to clarify that interest on refunds is due only from the date the amended return is filed. This change conforms the estate tax interest provision to the provision for interest on income tax refunds.

Sec. 33. The act amends the estate tax exclusion amount for decedents dying in 2011 by increasing the amount from $2.0 million to $2.75 million. The act further provides legislative intent that the legislature plans to "re-couple" to the federal estate tax system if the federal government adopts a system that is similar to the one in place in 2001, prior to when the state "de-coupled" from the federal estate tax.

Sec. 34. The act provides a definition of a "cigar" as a roll of tobacco wrapped in leaf tobacco or in any substance containing tobacco. This section and Secs. 34 and 35 take effect on July 1, 2010.

Sec. 35. The act amends the amount of roll-your-own tobacco that constitutes a cigarette for tax purposes. Prior to enactment of this act, the amount of tobacco that constituted a cigarette was 0.09 ounces. This act lowers that amount to 0.0325 ounces.

Sec. 36. The act increases tax on snuff and new smokeless tobacco to approximate the tax increase on cigarettes made in 2009. The new rates are $1.87 per ounce for snuff and $1.87 per ounce of new smokeless tobacco or $2.24 per package of new smokeless tobacco if sold in packages containing less than 1.2 ounces. The tax on cigars is as follows:

Sec. 37. The act increases the percentage from 0.0004 to 0.0008 of Vermont adjusted gross income that is acceptable to report as the alternative use tax on individual income tax returns. This change will apply to income tax returns for tax year 2010 and after.

Sec. 38. The act changes the term "amusement" to "entertainment" for purposes of the sales and use tax. This change takes effect on April 1, 2011.

Sec. 39. The act requires the legislative council to make the necessary statutory revision regarding the change of the term "amusement" in Sec. 38.

Sec. 40a. The act provides for transition rules that abate certain assessments made by the commissioner of the department of taxes for performances for which the sales tax was not collected.

Sec. 40b. The act provides nonprofit organizations with guidance until the changes in Sec. 41 concerning the tax on entertainment charges by a nonprofit organization take effect on April 1, 2011.

Sec. 41. The act amends the definition of organizations not covered in the sales and use tax chapter by: making technical corrections to statutory references in 32 V.S.A. § 9743(4), which deals with sales of building materials for governmental structures and development corporations; clarifying that schools and municipalities are exempt from collecting and remitting sales tax, but that vendors who sell on school or municipal property must collect and remit the sales tax; and amending the statute for nonprofit organizations so that if a nonprofit organization's gross ticket sales in the previous calendar year were $50,000 or more, the nonprofit will collect and remit the sales tax on all of its entertainment charges in the current year. The first two changes take effect upon passage and the last change takes effect on April 1, 2011.

Sec. 42. The act increases the amount of money that may be spent from the motor fuel account of the petroleum cleanup fund on any one site from $990,000 to $1,240,000. This change affects all sites currently under remediation and all future remediation activities.

Sec. 43. The act increases the per-gallon heating fuel fee from one-half cent to one cent that is to be collected and deposited in the petroleum cleanup fund heating fuel account. The act also establishes triggers for when the petroleum distributor licensing fee is not to be collected: If the motor fuel fund balance is $7 million or more on May 15, the motor fuel fee will not be collected during the next fiscal year; if the heating fuel fund balance is $3 million or more on May 15, the heating fuel fee will not be collected. These changes take effect on July 1, 2010.

Sec. 44. The act amends the fuel gross receipts tax to apply only to dyed fuels delivered to a business or residence. Under the law amended in the 2009 session, all dyed diesel fuel "not used to propel a motor vehicle" was taxable. That change was a response to the fact that such fuel is starting to be used for heating purposes. However, it swept in all dyed diesel fuel used for nonheating purposes and was administratively difficult for sellers who would not necessarily know how the fuel was going to be used. This change takes effect on July 1, 2010.

Sec. 45. The act requires the department of taxes to provide to the general assembly by January 15, 2011, a plan to develop a system of collecting the education property tax at the state level.

Sec. 46. The act requires the Blue Ribbon Tax Structure Commission created pursuant to Sec. H.56 of No. 1 of the Acts of 2009 (Spec. Sess.) to study and report on the short-term and long-term goals of Vermont education and financing.

Sec. 47. The act amends the homestead declaration statute so that a declaration filed in 2010 will remain in effect until the declarant transfers all or a portion of the homestead or until a change in the use of the homestead affects eligibility. A taxpayer who fails to file a declaration or fails to notify the department of taxes of a change to a declaration will pay a penalty equal to: three percent of the taxpayer's education property tax bill if the nonresidential property tax rate in the taxpayer's municipality is higher than the homestead rate; or seven percent of the taxpayer's education property tax bill in all other situations.

Sec. 48. The act establishes a special fund to benefit Vermont veterans through grants and other support, including: long-term care, aid for homeless veterans, transportation services, other veterans' services, recognition, and direct monetary assistance for veterans. The fund will consist of revenues paid in from a check-off on Vermont income tax returns and from other contributions.

Sec. 49. The act creates a checkoff box on the Vermont income tax return for making contributions to the Vermont veterans' fund created in Sec. 48. This checkoff box will be on individual income tax returns for tax years 2010 and after.

Sec. 50. The act amends 32 V.S.A. § 5402b to require the commissioner of taxes to provide additional data on December 1 regarding education property tax rates and income sensitivity adjustments. This requirement is repealed on April 15, 2011.

Sec. 51. The act repeals the following:

The act repeals for claims filed in 2013 the interest and dividend test and add-back (32 V.S.A. § 6061(5)(D)) and the housesite value limitation (32 V.S.A. § 6066(a)) provided for in Secs. 23 and 25 of the act.

The act repeals the campaign finance checkoff box on individual income tax returns for tax year 2010 and after.

The act repeals on April 15, 2011, the requirement for additional information regarding education property tax rates and income sensitivity adjustments set forth in Sec. 50.

The act repeals a 1981 municipal act relating to tax sharing and joint municipal development between the town of Clarendon and Rutland City.

Sec. 52. The act states that it is the intent of the general assembly that the money saved by the repeal of the tax expenditure in Sec. 51(a)(1) will be appropriated to the department of disabilities, aging, and independent living.

Sec. 53. The act repeals income tax provisions related to income received for a dramatic performance in a commercial film production.

Sec. 54. The act provides an additional $600,000 in sales and use tax reallocation to the village and downtown credits program.

Sec. 55. The act creates a start-up business competition committee comprising the following:

The act directs the committee to develop a business plan competition and to report to the general assembly by January 15, 2011, on its results.

Sec. 56. The act directs the commissioner of finance and management to disburse $5,000 from the campaign finance fund to the fire department of East Montpelier to assist individuals affected by the May flood in the Village of Adamant.

Sec. 57. The act allows the city of Rutland to increases the fees it charges for water and sewer reconnection.

Sec. 58. The act provides findings regarding the fluctuations in the valuation of hydroelectric generating facilities.

Sec. 59. The act freezes grand list values of hydroelectric generating facilities for two years at no less than the April 1, 2009, valuation. The act directs the commissioner of the department of taxes to report to the general assembly no later than January 15, 2011, on varying valuation methodologies for hydroelectric generating facilities including using three- to five-year income averaging.

Sec. 60. The act amends the tax treatment of certain capital gains as follows: Beginning in 2011, taxpayers will have a choice for capital gains:

The 40 percent option cannot be applied to:

Sec. 61. The act amends Sec. E.100.4 of the Big Bill (H.789) as follows:

Sec. E.100.4 of the budget bill provides that if the governor decides to cut the state workforce by more than one percent when the legislature is not in session, then the secretary of administration may not implement that one percent cut unless he or she presents the plan to the joint fiscal committee and it meets the criteria set forth in Sec. E.100.4. Sec. E.100.4 provides that the one percent is measured cumulatively from July 1, 2010. This act amends that section to provide that the one percent is measured cumulatively from the date of passage of the Big Bill.

Sec. 62. This section provides various effective dates for sections of the act. The act takes effect upon passage except where noted above in this summary.

Date Signed by the Governor: June 4, 2010

Effective Date: On passage (June 4, 2010, the date on which the governor signed the bill) except where noted otherwise; see section-by-section summary above.