Act No. 45 (H.436). Taxation; income tax; property tax; economic development; health care; miscellaneous

This act makes numerous changes to Vermont tax code, including changes to income taxes, property taxes, economic development credits, health care-related tax provisions, and miscellaneous tax provisions.

Sec. 1. Lottery winning setoff (Adds 32 V.S.A. § 3113b)

Allows the tax department and the lottery commissioner to offset lottery winnings against outstanding tax liabilities.

Sec. 2. Adoption of federal income tax laws (Amends 32 V.S.A. § 5824)

Updates the link to the Internal Revenue Code.

Sec. 3. Withholding reconciliations (Adds 32 V.S.A. § 5884(d))

Provides that withholding reconciliation returns can only be amended after the due date for administrative error, which is an error that does not change the amount of tax withheld. Removes withholding reconciliation reports from the three-year refund statute.

Sec. 3a. Emergency medical personnel survivor payments (Adds 32 V.S.A. § 5823(a)(8))

Adds section exempting from state taxation payments made by the state to the survivors of emergency medical personnel who die in the line of duty or die from a work-related illness.

Sec. 4. FY 2012 base education tax rate and income percentage

Sets the homestead rate at $0.87 and nonresidential rate at $1.36 for fiscal year 2012. Sets the applicable percentage for determining income sensitivity adjustments at 1.80.

Sec. 5. FY 2012 education base payment amount

Establishes the base education payment amount at $8,544.00 for fiscal year 2012.

Sec. 6. State collection of education property tax

Adds language to Sec. 45 of No. 160 of the Acts of the 2009 Adj. Sess. (2010), requiring the tax department to report on the feasibility of applying the common level of appraisal separately from the tax rate.

Sec. 7. Repeals related to the education financing system evaluation

Repeals session law provisions providing a mandate for Vermont's Blue Ribbon Tax Structure Commission to evaluate Vermont's education financing system. Repeals requirement that the department of education file a report every five years on Vermont's education financing system.

Sec. 8. Evaluation of Vermont's education financing system

Authorizes the joint fiscal office to formulate a proposal for an outside entity to conduct an evaluation of the outcomes of Act 60 and Act 68. Requires that the proposal is approved by the speaker of the house, the president pro tempore of the senate, and the special committee composed of the joint fiscal committee (JFC) and the chairs of the house and senate committees on education. Requires that the evaluation consider previous studies, data collected by the department of taxes and department of education, and data from other states. Requires that the evaluation compare communities within the state, and Vermont with other states based on a number of factors - equity, education quality, comparative costs, funding reliance, demographic issues, economic impacts, spending patterns, and spending correlated to community wealth. The evaluation provider must submit an initial report by March 30, 2012. The department of taxes, department of education, joint fiscal office, and legislative council are to assist the evaluation provider.

Sec. 9. Authorization to spend

Authorizes the joint fiscal office to spend up to $210,000.00 for the education financing system evaluation from its existing budget, or from other legislative budgets as approved by the joint fiscal committee.

Sec. 10. Glastenbury and Somerset budget approval (Amends 32 V.S.A. § 4961(c))

Current law provides that if the tax commissioner does not approve the budget of either Glastenbury or Somerset by September 10, then the budget and tax rate shall remain the same as the prior year. This proposes to delete "tax rate" because even with the same budget, the tax rate should change to reflect the current grand list (which may have changed from the prior year).

Sec. 11. Penalty or failure to pay correction (Amends 32 V.S.A. § 5410(g))

Makes corrections to the penalty for failure to declare a homestead or declaring a nonresidential property as a homestead and eliminates the penalty for failure to inform the commissioner of taxes within 30 days of transfer of or changes in use of property. Gives municipalities discretion regarding whether to impose the penalty.

Sec. 12. Examination of renewable energy property tax issues

Directs the director of property valuation and review (PVR) and commissioner of public service to examine property tax issues related to renewable energy plants. Report due January 15, 2012.

Sec. 13. Household income (Amends 32 V.S.A. § 6061)

Excludes amounts paid by self-employed people for health insurance premiums from the definition of household income for purposes of income sensitivity adjustments.

Sec. 13a. Use value appraisal

Amends 32 V.S.A. § 3757(a) to remove from current use program land that has been permitted for development, or that has received a wastewater permit, but not actually developed, two years after all the permits are issued.

Sec. 13b. Veteran's property tax exemption

Adds a provision to 32 V.S.A. § 6066 requiring that income sensitivity adjustments be calculated without regard to any veteran's property tax exemption under 32 V.S.A. § 3802(11). The net result is that income-sensitized disabled veterans will see a benefit from the disabled veterans property tax exemption in 32 V.S.A. § 3802(11).

Sec. 13c. Definition of excess spending

Together with Sec. 18, moves definitions of excess spending from Title 32 to Title 16.

Sec. 13d. Changes to definition of education spending

Allows towns that tuition all students to both public and approved independent schools to exclude the cost of a deficit from the definition of excess spending.

Sec. 13e. Health recreation and fitness organizations property tax exemption

Extends sunset on property tax exemption for certain health care facilities for one year, but limits exemption to 50 percent of the applicable property taxes.

Sec. 13f. Education property tax exemption for skating rinks used for public schools

Extends sunset on property tax exemption for certain skating rinks for one year, but limits exemption to 50 percent of the applicable property taxes.

Sec. 13g. Veterans property tax exemption

Requires the office of veterans affairs to collect applications and data for the disabled veterans property tax credit as modified by Sec. 16.

Sec. 13h. Wastewater permits

Requires PVR to track wastewater permits issued for land in current use in conjunction with changes made in Sec. 15.

Sec. 14. Vermont Economic Growth Incentive (VEGI) claims filing date extension and clarification (Amends 32 V.S.A. § 5930b(c)(9))

Changes the date that VEGI claims must be filed from the last day of February to the last day of April. Provides that the commissioner of taxes may allow additional time for completion of timely, but incomplete claims. Clarifies that failure to file a claim in each year of the utilization period will result in recapture of previously paid installments.

Sec. 15. Tax increment financing (TIF) district reapproval

Changes make it easier for municipalities to obtain reapproval for an extension of time to incur indebtedness.

Sec. 15a. Tax increment financing district audits

Requires that the cost of audits of tax increment financing districts conducted by the state auditor of accounts be billed back to the municipalities. Extends the time between audits from three years to four years. Allows the municipalities to count the cost of the audits as a "related cost."

Sec. 15b. Milton tax increment financing district

Allows the town of Milton to treat its two tax increment financing districts as one entity for the purpose of accounting and reporting.

Sec. 16. Adding preexisting Burlington TIF language to session law

This section puts language establishing the terms of the Burlington tax increment financing district, approved by the JFC in 2009, in session law to increase its visibility.

Sec. 17. Wood products manufacture tax credit sunset extension

Extends the wood products manufacture tax credit at 32 V.S.A. § 5930y for two years.

Sec. 17a. Finished wood products

Adds language to 32 V.S.A. § 5930y limiting woods product tax credit to producers of finished wood products.

Sec. 18. Downtown and village center tax credit allocation

Allows the state board to allocate the credit awarded under the downtown and village center tax credit program as soon as a distinct phase of a qualified project is complete.

Sec. 19. Downtown and village center tax credit recapture

Allows the state board to reward credits that have been recaptured or rescinded.

Secs. 20 and 21. Composite filing and payments by S corps, partnerships and LLCs (Amends 32 V.S.A. § 5914(b) and 5920(b))

Requires composite filing and payment of tax by S corporations, partnerships, and limited liability companies that have more than 50 nonresident shareholders, partners, or members. This would eliminate hundreds of nonresident returns that remit small amounts of tax and replace it with one return filed by the entity on behalf of its nonresident owners.

Sec. 22. Cigar tax (Amends 32 V.S.A. § 7811)

Increases the low price threshold on cigars that are taxed at the $2.00 rate.

Sec. 23. Home health assessment

Raises assessment on home health agencies from 17.69 percent to 19.30 percent on October 1, 2011.

Secs. 24 and 24a. Hospital assessment

Raises hospital assessment from 5.5 percent to 5.9 percent on October 1, 2011. Changes base year from actual FY 2010 to estimated actual FY 2011. Adds language providing a system for calculating estimated actual numbers on an annual basis.

Sec. 25. Nursing homes

Raises assessment on nursing homes from $4,509.57 per bed to $4,919.53 on October 1, 2011.

Sec. 26. ICF/MR assessment

Raises assessment for ICR/MRs from 5.5 percent to 5.9 percent on October 1, 2011.

Sec. 27. Cigarette tax

Raises tax on a pack of cigarettes $0.38.

Sec. 27a. Floor tax

Imposes a corresponding floor tax on the date the new cigarette tax is effective.

Sec. 28. Health care claims assessment

Imposes an assessment of 0.8 percent on insurance claims. Modeled after the health information technology fee, using same definitions and timing. Extended to claims for dental insurance.

Sec. 29. Health information technology fee

Changes dates for health information technology fee to match health care claims assessment due dates.

Sec. 30. Data collection

Requires the secretary of administration to collect data on permitted provider taxes that Vermont does not levy.

Sec. 31. Power of attorney change

Adds a new 32 V.S.A. § 3102(b)(7) providing a definition of "authorized representative," and making it clear that a notary signature is not required for the release of returns and return information to the authorized representative.

Sec. 32. Fuel gross receipts tax sunset extension (Amends 33 V.S.A. § 2503(h))

Extends the fuel gross receipts tax through June 30, 2016.

Sec. 32a. Weatherization program

Amendment to fuel gross receipts tax section making it consistent with earlier changes as to how the weatherization program is administered.

Sec. 33. Repeal preferential transfer tax treatment of land in use value program (Repeals 32 V.S.A. § 9602(2))

The repeal has the effect of raising the property transfer tax on land in the use value program from 0.5 percent to 1.25 percent.

Sec. 34. Applies funds to administration of land use value program (Amends 32 V.S.A. § 9610(c))

Raises the amount of property transfer tax revenue allocated for funding the division of property valuation and review from 1 percent to 2 percent. Requires that the increased revenues be used to fund the transition of the administration of PVR to an electronic system.

Sec. 35. Sunsets increased funding for division of property valuation and review

Five-year sunset for Sec. 34 which increased funding for division of property valuation and review.

Sec. 36. Raises limit for nonprofit ticket exemption

Raises $50,000.00 exemption for nonprofit ticket sales to $100,000.00. Removes referral to certain organizations covered under the four-event rule from the scope of the nonprofit ticket tax exemption.

Sec. 36a. Internet sales tax

Requires out-of-state sellers with in-state affiliates to collect sales tax. Made effective by Sec. 37 when 15 other states adopt the same or substantially similar language.

Sec. 36b. Internet sales tax notification

Requires out-of-state sellers to notify purchasers of their sales and use tax obligations. Made effective by Sec. 37 until 15 other states adopt the same or substantially similar language.

Sec. 36c. Revenue department

Repeals tax department transition to revenue department.

Sec. 36d. Spirituous liquor

Adds a graduated tax on retail sale of spirits based on amount of sales. Retail sales under $100,000.00 are taxed at 5 percent, retail sales from $100,000.00 to $200,000.00 are taxed at 15 percent, and retail sales over $200,000.00 are taxed at 25 percent.

Sec. 36e. Taxpayer advocate

Establishes an office of the taxpayer advocate within the department of taxes with statutory duties aimed at identifying problems faced by taxpayers and solutions. Requires joint fiscal office and legislative council to evaluate creating an office of the taxpayer advocate that is independent of the department of taxes.

Sec. 36f. Offers in compromise

Authorizes the commissioner of taxes to compromise a tax liability if there is doubt as to collectability or as to liability or both.

Sec. 36g. Auctioneers

Exempts sales by licensed auctioneers from sales tax as long as the sale takes place on the premises of the property owner and no other property is offered for sale.

Sec. 36h. Taxpayer outreach and information systems

Requires the department of taxes to make recommendations to senate committee on finance and house committee on ways and means on how to improve taxpayer education and outreach, on the role of the tax hearing officer, and on how to track taxpayer complaints and responses.

Secs. 36i-36l. Tax expenditures

Alters the format of the tax expenditure budget prepared by the governor and repeals one underutilized tax expenditure.

Sec. 36m. Link-based use returns

Requires department of taxes to evaluate the feasibility of providing voluntary use tax returns and payment on the Internet.

Secs. 36n and 36o. Cigarette tax revenue

Sections slightly alter the amount of cigarette tax revenue going to the Catamount fund and the state health care resources fund in order to compensate for the increase in cigarette taxes in Sec. 27.

Sec. 37. Effective dates

Multiple effective dates, beginning May 24, 2011

Also see: Education; Act No. 30 (H.428). Education; supervisory unions; education property tax

Also see: Education; Act No. 38 (S.53). Education; prekindergarten; average daily membership

Also see: Executive Branch; Act No. 33 (H.138). Executive branch fees

Also see: Motor Vehicles; Act No. 46 (S.94). Miscellaneous amendments to the motor vehicle laws

Also see: Municipal Government; Act No. 4 (H.30). Taxation and fees; municipal government; unified towns and gores of Essex County; tax appeals

Also see: Public Service; Act No. 47 (H.56). Energy; renewable energy; tax; municipalities; real property; commerce and trade; consumer fraud; natural resources; air quality

No applicable act summaries.