Act No. 143 (H.782). Taxation and fees

An act relating to miscellaneous tax changes for 2012

This act proposes to make numerous changes to Vermont's tax code.

Administrative provisions

Sec. 1. Petroleum distribution fee

Amends petroleum distribution fee section to limit the imposition to fuels delivered to a bulk tank and to eliminate exemption for fuels used to propel a motor vehicle. 10 V.S.A. § 1942.

Sec. 2. Notice of fund availability

Requires the secretary of agriculture, food and markets to publish or broadcast information to farmers on the availability of the petroleum cleanup fund. 10 V.S.A. § 1941 and session law.

Sec. 3. Power of attorney

Eliminates the requirement for a notary's signature on power of attorney forms authorizing people to represent taxpayers before the department of taxes. Legislation passed last session authorized the disclosure of information to authorized representatives without a notary signature, but did not remove the notary requirement in cases in which authority is given to bind a taxpayer. 14 V.S.A. § 3502.

Sec. 4. Disclosures to department of liquor control

Amends confidentiality statute to allow the department of taxes to disclose tax account information of a persons seeking a liquor license or a renewal of a liquor license. 32 V.S.A. § 3102(d)(5) and (15).

Sec. 5. Access to property tax bills

Specifies which tax bill information is confidential and who may access that information. Together with Sec. 11, this section provides a response to the Manchester decision. 32 V.S.A. § 3102.

Sec. 6. Taxpayer advocate - definition of powers and case authority

Specifies the powers of the taxpayer advocate and gives the taxpayer advocate authority to assist an individual taxpayer in resolving disputes with the department of taxes. 32 V.S.A. § 3205.

Sec. 7. Taxpayer statement of rights

Requires the taxpayer advocate to make a proposal for a taxpayer statement of rights. Session law.

Sec. 8. Recommendations for extraordinary relief

Establishes a process for the taxpayer advocate to recommend cases to the commissioner for extraordinary relief. 32 V.S.A. § 3206.

Sec. 9. Updates link to the Internal Revenue Code

Adopts any changes in the Internal Revenue Code for the immediately completed year. 32 V.S.A. § 5824.

Sec. 10. Netting of business losses

Allows a sole proprietorship business to net business losses on line h of the Vermont household income form.

Sec. 11. Property tax bills

Requires towns to create and send an alternate tax bill showing the property tax adjustment and the net tax due. Together with Sec. 5, this section provides a response to the Manchester decision. 32 V.S.A. § 6066a(f).

Sec. 12. IRS update for estate tax provisions

Adopts any changes in the Internal Revenue Code for estate taxes for the immediately completed year.

Sec. 13. Vermont Strong

Allows a Vermont Strong plate to be displayed on a motor vehicle registered in Vermont. Session law.

Sec. 13a. Little cigars

Alters the definition of little cigars.

Compliance provisions

Sec. 14. Reporting sales of beer and wine

Requires beer and wine distributors to report their sales to retail dealers to the tax department. 7 V.S.A. § 421.

Sec. 15. Interest rates adjustments

Provides an annual and monthly interest rate equal to the prime rate, subject to rounding rules, for the overpayment of tax. Provides an annual and monthly rate of interest for the underpayment of taxes that are 200 basis points higher than the rates for overpayments. Allows the department of taxes 90 days to issue corporate refunds before interest starts to run. 32 V.S.A. § 3108.

Income tax provisions

Sec. 16. Minimum tax on C corporations

Increases minimum tax on C corporations with gross receipts of under $2 million to $300.00, from $2 million to $5 million to $500.00, and for C corporations over $5 million to $750.00. 32 V.S.A. § 5832.

Sec. 17. New market tax credits

Exempts partnerships or limited liability companies (LLCs) engaged solely in the business of operating a new market tax credit project in Vermont from withholding requirements for nonresidents. 32 V.S.A. § 5920(g).

Sec. 18. VEGI documentation

Clarifies that a Vermont Economic Growth Incentive (VEGI) claim by a business that has not filed all required forms, such as W2s and withholding returns, will not be considered filed in a timely manner and will not be eligible for payment. 32 V.S.A. § 5930b(c)(9).

Sec. 19. VEGI reporting

Amends the VEGI reporting provisions to more accurately reflect the data that the Vermont economic progress council and the department of taxes currently collect and allows additional time for reporting. 32 V.S.A. § 5930b(c).

Sec. 20. VEGI sunset extension

Extends sunset for VEGI program from July 1, 2012 to July 1, 2017. Session law.

Sec. 21. Affordable housing tax credit

Lifts the cap for tax credits awarded for owner-occupied units by $200,000.00 a year, and lifts the total cap of allowed credits by $1 million.

Sec. 21a. Use of credits

Adds language demonstrating an intent to use the increased affordable housing tax credit for housing that meets efficiency standards.

Sec. 22. Downtown tax credit

Creates a 10-percent tax credit within downtown tax credit program for expenditures related to damage from a federally declared disaster in Vermont in 2011. 32 V.S.A. § 5930bb.

Sec. 23. Downtown tax credit limit

Increases limit for tax credits for fiscal year 2013 to accommodate new disaster-related credits.

Sec. 24. Low income housing exemption

Adds fee interests to the types of low income housing transactions exempted from the property transfer tax.

Property tax adjustment and renter rebate provisions

Sec. 25. Annual filing of homestead declarations

Requires homestead declarations to be filed annually. 32 V.S.A. § 5410(b).

Sec. 25a. Transition to annual filing

Requires commissioner of taxes to publicize annual filings and to use statutory powers to forgive late filings for 2013.

Sec. 26. Definition of household income

Excludes payments made into health saving accounts from the definition of household income. 32 V.S.A. § 6061.

Secs. 27, 28, and 29. Final dates for property tax adjustment and renter rebate claims

Final date for filing property tax adjustment claims and renter rebate claims moved from September 1 to October 15. Makes explicit that renter rebate claims are due at the same time as property tax adjustment claims, which is currently the same time as Vermont income tax returns are due. 32 V.S.A. §§ 6066a, 6068, and 6074.

Sec. 30. Limitation on renter rebates

Provides a $3,000.00 cap for renter rebate claims. 32 V.S.A. § 6067.

Sec. 31. Property tax adjustment and household income sunsets

Eliminates the sunset on the $500,000.00 housesite cap. Maintains the January 1, 2013 sunset on the double counting of interest and dividend income.

Sec. 31a. Household income

Provides for double counting of interest and dividend income over $10,000.00 for claimants under age 65 as of January 1, 2013 for the purposes of calculating household income.

Sec. 32. Landlord certificates

Requires the department of taxes to report back to the senate committee on finance and house committee on ways and means on how to implement an electronic system of filing landlord certificates. Session law.

Property tax provisions

Sec. 33. Taxation of common interest communities

Establishes rules for allocating taxes when a common interest community straddles more than one town. 27A V.S.A. § 1-105.

Sec. 34. Elimination of copyrights

Eliminates state's copyright protection for orthophotographic products and allows the products to be freely copied and exchanged. 32 V.S.A. § 3409.

Secs. 35 and 36. Gores, unorganized towns, and unified towns and gores of Essex County

Changes correct statutory references to reflect difference between gores, unorganized towns, and the unified towns and gores of Essex County.

Sec. 37. Spending adjustments for tuition-only towns

Creates a two-year average for spending adjustments in tuition-only towns that a town can choose to opt into. 32 V.S.A. § 5401(13).

Sec. 38. Property tax rates

Sets the base rate for nonresidential properties at $1.38 per $100.00 of assessed value and the base rate for homestead properties at $0.89 per $100.00 of assessed value. For fiscal year 2013 only.

Sec. 39. Education base amount

Sets the education base amount at $8,723.00 for fiscal year 2013 only.

Sec. 40. Dollar equivalent

Requires the commissioner of taxes to include, for illustration purposes, how much spending a tax rate of $1.00 could support.

Wastewater permit provisions

Secs. 41-44. Wastewater permits

Allows the commissioner of forests, parks and recreation to certify in certain circumstances that a wastewater permit constitutes development triggering the land use change tax. Repeals provision with two-year look back for wastewater permits and repeals requirement that the department of taxes track wastewater permits.

Current use provisions

Sec. 45. Land use change tax

Clarifies that cutting contrary to the forest management plan during the term of the plan is development that triggers a land use change tax even if the land is no longer enrolled. If the term of the plan has expired, cutting contrary to minimum acceptable standards for forest management constitutes development. 32 V.S.A. § 3752(5).

Sec. 46. Current use advisory board reference correction

Removes the University of Vermont member of current use advisory board. 32 V.S.A. § 3753.

Sec. 47. Forest management plan due dates

Clarifies that, after the initial plan is filed, subsequent ten-year forest management plans are due on April 1. 32 V.S.A. § 3755.

Sales and use tax provisions

Sec. 48. Local option tax opt-out

Creates a process for a town with a local option tax to discontinue that tax. 24 V.S.A. § 138.

Sec. 49. Auctioneers

Amends auctioneer exemption to make it explicit that the exemption is only for auctioned property that was obtained by the owner for his or her own use, and not for commercial purposes. 32 V.S.A. § 9741(48).

Sec. 50. Specified digital products

Clarifies that imposition of sales tax on specified digital products conforms to language in Streamlined Sales Tax Agreement. 32 V.S.A. § 9771.

Sec. 51. Sales tax appeals

Amends sales and use tax appeal statute to provide that appeal is to the superior court of the county in which the taxpayer resides or has a place of business. 32 V.S.A. § 9817(a).

Sec. 52. Taxation of cloud computing

Imposes a moratorium on the imposition of the sales and use tax on remotely accessed prewritten software from December 31, 2006 to July 1, 2013. Provides refunds for those who paid the tax during that period.

Sec. 53. Sales tax study committee

Establishes a study committee to address sales tax issues in a changing economy.

Sec. 53a. Enhancing Vermont's technology economy study committee

Establishes a study committee to examine ways to enhance Vermont's technology economy.

Sec. 54. Dental items

Provides a sales tax exemption for toothbrushes, floss, and other items given to patients by dentists and hygienists.

Sec. 54a. Secondary packaging

Exempts from the sales tax secondary packaging equipment used in an integrated process.

Sec. 55. Tax rebates for mobile homes

Exempts from sales and use tax, local option taxes, and property transfer taxes the sale of a mobile home used to replace a mobile home damaged by a federal disaster in Vermont in 2011.

Secs. 56 and 56a. Sale tax allocation

Allocates 35 percent of sales tax revenue to the education fund, instead of current 33.3 percent, and allocates 65 percent of sales tax revenue to the general fund, instead of current 66.6 percent.

Electrical generating tax provisions

Sec. 57. Repeal

Repeals the property generating tax at 32 V.S.A. § 5402a.

Sec. 58. Electrical generating tax

Replaces the current rate structure with a flat generation rate of $0.0025 per kilowatt hour. Places the tax on the most recent quarter of generation rather than the current three-year rolling average. 32 V.S.A. § 8661.

Meals and rooms tax provisions

Sec. 59. Rooms tax - independent living facility

Updates the rooms tax language to specify the types of homes that are exempt from the rooms tax. 32 V.S.A. § 9202.

Sec. 60. Meals tax - independent living facility

Updates the meals tax language to specify the types of facilities that are exempt from the meals tax. 32 V.S.A. § 9202.

Sec. 61. Independent living facility

Creates a new definition for an independent living facility. 32 V.S.A. § 9202.

Sec. 62. Premiums payment

Increases the payment due from insurance companies who write policies in Vermont by $150,000.00 for the fire safety special fund and the emergency medical services special fund.

Sec. 63. Effective dates

Multiple effective dates, beginning retroactively on May 24, 2011