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Subchapter 001: DEFINITIONS; GENERAL PROVISIONS
§ 5811. Definitions
As used in this chapter unless the context requires otherwise:
(1) [Repealed.]
(2) “Commissioner” means the Commissioner of Taxes appointed under section 3101 of this title or any officer or employee of the Department authorized by the Commissioner (directly
or indirectly by one or more redelegations of authority) to perform the functions
mentioned or described in this chapter.
(3) “Corporation” means any business entity subject to income taxation as a corporation,
and any entity qualified as a small business corporation, under the laws of the United
States, with the exception of the following entities that are exempt from taxation
under this chapter:
(A) railroad and insurance companies that are taxed under chapter 211 of this title;
(B) credit unions organized under 8 V.S.A. chapter 221 and federal credit unions;
(C) nonprofit hospital service corporations organized under 8 V.S.A. chapter 123; and
(D) nonprofit medical service corporations organized under 8 V.S.A. chapter 125.
(4) [Repealed.]
(5) “Fiscal year” means an accounting period of 12 months ending on the last day of any
month except December, or an accounting period of less than 12 months, which period
is employed as the fiscal year of the taxpayer for U.S. income tax purposes.
(6) “Individual” means a natural person. However, if, for any taxable year, a spouse
or a surviving spouse file a joint income tax return under this chapter, they shall
be considered to be a single individual for that taxable year.
(7) “Laws of the United States” means, for any taxable year, the statutes of the United
States relating to federal income taxes, whether enacted before or after this chapter
effective for the taxable year, unless otherwise provided.
(8) “Nonresident estate” means any estate other than a resident estate.
(9) “Nonresident individual or trust” means, for any taxable year, an individual or trust
not qualifying for residency in this State during any part of that taxable year.
(10) “Part-year resident individual or trust” means, for any taxable year, an individual
or trust qualifying for residency in this State during only part of that taxable year.
(11) “Residency.”
(A) An individual qualifies for residency in this State for that portion of the taxable
year during which:
(i) the individual is domiciled in this State; or
(ii) the individual maintains a permanent place of abode within this State if the individual
both maintains a permanent place of abode and is present in this State for more than
an aggregate of 183 days of that taxable year.
(B) A trust qualifies for residency in this State if it is:
(i) a trust, or a portion of a trust, consisting of property transferred by will or by
a decedent who at his or her death was domiciled in this State; or
(ii) a trust, or a portion of a trust, consisting of property of:
(I) a person domiciled in this State at the time such property was transferred to the
trust, if such trust or portion of a trust was then irrevocable, or if it was then
revocable and has not subsequently become irrevocable; or
(II) a person domiciled in this State at the time such trust, or portion of a trust, became
irrevocable, if it was revocable when such property was transferred to the trust but
has subsequently become irrevocable.
(C) As used in subdivision (B) of this subdivision (11), a trust or a portion of a trust
is revocable if it is subject to a power, exercisable immediately or at any future
time, to revest title in the person whose property constitutes such trust or portion
of a trust, and a trust or portion of a trust becomes irrevocable when the possibility
that such power may be exercised has been terminated.
(12) “Resident estate” means the estate of a decedent who, at the decendent’s death, was
domiciled in this State.
(13) “Resident individual or trust” means, for any taxable year, an individual or trust
qualifying for residency in this State during the entirety of that taxable year.
(14) “Tax” or “tax liability” includes the liability for all amounts owing by a taxpayer
to the State of Vermont under this chapter.
(15) “Taxable corporation” means, for any taxable year, a corporation that, at any time
during that taxable year:
(A) was incorporated under the laws of this State;
(B) possessed a certificate of authority to do business within this State; or
(C) received any income allocable or apportionable to this State under the provisions
of section 5833 of this title, except that a corporation that would otherwise be taxable under this subdivision
shall be exempt if the corporation’s activities in this State are limited to the performance
of any activities that, without more, would not subject the corporation to taxation
in this State, plus either:
(i) fulfillment operations as follows:
(I) maintenance of cash balances with banks or trust companies in this State;
(II) the following actions by a person unrelated to the corporation taken on behalf of
the corporation:
(aa) sales order processing service;
(bb) credit card processing services;
(cc) receipt, storage, and removal from storage of property of the corporation in conjunction
with the packaging or repackaging of such property for shipment to a customer of the
corporation; and
(dd) reproduction of property of the corporation contained in or on electromagnetic or
optical media, such as computer discs, magnetic tapes, compact discs, laser discs,
and microprocessor chips, onto tangible media, and receipt, storage, and removal from
storage of property of the corporation for shipment to a customer of the corporation
or to the corporation itself in conjunction with any such reproduced property; or
(ii) any or all of the following necessary to create or maintain a World Wide Web page
or internet site for the corporation:
(I) ownership of data or programming code in this State, or use of that data or programming
code by a person other than the corporation or by a person not in this State;
(II) ownership of, or receipt of services from, computer servers in this State; and
(III) receipt of computer processing or web hosting services from a computer service provider
or web hosting service in this State.
(16) “Taxable year” means the calendar year, or the fiscal year ending during the calendar
year, with respect to which a tax is imposed under this chapter and, in the case of
a return filed with respect to a fractional part of a year, the period with respect
to which the return is filed.
(17) “Taxpayer” means a person obligated to file a return with or pay or remit any amount
to this State under this chapter.
(18) “Vermont net income” means, for any taxable year and for any corporate taxpayer:
(A) the taxable income of the taxpayer for that taxable year under the laws of the United
States, without regard to 26 U.S.C. § 168(k), and excluding income that under the laws of the United States is exempt from taxation
by the states:
(i) increased by:
(I) the amount of any deduction for State and local taxes on or measured by income, franchise
taxes measured by net income, franchise taxes for the privilege of doing business
and capital stock taxes;
(II) to the extent such income is exempted from taxation under the laws of the United States
by the amount received by the taxpayer on and after January 1, 1986 as interest income
from state and local obligations, other than obligations of Vermont and its political
subdivisions, and any dividends or other distributions from any fund to the extent
such dividend or distribution is attributable to such Vermont State or local obligations;
and
(III) the amount of any deduction for a federal net operating loss; and
(ii) decreased by:
(I) the “gross-up of dividends” required by the federal Internal Revenue Code to be taken
into taxable income in connection with the taxpayer’s election of the foreign tax
credit;
(II) the amount of income that results from the required reduction in salaries and wages
expense for corporations claiming the Targeted Job or WIN credits; and
(III) any federal deduction or credit that the taxpayer would have been allowed for the
cultivation, testing, processing, or sale of cannabis or cannabis products as authorized
under 7 V.S.A. chapter 33 or 37, but for 26 U.S.C. § 280E.
(B) In the case of an “electing small business corporation” (“Subchapter S Corporation”)
under the laws of the United States, “Vermont net income” shall include only the Vermont
net income of the corporation (as defined in this section) that is taxable to the
corporation under the provisions of the Internal Revenue Code.
(C) For a taxable corporation that is a member of an affiliated group and that is engaged
in a unitary business with one or more other members of that affiliated group, “Vermont
net income” includes the allocable share of the combined net income of the group.
(D) For a corporation with federal exempt status, “Vermont net income” means all income
that is subject to federal income tax, including unrelated business income under 26 U.S.C. § 511 and any income arising from debt-financed property subject to taxation under 26 U.S.C. § 514.
(19) [Repealed.]
(20) “Person” shall include an individual, firm, partnership, association, joint stock
company, corporation, trust, estate, or other entity.
(21) “Taxable income” means, in the case of an individual, federal adjusted gross income
determined without regard to 26 U.S.C. § 168(k) and:
(A) increased by the following items of income (to the extent such income is excluded
from federal adjusted gross income):
(i) interest income from non-Vermont state and local obligations; and
(ii) dividends or other distributions from any fund to the extent they are attributable
to non-Vermont state or local obligations; and
(B) decreased by the following items of income (to the extent such income is included
in federal adjusted gross income):
(i) income from U.S. government obligations;
(ii) with respect to adjusted net capital gain income as defined in 26 U.S.C. § 1(h) reduced by the total amount of any qualified dividend income: either the first $5,000.00
of such adjusted net capital gain income or 40 percent of adjusted net capital gain
income from the sale of assets held by the taxpayer for more than three years, except
not adjusted net capital gain income from:
(I) the sale of any real estate or portion of real estate used by the taxpayer as a primary
or nonprimary residence; or
(II) the sale of depreciable personal property other than farm property and standing timber;
or stocks or bonds publicly traded or traded on an exchange, or any other financial
instruments; regardless of whether sold by an individual or business; and provided
that the total amount of decrease under this subdivision (21)(B)(ii) shall not exceed
40 percent of federal taxable income or $350,000.00, whichever is less;
(iii) recapture of State and local income tax deductions not taken against Vermont income
tax;
(iv) the portion of certain retirement income and federally taxable benefits received under
the federal Social Security Act that is required to be excluded under section 5830e
of this chapter;
(v) the amount of any federal deduction or credit that the taxpayer would have been allowed
for the cultivation, testing, processing, or sale of cannabis or cannabis products
as authorized under 7 V.S.A. chapter 33 or 37, but for 26 U.S.C. § 280E; and
(vi) the amount of interest paid by a qualified resident taxpayer during the taxable year
on a qualified education loan for the costs of attendance at an eligible educational
institution; and
(C) decreased by the following exemptions and deductions:
(i) a personal exemption of $4,150.00 per person for the taxpayer, for the spouse or the
deceased spouse of the taxpayer whose filing status under section 5822 of this chapter
is married filing a joint return or surviving spouse, and for each individual qualifying
as a dependent of the taxpayer under 26 U.S.C. § 152, provided that no exemption may be claimed for an individual who is a dependent of
another taxpayer;
(ii) a standard deduction determined as follows:
(I) for taxpayers whose filing status under section 5822 of this chapter is unmarried
(other than surviving spouses or heads of households) or married filing separate returns,
$6,000.00;
(II) for taxpayers whose filing status under section 5822 of this chapter is head of household,
$9,000.00; and
(III) for taxpayers whose filing status under section 5822 of this chapter is married filing
joint return or surviving spouse, $12,000.00;
(iii) an additional deduction of $1,000.00 for each federal deduction under 26 U.S.C. § 63(f) that the taxpayer qualified for and received; and
(iv) an amount equal to the itemized deduction for medical expenses taken at the federal
level by the taxpayer, under 26 U.S.C. § 213:
(I) minus the amount of the Vermont standard deduction and Vermont personal exemptions
taken by the taxpayer under this subdivision (C); and
(II) minus any amount deducted at the federal level that is attributable to the payment
of an entrance fee or recurring monthly payment made to a continuing care retirement
community regulated under 8 V.S.A. chapter 151, which exceeds the deductibility limits for premiums paid during the taxable year
on qualified long-term care insurance contracts under 26 U.S.C. 213(d)(10)(A).
(D) The dollar amounts of the personal exemption allowed under subdivision (C)(i) of this
subdivision (21), the standard deduction allowed under subdivision (C)(ii) of this
subdivision (21), and the additional deduction allowed under subdivision (C)(iii)
of this subdivision (21) shall be adjusted annually for inflation by the Commissioner
of Taxes beginning with taxable year 2018 by using the Consumer Price Index and the
same methodology as used for adjustments under 26 U.S.C. § 1(f)(3); provided, however, that as used in this subdivision (D), “consumer price index”
means the last Consumer Price Index for All Urban Consumers published by the U.S.
Department of Labor.
(22) “Affiliated group” means a group of two or more corporations in which more than 50
percent of the voting stock of each member corporation is directly or indirectly owned
by a common owner or owners, either corporate or noncorporate, or by one or more of
the member corporations, but shall exclude foreign corporations and corporations taxable
under 8 V.S.A. § 6014.
(23) “Unitary business” means one or more related business organizations engaged in business
activity both within and outside the State among which there exists a unity of ownership,
operation, and use or an interdependence in their functions.
(24) [Repealed.]
(25) “Vermont net operating loss” means any negative income after allocation and apportionment
of Vermont net income pursuant to section 5833 of this chapter.
(26) “Digital business entity” means a business entity that, during the entire taxable
year:
(A) was not a member of an affiliated group or engaged in a unitary business with one
or more members of an affiliated group that is subject to Vermont income taxation;
did not have any Vermont property, payroll, or sales; and did not perform any activities
in this State that would constitute doing business for purposes of income taxation
except activities described in subdivisions (15)(C)(i) (fulfillment operations) and
(C)(ii) (web page or internet site maintenance) of this section; and
(B) used mainly computer, electronic, and telecommunications technologies in its formation
and in the conduct of its business meetings, in its interaction with shareholders,
members, and partners, in executing any other formal requirements.
(27)(A) For the purposes of subdivisions (21)(B)(ii)(I), (21)(B)(ii)(II), (28)(B)(ii)(I),
and (28)(B)(ii)(II) of this section, the sale of a farm shall mean the disposition
of real and personal property owned by a farmer as that term is defined in subdivision 3752(7) of this title and used by the farmer in the business of farming as that term is defined in 26 C.F.R. § 1.175-3.
(B) For the purposes of subdivisions (21)(B)(ii)(II) and (28)(B)(ii)(II) of this section,
the sale of standing timber shall mean the disposition of standing timber by an owner
of timber that would give rise to the owner recognizing a capital gain or loss as
defined in 26 U.S.C. § 631(b).
(28) “Taxable income” means, in the case of an estate or a trust, federal taxable income
determined without regard to 26 U.S.C. § 168(k) and:
(A) increased by the following items of income:
(i) interest income from non-Vermont state and local obligations;
(ii) dividends or other distributions from any fund to the extent they are attributable
to non-Vermont state or local obligations; and
(iii) the amount of State and local income taxes deducted from federal gross income for
the taxable year; and
(B) decreased by the following items of income:
(i) income from U.S. government obligations;
(ii) with respect to adjusted net capital gain income as defined in 26 U.S.C. § 1(h), reduced by the total amount of any qualified dividend income: either the first $5,000.00
of such adjusted net capital gain income or 40 percent of adjusted net capital gain
income from the sale of assets held by the taxpayer for more than three years, except
not adjusted net capital gain income from:
(I) the sale of any real estate or portion of real estate used by the taxpayer as a primary
or nonprimary residence; or
(II) the sale of depreciable personal property other than farm property and standing timber;
or stocks or bonds publicly traded or traded on an exchange, or any other financial
instruments; regardless of whether sold by an individual or business; and provided
that the total amount of decrease under this subdivision (28)(B)(ii) shall not exceed
40 percent of federal taxable income or $350,000.00, whichever is less; and
(iii) recapture of State and local income tax deductions not taken against Vermont income
tax.
(29) As used in subdivision (21)(B)(vi) of this section:
(A) “Qualified education loan” and “eligible educational institution” shall have the same
meanings as under 26 U.S.C. § 221(d).
(B) “Qualified resident taxpayer” means an individual qualifying for residency as defined
under subdivision (11) of this section and whose adjusted gross income is equal to
or less than:
(i) $120,000.00 if the individual’s filing status is single, head of household, or married
filing separately; or
(ii) $200,000.00 if the individual’s filing status is married filing jointly. (Added 1966, No. 61 (Sp. Sess.), § 1, eff. Jan. 1, 1966; amended 1967, No. 121, § 1, eff. Jan. 1, 1968 for taxable years beginning on or after January 1, 1968; 1971, No. 73, § 12, eff. April 16, 1971; 1973, No. 90, § 4; 1975, No. 190 (Adj. Sess.), § 3, eff. for tax years beginning after December 31, 1974; 1977, No. 17, § 1, eff., March 22, 1977 for tax years ending on and after December 31, 1976; 1977, No. 117 (Adj. Sess.), §§ 1, 2, eff. Jan. 27, 1978 for tax years commencing on and after January 1, 1977; 1979, No. 105 (Adj. Sess.), §§ 1, 2, § 45, eff. April 2, 1980 for taxable years beginning after January 1, 1979; 1981, No. 152 (Adj. Sess.), § 1, eff. April 12, 1982 for taxable years beginning on and after Jan. 1, 1982; 1985, No. 262 (Adj. Sess.), §§ 5–7, eff. June 4, 1986, affecting income taxes beginning on and after Jan. 1, 1986; 1985, No. 266 (Adj. Sess.), §§ 1, 2, eff. June 4, 1986 for taxable years beginning on and after Jan. 1, 1986; 1987, No. 82, §§ 4, 5, 9, eff. June 9, 1987 affecting taxable years beginning on and after Jan. 1, 1987; 1987, No. 210 (Adj. Sess.), § 4; 1989, No. 119, § 2, eff. June 22, 1989, applying to taxes payable for taxable years beginning on and after Jan. 1, 1989; 1989, No. 210 (Adj. Sess.), § 296, eff. May 31, 1990, affecting taxable years beginning on or after Jan. 1, 1990; 1989, No. 222 (Adj. Sess.) § 4, eff. May 31, 1990, applying to taxable years beginning on or after Jan. 1, 1990; 1991, No. 32, eff. May 18, 1991, §§ 31, 32, eff. May 18, 1991, applying retroactively to taxable years beginning on and after January 1, 1990, § 33 eff. May 18, 1991, applying to loss years ending on and after April 30, 1991; 1991, No. 67, § 25, eff. June 19, 1991; 1995, No. 29, §§ 7, 8, eff. April 14, 1995; 1995, No. 169 (Adj. Sess.), §§ 14, 22, eff. May 15, 1996; 1997, No. 156 (Adj. Sess.), §§ 3, 51, eff. April 29, 1998; 2001, No. 67, §§ 2, 3, eff. June 16, 2001; 2001, No. 140 (Adj. Sess.), §§ 1-3, eff. June 21, 2002; 2001, No. 144 (Adj. Sess.), § 28, eff. June 21, 2002; 2003, No. 67, § 24a, eff. July 1, 2003; 2003, No. 152 (Adj. Sess.), § 2, eff. June 7, 2004; 2005, No. 94 (Adj. Sess.), § 1, eff. March 8, 2006; 2005, No. 207 (Adj. Sess.), §§ 9, 15, eff. May 31, 2006; 2007, No. 190 (Adj. Sess.), §§ 19, 36; 2009, No. 1 (Sp. Sess.), §§ H.25, H.47, H.51; 2009, No. 2 (Sp. Sess.), §§ 16a, 16b, 17, eff. June 9, 2009; 2009, No. 160 (Adj. Sess.), § 60, eff. June 4, 2010; 2013, No. 73, §§ 17, 18, eff. June 5, 2013; 2015, No. 57, § 64, eff. Jan. 1, 2015; 2017, No. 73, § 13a, eff. Jan. 1, 2018; 2018, No. 11 (Sp. Sess.), § H.1, eff. Jan. 1, 2018; 2019, No. 71, § 1; 2019, No. 71, § 2, eff. Jan. 1, 2019; 2019, No. 164 (Adj. Sess.), § 18, eff. Jan. 1, 2022; 2019, No. 164 (Adj. Sess.), §§ 18a, 18b, eff. Jan. 1, 2023; 2021, No. 105 (Adj. Sess.), § 532, eff. July 1, 2022; 2021, No. 138 (Adj. Sess.), §§ 5, 6, eff. January 1, 2022; 2021, No. 148 (Adj. Sess.), § 1, eff. January 1, 2023; 2023, No. 6, § 375, eff. July 1, 2023; 2023, No. 85 (Adj. Sess.), §§ 467, 468, eff. July 1, 2024.)
§ 5812. Income taxation of parties to a civil union
This chapter shall apply to parties to a civil union or civil marriage and surviving
parties to a civil union or civil marriage as if federal income tax law recognized
a civil union and civil marriage in the same manner as Vermont law. (Added 1999, No. 91 (Adj. Sess.), § 21; amended 2013, No. 73, § 19.)
§ 5813. Statutory purposes
(a) The statutory purpose of the exemption for Vermont municipal bond income in subdivision 5811(21)(A)(i) of this title is to lower the cost of borrowing in order to finance State and municipal projects.
(b) The statutory purpose of the Vermont flat capital gains exclusion in subdivision 5811(21)(B)(ii) of this title is intended to increase savings and investment by making the effective tax rate on
capital gains income lower than the effective tax rate on earned income while exempting
a portion of the gain that may represent inflation. The 40-percent business capital
gains exclusion mitigates the impact of one-time realizations in a progressive tax
structure.
(c) [Repealed.]
(d) The statutory purpose of the Vermont credit for persons who are elderly or disabled
in subsection 5822(d) of this title is to provide financial assistance to seniors and persons who are disabled with little
tax-exempt retirement or disability income.
(e) The statutory purpose of the Vermont investment tax credit in subsection 5822(d) of this title is to encourage Vermont business investments by lowering the effective costs of certain
activities.
(f) The statutory purpose of the Vermont farm income averaging credit in subdivision 5822(c)(2) of this title is to mitigate the adverse tax consequences of fluctuating farm incomes under a progressive
tax structure and to provide stability to farm operations.
(g) The statutory purpose of the exemption for military pay in subdivisions 5823(a)(2)
and (b)(3) of this title is to provide additional compensation for military personnel
in recognition of their service to Vermont and to the country.
(h) The statutory purpose of the Vermont charitable housing credit in section 5830c of this title is to enable lower capital cost to certain affordable housing charities by restoring
some of the forgone investment income through a tax credit to the investor.
(i) The statutory purpose of the Vermont affordable housing credit in section 5930u of this title is to increase the capital available to certain affordable housing projects for construction
or rehabilitation by attracting up-front private investment.
(j) The statutory purpose of the Vermont qualified sale of a mobile home park credit in
section 5828 of this title is to encourage sales of mobile home parks to a group composed of a majority of the
mobile home park leaseholders, or to a nonprofit organization that represents such
a group and, in doing so, to provide stability to the inhabitants of such mobile home
parks.
(k) The statutory purpose of the Vermont higher education investment credit in section 5825a of this title is to encourage contributions to Vermont 529 plans that would not otherwise occur
and to lower the cost of higher education for Vermont students and the Vermont taxpayers
who financially support them.
(l) The statutory purpose of the Vermont entrepreneurs’ seed capital fund credit in section 5830b of this title is to provide incentives for investment in the Seed Capital Fund, ensuring it has
sufficient capital to make equity investments in Vermont businesses.
(m) The statutory purpose of the Vermont historical rehabilitation tax credit in subsection
5930cc(a) of this title is to provide incentives to improve and rehabilitate historic
properties in designated downtowns and village centers.
(n) The statutory purpose of the Vermont façade improvement tax credit in subsection 5930cc(b) and sections 5930aa-5930ff of this title is to provide incentives to improve façades and rehabilitate historic properties in designated downtowns and village centers.
(o) The statutory purpose of the Vermont code improvement tax credit in subsection 5930cc(c)
and sections 5930aa-5930ff of this title is to provide incentives to improve and rehabilitate
historic properties in designated downtowns and village centers.
(p) The statutory purpose of the Vermont research and development tax credit in section
5930ii of this title is to encourage business investment in research and development
within Vermont and to attract and retain intellectual-property-based companies.
(q) The statutory purpose of the Vermont downtown tax credits in sections 5930n-5930r of this title is to provide incentives to improve and rehabilitate historic properties in designated
downtowns and village centers.
(r) The statutory purpose of the Vermont child and dependent care tax credit in section 5828c of this title is to provide cash relief to employees who incur dependent care expenses to enable
them to remain in the workforce.
(s) The statutory purpose of the Vermont earned income tax credit in section 5828b of this title is to provide incentives for working families and individuals with low income and
to offset the effect on these Vermonters of conventionally regressive taxes.
(t) The statutory purpose of the Vermont machinery and equipment tax credit in section
5930ll of this title is to provide an incentive to make a major, long-term capital
investment in Vermont-based plants and property to ensure the continuation of in-state
employment.
(u) The statutory purpose of the Vermont Employment Growth Incentive Program in chapter
105, subchapter 2 of this title is to generate net new revenue to the State by encouraging
a business to add new payroll, create new jobs, and make new capital investments and
sharing a portion of the revenue with the business.
(v) The statutory purpose of the Vermont Downtown and Village Center Program tax credits
in section 5930cc of this title is to provide incentives to improve and rehabilitate
historic properties in designated downtowns and village centers.
(w) The statutory purpose of the partial exemption of federally taxable benefits under
the Social Security Act and certain retirement income in section 5830e of this title is to lessen the tax burden on Vermonters with low to moderate income who derive
part of their income from Social Security benefits and certain retirement income.
(x) The statutory purpose of the charitable contribution credit in subdivision 5822(d)(3) of this title is to reduce the tax liability for Vermonters who contribute to charitable causes.
(y) The statutory purpose of the Vermont child tax credit in section 5830f of this title is to provide financial support to families with young children.
(z) The statutory purpose of the exclusion from income of student loan interest paid in
subdivision 5811(21)(B)(vi) of this title is to lessen the financial impact of higher education debt on Vermonters.
(aa) The statutory purpose of the Vermont veteran tax credit in section 5830g of this title is to provide financial support to Vermonters who served in the U.S. uniformed services. (Added 2013, No. 200 (Adj. Sess.), § 3; amended 2015, No. 157 (Adj. Sess.), § H.7, eff. Jan. 1, 2017; 2018, No. 11 (Sp. Sess.), § H.6, eff. Jan. 1, 2018; 2021, No. 105 (Adj. Sess.), § 533, eff. July 1, 2022; 2021, No. 138 (Adj. Sess.), § 8, eff. January 1, 2022; 2025, No. 71, § 4, eff. January 1, 2025.)
§ 5814. Repealed. 1991, No. 186 (Adj. Sess.), § 8(b), eff. May 7, 1992.
§ 5815. Repealed.
§ 5816. Repealed. 1991, No. 186 (Adj. Sess.), § 3(b), eff. May 7, 1992.
§ 5817. Repealed. 1991, No. 186 (Adj. Sess.), § 8(c), eff. May 7, 1992.
§ 5818. Repealed. 1991, No. 186 (Adj. Sess.), § 8(d), eff. May 7, 1992.
§ 5819. Inconsistent provisions
Notwithstanding any provision of the statutes of this State to the contrary, no individual,
corporation, or other taxpayer, and no item of income, shall be exempt from taxation
under this chapter unless the individual, corporation, other taxpayer, or item of
income, as the case may be, is expressly exempted from taxation by this chapter. (Added 1966, No. 61 (Sp. Sess.), § 1, eff. Jan. 1, 1966; amended 1967, No. 121, § 2, eff. Jan. 1, 1968 for taxable years beginning on or after Jan. 1, 1968.)
§ 5820. Purpose
(a) This chapter is intended to conform the Vermont personal and corporate income taxes
with the U.S. Internal Revenue Code, except as otherwise expressly provided, in order
to simplify the taxpayer’s filing of returns, reduce the taxpayer’s accounting burdens,
and facilitate the collection and administration of these taxes.
(b) It is intended that, for any taxable year, individuals, estates, and trusts shall
be taxed upon only their Vermont income for that year, but that the rate at which
the Vermont income of any taxpayer is taxed under this chapter shall reflect the taxpayer’s
ability to pay as measured by his or her adjusted gross income for the taxable year. (Added 1966, No. 61 (Sp. Sess.), § 1, eff. Jan. 1, 1966; amended 1967, No. 121, § 3, eff. Jan. 1, 1968 for taxable years beginning on or after Jan. 1, 1968.)
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Subchapter 002: TAXATION OF INDIVIDUALS, TRUSTS, AND ESTATES
§ 5821. Name of tax
The tax imposed by this subchapter shall be known as the Vermont personal income tax. (Added 1966, No. 61 (Sp. Sess.), § 1, eff. Jan. 1, 1966.)
§ 5822. Tax on income of individuals, estates, and trusts
(a) A tax is imposed for each taxable year upon the taxable income earned or received
in that year by every individual, estate, and trust, subject to income taxation under
the laws of the United States, in an amount determined by the following tables, and
adjusted as required under this section:
(1) Married individuals filing joint returns and surviving spouses:
| If taxable income is: |
The tax is: |
| Not over $64,600.00 |
3.35% of taxable income |
| Over $64,600.00 but |
$2,164.00 plus 6.6% of |
| not over $156,150.00 |
the amount of taxable |
| |
income over $64,600.00 |
| Over $156,150.00 but |
$8,206.00 plus 7.6% |
| not over $237,950.00 |
of the amount of taxable |
| |
income over $156,150.00 |
| Over $237,950.00 |
$14,423.00 plus 8.75% |
| |
of the amount of taxable |
| |
income over $237,950.00 |
(2) Heads of households:
| If taxable income is: |
The tax is: |
| Not over $51,850.00 |
3.35% of taxable income |
| Over $51,850.00 but |
$1,737.00 plus 6.6% |
| not over $133,850.00 |
of the amount of taxable |
| |
income over $51,850.00 |
| Over $133,850.00 but |
$7,149.00 plus 7.60% |
| not over $216,700.00 |
of the amount of taxable |
| |
income over $133,850.00 |
| Over $216,700.00 |
$13,446.00 plus 8.75% |
| |
of the amount of taxable |
| |
income over $216,700.00 |
(3) Unmarried individuals (other than surviving spouse or head of household):
| If taxable income is: |
The tax is: |
| Not over $38,700.00 |
3.35% of taxable income |
| Over $38,700.00 but |
$1,296.00 plus 6.6% of |
| not over $93,700.00 |
the amount of taxable |
| |
income over $38,700.00 |
| Over $93,700.00 but |
$4,926.00 plus 7.6% |
| not over $195,450.00 |
of the amount of taxable |
| |
income over $93,700.00 |
| Over $195,450.00 |
$12,659.00 plus 8.75% |
| |
of the amount of taxable |
| |
income over $195,450.00 |
(4) Married individuals filing separate returns:
| If taxable income is: |
The tax is: |
| Not over $32,300.00 |
3.35% of taxable income |
| Over $32,300.00 but |
$1,082.00 plus 6.6% of |
| not over $78,075.00 |
the amount of taxable |
| |
income over $32,300.00 |
| Over $78,075.00 but |
$4,103.00 plus 7.6% |
| not over $118,975.00 |
of the amount of taxable |
| |
income over $78,075.00 |
| Over $118,975.00 |
$7,212.00 plus 8.75% |
| |
of the amount of taxable |
| |
income over $118,975.00 |
(5) Estates and trusts:
| If taxable income is: |
The tax is: |
| $2,600.00 or less |
3.35% of taxable income |
| Over $2,600.00 but |
$87.00 plus 6.6% of |
| not over $6,100.00 |
the amount of taxable |
| |
income over $2,600.00 |
| Over $6,100.00 but |
$318.00 plus 7.6% |
| not over $9,350.00 |
of the amount of taxable |
| |
income over $6,100.00 |
| Over $9,350.00 |
$565.00 plus 8.75% |
| |
of the amount of taxable |
| |
income over $9,350.00 |
(6) If the federal adjusted gross income of the taxpayer exceeds $150,000.00, then the
tax calculated under this subsection shall be the greater of the tax calculated under
subdivisions (1)-(5) of this subsection or three percent of the taxpayer’s federal
adjusted gross income.
(b) As used in this section:
(1) “Married individuals,” “surviving spouse,” “head of household,” “unmarried individual,”
“estate,” and “trust” have the same meaning as under the Internal Revenue Code.
(2) The amounts of taxable income shown in the tables in this section shall be adjusted
annually for inflation by the Commissioner of Taxes using the Consumer Price Index
adjustment percentage, in the manner prescribed for inflation adjustment of federal
income tax tables for the taxable year by the Commissioner of Internal Revenue, beginning
with taxable year 2003; provided, however, notwithstanding 26 U.S.C. § 1(f)(3), that as used in this subdivision, “consumer price index” means the last Consumer
Price Index for All Urban Consumers published by the U.S. Department of Labor.
(c) The amount of tax determined under subsection (a) of this section shall be:
(1) increased by 24 percent of the taxpayer’s federal tax liability for the taxable year
for the following:
(A) additional taxes on qualified retirement plans, including individual retirement accounts
and medical savings accounts and other tax-favored accounts;
(B) recapture of the federal investment tax credit attributable to the Vermont portion
of the investment; and
(C) tax on qualified lump-sum distributions of pension income not included in federal
taxable income; and
(2) decreased by 24 percent of the reduction in the taxpayer’s federal tax liability due
to farm income averaging.
(d)(1) A taxpayer shall be entitled to a credit against the tax imposed under this section
of 24 percent of each of the credits allowed against the taxpayer’s federal income
tax for the taxable year as follows: the credit for people who are elderly or permanently
totally disabled and the investment tax credit attributable to the Vermont-property
portion of the investment.
(2) Any unused solar energy investment tax credit under this section may be carried forward
for not more than five years following the first year in which the credit is claimed.
(3) Individuals shall receive a nonrefundable charitable contribution credit against the
tax imposed under this section for the taxable year. The credit shall be five percent
of the first $20,000.00 in charitable contributions made during the taxable year that
are allowable under 26 U.S.C. § 170. This credit shall be available irrespective of a taxpayer’s election not to itemize
at the federal level.
(e) The tax determined under subsections (a) through (d) of this section shall be reduced
by a percentage equal to the portion of adjusted gross income that is not Vermont
income; provided, however, that if a taxpayer’s Vermont income exceeds the taxpayer’s
adjusted gross income, no reduction shall be made and provided, further, that if a
taxpayer has zero or negative Vermont income and the taxpayer’s Vermont income computed
without regard to the reductions in subsection 5823(a) of this chapter does not equal
or exceed the taxpayer’s adjusted gross income, no tax shall be due under this section. (Added 1966, No. 61 (Sp. Sess.), § 1, eff. Jan. 1, 1966; amended 1967, No. 121, § 4, eff. Jan. 1, 1968; 1979, No. 70, § 1, eff. Jan. 1, 1968, affecting taxable years beginning on or after Jan. 1, 1968; 1979, No. 84 (Adj. Sess.), § 1, eff. Jan. 29, 1980 for taxable years beginning on and after Jan. 1, 1980; 1981, No. 170 (Adj. Sess.) § 15, eff. April 19, 1982, affecting taxable years beginning on and after January 1, 1982; 1983, No. 144 (Adj. Sess.), § 4, eff. Jan. 1, 1985; 1985, No. 213 (Adj. Sess.), § 2, eff. June 2, 1986 for taxable years beginning on and after January 1, 1987; 1987, No. 82, § 2, eff. June 9, 1987, affecting taxable years beginning on and after Jan. 1, 1987 (except for change in tax rate); 1987, No. 259 (Adj. Sess.), § 1, eff. June 16 1988, affecting taxable years beginning on and after Jan. 1, 1988, § 2, eff. Jan. 1, 1989, affecting taxable years beginning on and after Jan. 1, 1989; 1989, No. 119, § 26, eff. June 22, 1989, applying to taxes payable for taxable years beginning on and after January 1, 1989; 1991, No. 32, § 2, eff. May 18, 1991, affecting taxes payable for taxable years beginning January 1, 1991, through December 31, 1993; 1993, No. 14, § 1, eff. April 27, 1993, applicable to income taxes payable for taxable years beginning on and after January 1, 1993; 1999, No. 49, § 35, eff. June 2, 1999; 2001, No. 67, § 4, eff. June 16, 2001; 2001, No. 140 (Adj. Sess.), § 5, eff. June 21, 2002; 2003, No. 66, § 305; 2005, No. 75, § 15; 2007, No. 92 (Adj. Sess.), § 27; 2009, No. 45, §§ 9, 9b, eff. May 27, 2009; 2009, No. 54, §§ 97, 99, eff. June 1, 2009; 2009, No. 1 (Sp. Sess.), § H.48a, eff. June 2, 2009; 2009, No. 159 (Adj. Sess.), §§ 9, 10, eff. June 4, 2010; 2013, No. 96 (Adj. Sess.), § 196; 2015, No. 57, § 65, eff. Jan. 1, 2015; 2018, No. 11 (Sp. Sess.), § H.2, eff. Jan. 1, 2018; 2018, No. 11 (Sp. Sess.), § H.3, eff. Jan. 1, 2018; 2019, No. 51, § 4, eff. Jan. 1, 2019; 2021, No. 138 (Adj. Sess.), § 2, eff. January 1, 2022; 2023, No. 85 (Adj. Sess.), § 469, eff. July 1, 2024.)
§ 5823. Vermont income of individuals, estates, and trusts
(a) For any taxable year, the Vermont income of a resident individual is the adjusted
gross income of the individual for that taxable year, and the Vermont income of a
resident estate or trust is its gross income for the taxable year, less:
(1) income exempted from State taxation under the laws of the United States and not subtracted
under subdivision 5811(21)(B)(i) of this chapter;
(2) military pay for full-time active duty with the U.S. Armed Services earned outside
the State; and the first $2,000.00 of military pay for unit training in the State
to National Guard and U.S. Reserve personnel for whom the Adjutant and Inspector General
or Reserve Component Commander certifies that the taxpayer completed all unit training
of his or her unit during the calendar year, and who has a federal adjusted gross
income of less than $50,000.00;
(3) funds received through the federal Armed Forces Educational Loan Repayment Program
under 10 U.S.C. chapters 109 and 1609, to the extent the funds are included in adjusted
gross income of the taxpayer for the taxable year; and
(4)-(7) [Repealed.]
(8) the amount paid by the State of Vermont pursuant to 20 V.S.A. chapter 181 to the extent that such amount is included in the federal adjusted gross income of
the taxpayer for the taxable year.
(b) For any taxable year, the Vermont income of a nonresident individual, estate, or trust
is the sum of the following items of income to the extent they are required to be
included in the adjusted gross income of the individual or the gross income of an
estate or trust for that taxable year:
(1) rents and royalties derived from the ownership of property located within this State;
(2) gains from the sale or exchange of property located within this State;
(3) wages, salaries, commissions, or other income (excluding military pay for full-time
active duty with the U.S. Armed Services and also excluding funds received through
the federal Armed Forces Educational Loan Repayment Program under 10 U.S.C. chapters
109 and 1609; and also excluding the first $2,000.00 of military pay for unit training
in the State to National Guard and U.S. Reserve personnel for whom the Adjutant and
Inspector General or Reserve Component Commander certifies that the taxpayer completed
all unit training of his or her unit during the calendar year, and who has a federal
adjusted gross income of less than $50,000.00) received with respect to services performed
within this State;
(4) income (other than income exempted from State taxation under the laws of the United
States) derived from every business, trade, occupation, or profession to the extent
that the business, trade, occupation, or profession is carried on within this State,
including any compensation received:
(A) under an agreement not to compete with a business operating in Vermont;
(B) for goodwill associated with the sale of a Vermont business; or
(C) for services to be performed under a contract associated with the sale of a Vermont
business, unless it is shown that the compensation for services does not constitute
income from the sale of the business;
(5) income that was previously deferred under a nonqualified deferred compensation plan
and that would have previously been included in the taxpayer’s Vermont income if it
had not been deferred, and income derived from such previously deferred income; and
(6) proceeds from wagering transactions made within the State; or any Vermont State Lottery,
tri-state lottery, or multijurisdictional lottery ticket paid to a person who purchased
the ticket in Vermont, including payments received from a third party for the transfer
of the rights to future proceeds related to the ticket; and the Commissioner may require
withholding of any taxes due to the State under this subdivision from payments of
wagering or lottery proceeds.
(c) For any taxable year, the Vermont income of a part-year resident individual or trust
is the sum of:
(1) all items of income constituting Vermont income for the purpose of subsection (a)
of this section that are earned or received during the period of the taxpayer’s residency
in this State in the taxable year; and
(2) all items of income constituting Vermont income for the purposes of subsection (b)
of this section that are earned or received during the period of the taxpayer’s nonresidency
in this State in the taxable year.
(d) Vermont income shall not include any income of a nonresident from the activities listed
in this subsection; and shall not include income of a nonresident through an entity
such as a partnership, limited liability company, or trust, if that entity’s activities
in this State are limited to activities that, without more, would not constitute nexus,
plus any or all of the following activities necessary to create or maintain a World
Wide Web page or internet site for the nonresident or entity:
(1) ownership of data or programming code in this State, or use of that data or programming
code by a person other than the nonresident or entity or by a person not in this State;
(2) ownership of, or receipt of services from, computer servers in this State; and
(3) receipt of computer processing or web hosting services from a computer service provider
or web hosting service in this State. (Added 1966, No. 61 (Sp. Sess.), § 1, eff. Jan. 1, 1966; amended 1967, No. 121, § 5, eff. Jan. 1, 1968; 1969, No. 263 (Adj. Sess.), § 3, eff. April 6, 1970; 1979, No. 105 (Adj. Sess.), § 44, eff. date, see note set out below; 1989, No. 119, §§ 22, 23(a), eff. June 22, 1989; 1989, No. 210 (Adj. Sess.), § 297, eff. May 31, 1990; 1991, No. 32, § 6, eff. May 18, 1991; 1993, No. 49, § 8, eff. May 28, 1993; 1995, No. 29, § 28, eff. April 14, 1995; 1995, No. 71 (Adj. Sess.), § 1, eff. Feb. 14, 1996; 1995, No. 169 (Adj. Sess.), § 23, eff. May 15, 1996; 1995, No. 174 (Adj. Sess.), § 6; 1997, No. 50, §§ 13, 14, eff. June 26, 1997; 1997, No. 79 (Adj. Sess.), § 2, eff. Jan. 1, 1999; 1997, No. 156 (Adj. Sess.), §§ 4, 52, eff. April 29, 1998; 2001, No. 140 (Adj. Sess.), § 6; 2001, No. 144 (Adj. Sess.), §§ 1, 2, 29, eff. June 21, 2002; 2003, No. 70 (Adj. Sess.), § 40, eff. March 1, 2004; 2003, No. 152 (Adj. Sess.), § 14; 2005, No. 14, § 2, eff. May 3, 2005; 2007, No. 33, § 1, eff. May 18, 2007; 2009, No. 160 (Adj. Sess.), §§ 51, 53, eff. June 4, 2010; 2011, No. 45, § 3a, eff. May 24, 2011; 2011, No. 45, § 36l, eff. July 1, 2013; 2023, No. 63, § 4, eff. June 14, 2023.)
§ 5824. Adoption of federal income tax laws
The statutes of the United States relating to the federal income tax, as in effect
on December 31, 2024, but without regard to federal income tax rates under 26 U.S.C. § 1, are hereby adopted for the purpose of computing the tax liability under this chapter
and shall continue in effect as adopted until amended, repealed, or replaced by act
of the General Assembly. (Added 2001, No. 140 (Adj. Sess.), § 7, eff. June 21, 2002; 2001, No. 144 (Adj. Sess.), § 23, eff. June 21, 2002; amended 2003, No. 66, § 313; 2003, No. 152 (Adj. Sess.), § 24, eff. June 7, 2004; 2005, No. 14, § 13; 2005, No. 94 (Adj. Sess.), § 2, eff. March 8, 2006; 2007, No. 33, § 6, eff. May 18, 2007; 2007, No. 190 (Adj. Sess.), § 26; 2009, No. 1 (Sp. Sess.), § H.26, eff. June 2, 2009; 2009, No. 160 (Adj. Sess.), § 29, eff. June 4, 2010; 2011, No. 45, § 2, eff. May 24, 2011; 2011, No. 143 (Adj. Sess.), § 9, eff. May 15, 2012; 2013, No. 73, § 20; 2013, No. 174 (Adj. Sess.), § 5, eff. Jan. 1, 2014; 2015, No. 57, § 66, eff. Jan. 1, 2015; 2015, No. 134 (Adj. Sess.), § 11, eff. Jan. 1, 2015; 2017, No. 73, § 7, eff. Jan. 1, 2016; 2018, No. 11 (Sp. Sess.), § H.7, eff. Jan. 1, 2018; 2019, No. 51, § 5, eff. Jan. 1, 2019; 2019, No. 175 (Adj. Sess.), § 13, eff. Jan. 1, 2020; 2021, No. 9, § 23, eff. Jan. 1, 2021; 2021, No. 73, § 23, eff. March 31, 2021; 2021, No. 148 (Adj. Sess.), § 7, eff. January 1, 2022; 2023, No. 72, § 1, eff. January 1, 2023; 2023, No. 144 (Adj. Sess.), § 3, eff. January 1, 2024; 2025, No. 27, § E.111, eff. January 1, 2025.)
§ 5825. Credit for taxes paid to other states and provinces
(a) A taxpayer of this State who was a resident individual, estate, or trust during any
portion of a taxable year shall receive credit against the tax imposed, for that taxable
year, by section 5822 of this title for income taxes imposed by, and paid to, another state or territory of the United
States, the District of Columbia, or a province of Canada, upon the taxpayer’s income
earned or received from sources within that state, territory, district, or province
during that portion of that taxable year. In no case shall the credit allowed by this
section exceed the portion of Vermont income tax, otherwise imposed by this chapter,
attributable to the adjusted gross income earned or received from sources within such
other state, territory, district, or province.
(b) For purposes of this section, when a taxpayer domiciled in another jurisdiction is
deemed to be a resident of Vermont as provided by subdivision 5811(11)(A)(ii) of this title, income from intangibles not employed in a business, trade, or profession shall be
deemed to be derived from sources within the jurisdiction of domicile. However, notwithstanding
the provisions of this subsection, no credit will be allowed against the tax imposed
unless the jurisdiction of domicile provides for a similar credit. (Added 1966, No. 61 (Sp. Sess.), § 1, eff. Jan. 1, 1966; amended 1981, No. 134 (Adj. Sess.), § 1, eff. April 2, 1982; 1991, No. 67, § 26, eff. June 19, 1991; 1991, No. 186 (Adj. Sess.), § 12; 1997, No. 50, § 16, eff. June 26, 1997; 2001, No. 140 (Adj. Sess.), § 8, eff. June 21, 2002.)
§ 5825a. Credit for Vermont Higher Education Investment Plan contributions
(a) A taxpayer of this State, including each spouse filing a joint return, shall be eligible
for a nonrefundable credit against the tax imposed under section 5822 of this title of 10 percent of the first $2,500.00 per beneficiary, contributed by the taxpayer
during the taxable year to a Vermont Higher Education Investment Plan account under
16 V.S.A. chapter 87, subchapter 7, provided the account is provided directly by the Vermont Student Assistance
Corporation to the participant.
(b) A taxpayer who has received a credit under subsection (a) of this section shall repay
to the Commissioner 10 percent of any distribution from a higher education investment
plan account, up to a maximum of the total credits received by the taxpayer under
subsection (a) of this section minus any amount of repayment of such credits in prior
tax years except when the distribution:
(1) is used exclusively for costs of attendance at an approved postsecondary education
institution as defined in 16 V.S.A. § 2822(6);
(2) is used for a qualifying expense associated with a registered apprenticeship program
pursuant to 26 U.S.C. § 529(c)(8);
(3) is made after the death of the beneficiary or after the beneficiary becomes disabled
pursuant to subdivisions (q)(2)(C) and (m)(7) of 26 U.S.C. § 72; or
(4) is used for qualified higher education expense loan repayment pursuant to 26 U.S.C. § 529(c)(9), provided the loan being repaid was used exclusively for costs of attendance at an
approved postsecondary education institution as defined in 16 V.S.A. § 2822(6).
(c) Repayments under subsection (b) of this section shall be subject to assessment, notice,
penalty and interest, collection, and other administration in the same manner as an
income tax under this chapter. (Added 2003, No. 65, § 2, eff. for tax years beginning on and after Jan. 1, 2004; amended 2005, No. 207 (Adj. Sess.), § 6, eff. May 31, 2006; 2019, No. 51, § 19, eff. Jan. 1, 2019; 2019, No. 154 (Adj. Sess.), § E.605.3, eff. Oct. 2, 2020; 2019, No. 175 (Adj. Sess.), § 19, eff. Oct. 8, 2020; 2021, No. 20, § 269; 2021, No. 179 (Adj. Sess.), § 18, eff. January 1, 2022.)
§ 5826. Repealed. 2009, No. 160 (Adj. Sess.), § 51(a)(2), eff. Jan. 1, 2013.
§ 5827. Repealed. 1989, No. 119, § 23(b), eff. June 22, 1989.
§ 5828. Mobile home park sale; capital gain credit
A taxpayer of this State shall receive a credit against the tax imposed under section 5822 or 5832 of this title for a qualified sale of a mobile home park. The credit shall be in the amount of
seven percent of the taxpayer’s gain subject to federal income tax for the taxable
year. Credit in excess of the taxpayer’s tax liability for the taxable year may be
carried forward for credit in the next succeeding three taxable years. “Qualified
sale of a mobile home park” means the land comprising a mobile home park that is transferred
in a single purchase to a group composed of a majority of the mobile home park leaseholders
as defined in 10 V.S.A. § 6242(a) or to a nonprofit organization that represents such a group. (Added 1997, No. 103 (Adj. Sess.), § 11, eff. April 23, 1998.)
§ 5828a. Repealed. 1991, No. 32, § 7, eff. May 18, 1991.
§ 5828b. Earned income tax credit
(a) A resident individual or part-year resident individual who is entitled to an earned
income tax credit granted under the laws of the United States shall be entitled to
a credit against the tax imposed for each year by section 5822 of this title. The credit shall be for an individual who claims one or more qualifying children
38 percent or for an individual who does not claim one or more qualifying children
100 percent of the earned income tax credit granted to the individual under the laws
of the United States, multiplied by the percentage that the individual’s income that
is earned or received during the period of the individual’s residency in this State
bears to the individual’s total income. A resident individual or part-year resident
individual who would have been entitled to or granted an earned income tax credit
under the laws of the United States but for the fact that the individual, the individual’s
spouse, or one or more of the individual’s children does not have a qualifying taxpayer
identification number shall be entitled to a credit under this section.
(b) The tax credit claimed by a taxpayer under this section shall be deductible from the
taxpayer’s income tax liability, if any, for the year in which the income is earned.
In the event the credit exceeds the amount of the income tax payments due from the
taxpayer, the excess of credits over payments due shall be paid to the taxpayer. Any
payments due to a taxpayer under this subsection shall not bear interest. (Added 1987, No. 258 (Adj. Sess.), § 1, eff. June 16, 1988; amended 1999, No. 49, § 36, eff. June 2, 1999; 1999, No. 119 (Adj. Sess.), § 2, eff. May 18, 2000; 2005, No. 14, § 1, eff. May 3, 2005; 2018, No. 11 (Sp. Sess.), § H.4, eff. Jan. 1, 2018; 2021, No. 138 (Adj. Sess.), § 4, eff. January 1, 2022; 2023, No. 72, § 15, eff. January 1, 2023; 2025, No. 71, § 2, eff. January 1, 2025.)
§ 5828c. Child and dependent care credit
A resident or part-year resident of this State shall be eligible for a refundable
credit against the tax imposed under section 5822 of this title. The credit shall be equal to 72 percent of the federal child and dependent care
credit allowed to the taxpayer for the taxable year for child or dependent care services.
The amount of the credit for a part-year resident shall be multiplied by the percentage
that the individual’s income that is earned or received during the period of the individual’s
residency in this State bears to the individual’s total income. (Added 2001, No. 144 (Adj. Sess.), § 24, eff. June 21, 2002; amended 2003, No. 70 (Adj. Sess.), § 39, eff. March 1, 2004; 2021, No. 138 (Adj. Sess.), § 3, eff. January 1, 2022; 2023, No. 72, § 14, eff. January 1, 2023.)
§ 5829. Repealed. 1993, No. 210 (Adj. Sess.), § 40, eff. Jan. 1, 1994.
§ 5830. Taxpayer identification numbers; credits
(a) The Commissioner shall provide a process for an individual to claim the child tax
credit or the earned income tax credit, or both, pursuant to subsections 5828b(a) and 5830f(a) of this title when the individual, the individual’s spouse, or one or more of the individual’s
qualifying children does not have a taxpayer identification number. The Commissioner
shall not inquire about or record the citizenship and immigration status of an individual,
an individual’s spouse, or one or more of an individual’s qualifying children when
an individual claims one or more credits pursuant to this section and subsections
5828b(a) and 5830f(a) of this title.
(b) Upon the Commissioner’s request, an individual who claims one or more credits pursuant
to subsections 5828b(a) and 5830f(a) of this title shall provide valid documents establishing the identity and income for the taxable
year of the individual and, as applicable, the individual’s spouse and qualifying
children. Upon receiving a valid Social Security number issued by the Social Security
Administration, the individual shall notify the Commissioner in the time and manner
prescribed by the Commissioner.
(c) All claims submitted and records created pursuant to this section and subsections
5828b(a) and 5830f(a) of this title shall be exempt from public inspection and copying under the Public Records Act 1 V.S.A. § 317(c)(6) and shall be kept confidential as return or return information pursuant to section 3102 of this title. (Added 2023, No. 72, § 17, eff. January 1, 2023.)
§ 5830a. Interest tax
(a) When another state imposes a tax upon interest earned by its residents on deposits
in a lending institution located in this State, but exempts from such taxation deposits
by its residents in lending institutions located within that state, then there is
hereby levied a tax in the amount of five percent upon interest earned by residents
of this State on deposits in lending institutions located in such other state. As
used in this section, “lending institution” includes any bank, savings bank, trust
company, or building and loan association or other similar institution.
(b) For each taxpayer, $600.00 of income otherwise taxable under this section shall be
exempt in each tax year. A husband and wife filing a joint return constitute a single
taxpayer. (Added 1977, No. 67.)
§ 5830b. Tax credits; Entrepreneurs’ Seed Capital Fund
(a) The initial capitalization of the Entrepreneurs’ Seed Capital Fund, as established
in 10 V.S.A. § 291, up to $7,150,000.00 raised from Vermont taxpayers on or before January 1, 2020,
shall entitle those taxpayers to a credit against the tax imposed by section 5822, 5832, 5836, or 8551 of this title and by 8 V.S.A. § 6014. The credit may be claimed for the taxable year in which a contribution is made and
each of the four succeeding taxable years. The amount of the credit for each year
shall be the lesser of four percent of the taxpayer’s contribution or 50 percent of
the taxpayer’s tax liability for that taxable year prior to the allowance of this
credit; provided, however, that in no event shall the aggregate credit allowable under
this section for all taxable years exceed 20 percent of the taxpayer’s contribution
to the initial $7,150,000.00 capitalization of the Fund. The credit shall be nontransferable
except as provided in subsection (b) of this section.
(b) If the taxpayer disposes of an interest in the Fund within four years after the date
on which the taxpayer acquired that interest, any unused credit attributable to the
disposed-of interest is disallowed. This disallowance does not apply in the event
of an involuntary transfer of the interest, including a transfer at death to any heir,
devisee, legatee, or trustee, or in the event of a transfer without consideration
to or in trust for the benefit of the taxpayer or one or more persons related to the
taxpayer as spouse, descendant, parent, grandparent, or child. (Added 1985, No. 171 (Adj. Sess.), § 2, eff. May 7, 1986; amended 1987, No. 80, § 7, eff. June 9, 1987; 1993, No. 78, § 1; 2003, No. 164 (Adj. Sess.), § 8, eff. June 12, 2004; 2005, No. 184 (Adj. Sess.), § 17b, eff. May 24, 2006; 2009, No. 54, § 27, eff. June 1, 2009.)
§ 5830c. Tax credits; charitable investments in housing
(a) Credit authorized. A charitable investment approved by the Commissioner of Housing and Community Affairs
in an eligible housing charity shall entitle a Vermont taxpayer to a credit against
the tax imposed by sections 5822 (individual income), 5832 (corporate income), 5836
(banks and financial institutions), or 8551 (insurance companies) of this title. The
credit may be claimed for any year in which a charitable investment is made and for
each year thereafter until the principal is repaid, or the investment is transferred,
or the taxpayer is notified or agrees or the Commissioner of Housing and Community
Affairs determines that the principal is not likely to be repaid, or until the end
of the year in which the housing charity ceases to be eligible, whichever is earlier.
(b) Amount of credit. The amount of the credit shall be equal to the difference between the net income that
would have been received by the taxpayer at the charitable threshold rate during the
taxable year and the actual net income received by or credited to the taxpayer from
a charitable investment in an eligible housing charity. However, the credit shall
not exceed three percent of the average outstanding principal balance of the investment
during the taxable year.
(c) Definitions. As used in this section:
(1) “Affordable housing” shall be defined by rule adopted by the Department of Housing
and Community Affairs. The rule shall include the following provisions:
(A) At least 50 percent of the units shall be occupied by households whose income does
not exceed 100 percent of the greater of State or area median income.
(B) The goal shall be to provide housing at a cost of no more than 30 percent of a household’s
gross income.
(C) The affordability of the unit shall be protected for a period of time not less than
the term of any loan made pursuant to subdivision (d)(4) of this section for the unit
or units or at least 15 years, whichever is greater, through a housing subsidy covenant
or other legally binding instrument, which shall terminate upon the issuance of a
judgment of foreclosure or a transfer of the property in lieu of foreclosure. This
rule may also include additional provisions consistent with this section.
(2) “Bank prime loan rate” means the March average prime loan rate, as of March 31 each
year, used by insured U.S. chartered commercial banks to price short-term business
loans, as published in the Federal Reserve Board’s statistical release.
(3) “Charitable investment” means a loan or deposit made to an eligible housing charity,
on which the actual annual rate of return is at or below the charitable threshold
rate.
(4) The “charitable threshold rate” means, for each year beginning July 1, a rate that
is the greater of: two percentage points below the most recent bank prime loan rate
or one percent.
(5) “Eligible housing charity” means a governmental agency or private nonprofit organization
determined eligible by the Commissioner of Housing and Community Affairs according
to subsection (d) of this section.
(6) “Net income” means interest income received or credited to the taxpayer.
(d) Eligibility. Any organization seeking eligibility shall apply to the Commissioner of Housing and
Community Affairs, who is authorized to issue certificates of eligibility for tax
credits to eligible housing charities in specific amounts. In no event shall certificates
of eligibility for tax credits for charitable investments be issued in excess of $5,000,000.00
in the aggregate for any fiscal year. The Commissioner by rule shall establish procedures
and criteria for application to ensure the equitable distribution of tax credit certificates
among eligible applicants. Subject to this limit, the Commissioner shall issue a certificate
of eligibility to receive tax credit investments to an organization if it meets all
of the following criteria:
(1) It is either an agency or instrumentality of the State, or a private not-for-profit
organization that has applied for and has not been denied tax-exempt status by the
U.S. Internal Revenue Service.
(2) It has as a major purpose to provide affordable housing.
(3) It can demonstrate that as of the date of its application, it had loaned or invested
at least $50,000.00 for the provision of affordable housing.
(4) At least 70 percent of all investments subject to this section are disbursed within
12 months for:
(A) the acquisition, rehabilitation, or construction of affordable housing in Vermont
by the eligible housing charity; or
(B) loans for affordable housing in Vermont; or
(C) loans to individual borrowers in Vermont having no more than 100 percent of median
income of the State or area, whichever is greater.
(5) Loans of charitable investments made pursuant to subdivision (4) of this subsection
shall be at an average rate of interest not more than two percent above the bank prime
loan rate.
(6) It can demonstrate that it has the administrative capacity to segregate funds to comply
with and account for the requirements of subdivision (4) of this subsection.
(e) Revocation. The Commissioner of Housing and Community Affairs may revoke the eligibility of any
organization under this section after a hearing, upon a finding that it fails to meet
substantially all of the criteria required for eligibility. Such organization shall
immediately notify all investors of the revocation. Such organization shall reimburse
the State for the full amount of any tax credits allowed its investors after revocation
of eligibility, and shall pay to investors the full amount of any tax credits claimed
by an investor but disallowed by the Commissioner due solely to revocation of eligibility.
Any person aggrieved by the denial or revocation of eligibility may appeal to Superior
Court.
(f) Procedure for claiming tax credit.
(1) Each eligible housing charity accepting investment funds for which a tax credit may
be claimed by the investor under this section shall furnish investors with a copy
of its certificate of eligibility to receive tax credit investments, plus a statement
of the amount and terms of the investment on a form to be provided by the Commissioner
of Taxes. The eligible housing charity shall keep a current list of the names, current
addresses, and taxpayer identification numbers of all investors who may claim a tax
credit under this section.
(2) On or before January 31 of each year, the eligible housing charity shall furnish all
investors who may claim a tax credit under this section with three copies of a tax
credit statement, in a form specified by the Commissioner of Taxes, showing the principal
balance of the investment at the beginning of the previous calendar year or at the
date of the investment if made during that year, the principal balance at the end
of the calendar year, the average outstanding principal balance during the year, the
income that would have been received at the charitable threshold rate, the actual
income received by or credited to the investor from the eligible housing charity during
the calendar year and the amount of the tax credit.
(3) On or before January 31 of each year, the eligible housing charity shall furnish the
Commissioner of Taxes with a list of all investors who may claim a tax credit under
this section, in a form specified by the Commissioner, showing the principal balance
of the investment at the beginning of the previous calendar year or at the date of
the investment if made during that year, the principal balance at the end of the calendar
year, the average outstanding principal balance during the year, the income that would
have been received at the charitable threshold rate, the actual income received by
or credited to the investor from the eligible housing charity during the calendar
year and the amount of the tax credit.
(4) Each investor who claims a tax credit under this section shall claim the credit on
a form to be provided by the Commissioner, which may be combined with the tax credit
statement furnished by the eligible housing charity pursuant to subdivision (2) of
this subsection. Each claimant shall also submit with his or her tax return a copy
of the certificate of eligibility of the eligible housing charity and a copy of the
tax credit statement furnished by the eligible housing charity.
(5) If the amount of allowed tax credit exceeds the taxpayer’s income tax liability for
the taxable year, the amount thereof that exceeds such tax liability may be carried
over for deduction from the taxpayer’s income tax liability in the next succeeding
taxable year or years until the total amount of the tax credit has been deducted from
tax liability; provided, however, that no tax credit shall be carried over for deduction
after the third taxable year succeeding the taxable year in which the credit was earned.
(6) Investors in an eligible housing charity whose eligibility to receive tax credit investments
is revoked during any calendar year may receive the credit for the year during which
the revocation occurs, but not for any succeeding year unless eligibility is reinstated
by the Commissioner of Housing and Community Affairs. (Added 1989, No. 240 (Adj. Sess.), § 2; amended 2001, No. 144 (Adj. Sess.), §§ 39, 40, eff. June 21, 2002; 2005, No. 116 (Adj. Sess.), §§ 3, 4, eff. April 26, 2006.)
§ 5830d. Deferral of income taxation; combat zone duty
The provisions of 26 U.S.C. § 7508 shall apply to this chapter for the benefit of:
(1) individuals called up for full-time active military duty as the result of the existence
of a military conflict in an area designated as a combat zone by the President of
the United States, regardless of whether such duty is performed within the combat
zone; and
(2) individuals serving in an area treated by federal law in the same manner as if it
were a combat zone. (Added 1991, No. 110, § 2, eff. June 28, 1991; amended 1995, No. 169 (Adj. Sess.), § 25, eff. May 15, 1996.)
§ 5830e. Retirement income; Social Security income
(a) Social Security income. The portion of federally taxable Social Security benefits excluded from taxable income
under subdivision 5811(21)(B)(iv) of this chapter shall be as follows:
(1) For taxpayers whose filing status is single, married filing separately, head of household,
or surviving spouse:
(A) If the federal adjusted gross income of the taxpayer is less than or equal to $55,000.00,
all federally taxable benefits received under the federal Social Security Act shall
be excluded.
(B) If the federal adjusted gross income of the taxpayer is greater than $55,000.00 but
less than $65,000.00, the percentage of federally taxable benefits received under
the Social Security Act to be excluded shall be proportional to the amount of the
taxpayer’s federal adjusted gross income over $55,000.00, determined by:
(i) subtracting the federal adjusted gross income of the taxpayer from $65,000.00;
(ii) dividing the value under subdivision (i) of this subdivision (B) by $10,000.00; and
(iii) multiplying the value under subdivision (ii) of this subdivision (B) by the federally
taxable benefits received under the Social Security Act.
(C) If the federal adjusted gross income of the taxpayer is equal to or greater than $65,000.00,
no amount of the federally taxable benefits received under the Social Security Act
shall be excluded under this section.
(2) For taxpayers whose filing status is married filing jointly:
(A) If the federal adjusted gross income of the taxpayer is less than or equal to $70,000.00,
all federally taxable benefits received under the Social Security Act shall be excluded.
(B) If the federal adjusted gross income of the taxpayer is greater than $70,000.00 but
less than $80,000.00, the percentage of federally taxable benefits received under
the Social Security Act to be excluded shall be proportional to the amount of the
taxpayer’s federal adjusted gross income over $70,000.00, determined by:
(i) subtracting the federal adjusted gross income of the taxpayer from $80,000.00;
(ii) dividing the value under subdivision (i) of this subdivision (B) by $10,000.00; and
(iii) multiplying the value under subdivision (ii) of this subdivision (B) by the federally
taxable benefits received under the Social Security Act.
(C) If the federal adjusted gross income of the taxpayer is equal to or greater than $80,000.00,
no amount of the federally taxable benefits received under the Social Security Act
shall be excluded under this section.
(b) Civil Service Retirement System income. The portion of income received from the Civil Service Retirement System excluded from
taxable income under subdivision 5811(21)(B)(iv) of this title shall be subject to the limitations under subsection (e) of this section and shall
be determined as follows:
(1) For taxpayers whose filing status is single, married filing separately, head of household,
or surviving spouse:
(A) If the federal adjusted gross income of the taxpayer is less than or equal to $55,000.00,
the first $10,000.00 of income received from the Civil Service Retirement System shall
be excluded.
(B) If the federal adjusted gross income of the taxpayer is greater than $55,000.00 but
less than $65,000.00, the percentage of the first $10,000.00 of income received from
the Civil Service Retirement System to be excluded shall be proportional to the amount
of the taxpayer’s federal adjusted gross income over $55,000.00, determined by:
(i) subtracting the federal adjusted gross income of the taxpayer from $65,000.00;
(ii) dividing the value under subdivision (i) of this subdivision (B) by $10,000.00; and
(iii) multiplying the value under subdivision (ii) of this subdivision (B) by the first
$10,000.00 of income received from the Civil Service Retirement System.
(C) If the federal adjusted gross income of the taxpayer is equal to or greater than $65,000.00,
no amount of the income received from the Civil Service Retirement System shall be
excluded under this section.
(2) For taxpayers whose filing status is married filing jointly:
(A) If the federal adjusted gross income of the taxpayer is less than or equal to $70,000.00,
the first $10,000.00 of income received from the Civil Service Retirement System shall
be excluded.
(B) If the federal adjusted gross income of the taxpayer is greater than $70,000.00 but
less than $80,000.00, the percentage of the first $10,000.00 of income received from
the Civil Service Retirement System to be excluded shall be proportional to the amount
of the taxpayer’s federal adjusted gross income over $70,000.00, determined by:
(i) subtracting the federal adjusted gross income of the taxpayer from $80,000.00;
(ii) dividing the value under subdivision (i) of this subdivision (B) by $10,000.00; and
(iii) multiplying the value under subdivision (ii) of this subdivision (B) by the first
$10,000.00 of income received from the Civil Service Retirement System.
(C) If the federal adjusted gross income of the taxpayer is equal to or greater than $80,000.00,
no amount of the income received from the Civil Service Retirement System shall be
excluded under this section.
(c) Other contributory retirement systems; earnings not covered by Social Security. Other retirement income, except U.S. military retirement income pursuant to subsection
(d) of this section, received by a taxpayer of this State shall be excluded pursuant
to subsection (b) of this section as though the income were received from the Civil
Service Retirement System and shall be subject to the limitations under subsection
(e) of this section, provided that:
(1) the income is received from a contributory annuity, pension, endowment, or retirement
system of:
(A) the U.S. government or a political subdivision or instrumentality of the U.S. government;
(B) this State or a political subdivision or instrumentality of this State; or
(C) another state or a political subdivision or instrumentality of another state; and
(2) the contributory system from which the income is received was based on earnings that
were not covered by the Social Security Act.
(d) U.S. military retirement income and U.S. military survivor benefit income. For taxpayers of any filing status, U.S. military retirement income, and U.S. military
survivor benefit income received by an eligible beneficiary, received by a taxpayer
of this State shall be excluded from taxable income under subdivision 5811(21)(B)(iv)
of this chapter as follows:
(1) If the federal adjusted gross income of the taxpayer is less than or equal to $125,000.00,
all federally taxable U.S. military retirement income and survivor benefit income
shall be excluded.
(2) If the federal adjusted gross income of the taxpayer is greater than $125,000.00 but
less than $175,000.00, the percentage of federally taxable U.S. military retirement
income and survivor benefit income to be excluded shall be proportional to the amount
of the taxpayer’s federal adjusted gross income over $125,000.00, determined by:
(A) subtracting the federal adjusted gross income of the taxpayer from $175,000.00;
(B) dividing the value under subdivision (A) of this subdivision (2) by $50,000.00; and
(C) multiplying the value under subdivision (B) of this subdivision (2) by the federally
taxable U.S. military retirement income and survivor benefit income received.
(3) If the federal adjusted gross income of the taxpayer is equal to or greater than $175,000.00,
no amount of the federally taxable U.S. military retirement income and survivor benefit
income received shall be excluded under this section.
(e)(1) Requirement to elect one exclusion. A taxpayer of this State who is eligible during the taxable year for more than one
of the exclusions under subsections (a), (b), and (c) of this section shall elect
only one of the exclusions for which the taxpayer is eligible.
(2) A taxpayer of this State who is eligible during the taxable year for the military
retirement and survivor benefit exclusion under subsection (d) of this section may
elect that exclusion regardless of whether the taxpayer also elects an exclusion under
subsections (a)–(c) of this section. (Added 2018, No. 11 (Sp. Sess.), § H.5, eff. Jan. 1, 2018; amended 2021, No. 105 (Adj. Sess.), § 534, eff. July 1, 2022; 2021, No. 138 (Adj. Sess.), § 7, eff. January 1, 2022; 2023, No. 6, §§ 376, 377, eff. July 1, 2023; 2025, No. 71, § 3, eff. January 1, 2025.)
§ 5830f. Vermont child tax credit
(a) A resident individual or part-year resident individual who is entitled to a child
tax credit under the laws of the United States or who would have been entitled to
a child tax credit under the laws of the United States but for the fact that the individual
or the individual’s spouse does not have a taxpayer identification number shall be
entitled to a refundable credit against the tax imposed by section 5822 of this title for the taxable year. The total credit per taxable year shall be in the amount of
$1,000.00 per qualifying child, as defined under 26 U.S.C. § 152(c) but notwithstanding the taxpayer identification number requirements under 26 U.S.C. § 24(e) and (h)(7), who is six years of age or younger as of the close of the calendar year
in which the taxable year of the taxpayer begins. For a part-year resident individual,
the amount of the credit shall be multiplied by the percentage that the individual’s
income that is earned or received during the period of the individual’s residency
in this State bears to the individual’s total income. An otherwise eligible individual
shall be entitled to the credit under this section without regard for the laws of
the United States pertaining to the amount of federal child tax credit that may be
refunded.
(b) Notwithstanding subsection (a) of this section, the amount of the credit per child
under this section shall be reduced, but not below zero, by $20.00 for each $1,000.00,
or fraction thereof, by which the individual’s adjusted gross income exceeds $125,000.00,
irrespective of the individual’s filing status. For purposes of this subsection, spouses
filing jointly shall be considered an individual.
(c) Notwithstanding any provision of law to the contrary, the refundable credit and its
payment authorized under this section shall be treated in the same manner as the federal
Earned Income Tax Credit and shall not be considered as assets, income, or resources
to the same extent the credit and its payment would be disregarded pursuant to 26 U.S.C. § 6409 and the general welfare doctrine for purposes of determining eligibility for benefits
or assistance, or the amount or extent of those benefits or assistance, under any
State or local program, including programs established under 33 V.S.A. § 3512 and chapters 11, 17, 19, 21, 25, and 26. This subsection shall only apply to the
extent that it does not conflict with federal law relating to the benefit or assistance
program and that any required federal approval or waiver is first obtained for that
program.
[Subsection (d) effective when contingency met.]
(d)(1) The Commissioner shall establish a program to make advance quarterly payments of the
credit under this section during the calendar year that, in the aggregate, equal 50
percent of the annual amount of the credit allowed to each individual for the taxable
year. The quarterly payments made to an individual during the calendar year shall
be in equal amounts, except that the Commissioner may modify the quarterly amount
upon receipt of any information furnished by the individual that allows the Commissioner
to determine the annual amount. The remaining 50 percent of the annual amount of the
credit allowed to each individual shall be determined at the time of filing a Vermont
personal income tax return for the taxable year pursuant to section 5861 of this title.
(2) The Commissioner shall provide a process by which individuals may elect not to receive
advance payments under this subsection. (Added 2021, No. 138 (Adj. Sess.), § 1, eff. January 1, 2022; amended 2023, No. 72, § 16, eff. January 1, 2023; 2023, No. 72, § 18; 2025, No. 71, § 1, eff. January 1, 2025.)
§ 5830g. Vermont veteran tax credit
(a) A resident individual or part-year resident individual who served in the uniformed
services shall be entitled to a refundable credit against the tax imposed by section 5822 of this title for the taxable year.
(b) A taxpayer shall be eligible for the credit under this section provided the taxpayer
has a discharge record, or other record of separation from active duty, verifying
service in the uniformed services.
(c)(1) If the federal adjusted gross income of the taxpayer is less than or equal to $25,000.00,
the amount of tax credit provided under this section shall be $250.00.
(2) If the federal adjusted gross income of the taxpayer is greater than $25,000.00 but
less than $30,000.00, the amount of credit shall be $250.00 less $5.00 per $100.00
of federal adjusted gross income exceeding $25,000.00 of federal adjusted gross income.
(3) If the federal adjusted gross income of the taxpayer is $30,000.00 or greater, no
amount of credit shall be provided under this section. (Added 2025, No. 71, § 5, eff. January 1, 2025.)
-
Subchapter 003: TAXATION OF CORPORATIONS
§ 5831. Name of tax
The tax imposed by this subchapter shall be known as the Vermont Corporate Income
Tax. (Added 1966, No. 61 (Sp. Sess.), § 1, eff. Jan. 1, 1966.)
§ 5832. Tax on income of corporations
A tax is imposed for each calendar year, or fiscal year ending during that calendar
year, upon the income earned or received in that taxable year by every taxable corporation,
reduced by any Vermont net operating loss allowed under section 5888 of this title, such tax being the greater of:
(1) an amount determined in accordance with the following schedule:
| |
Vermont net income of the corporation |
|
Tax |
| |
for the taxable year allocated or |
|
|
| |
apportioned to Vermont |
|
|
| |
under section 5833 of this title |
|
|
| |
|
|
|
| |
$ |
0-10,000.00 |
|
6.00% |
| |
10,001.00-25,000.00 |
|
$600.00 plus 7.0% of the |
| |
|
|
excess over $10,000.00 |
| |
25,001.00 and over |
|
$1,650.00 plus 8.5% of the |
| |
|
|
excess over $25,000.00 |
| |
or |
|
|
|
(2)(A) $75.00 for small farm corporations. “Small farm corporation” means any corporation
organized for the purpose of farming, which during the taxable year is owned solely
by active participants in that farm business and receives less than $100,000.00 Vermont
gross receipts from that farm operation, exclusive of any income from forest crops;
or
(B) An amount determined in accordance with section 5832a of this title for a corporation that qualifies as and has elected to be taxed as a digital business
entity for the taxable year; or
(C) For C corporations with Vermont gross receipts from $0.00–$500,000.00, the greater
of the amount determined under subdivision (1) of this section or $100.00; or
(D) For C corporations with Vermont gross receipts from $500,001.00–$1,000,000.00, the
greater of the amount determined under subdivision (1) of this section or $500.00;
or
(E) For C corporations with Vermont gross receipts from $1,000,001.00–$5,000,000.00, the
greater of the amount determined under subdivision (1) of this section or $2,000.00;
or
(F) For C corporations with Vermont gross receipts from $5,000,001.00–$300,000,000.00,
the greater of the amount determined under subdivision (1) of this section or $6,000.00;
or
(G) For C corporations with Vermont gross receipts greater than $300,000,000.00, the greater
of the amount determined under subdivision (1) of this section or $100,000.00. (Added 1966, No. 61 (Sp. Sess.), § 1, eff. Jan. 1, 1966; amended 1969, No. 144, § 10, eff. June 1, 1969; 1973, No. 270 (Adj. Sess.), § 1, eff. date, see note set out below; 1983, No. 144 (Adj. Sess.), § 3, eff. April 12, 1984; 1983, No. 144 (Adj. Sess.), § 6(b), eff. Jan. 1, 1988; 1991, No. 32, § 31, eff. May 18, 1991; 1991, No. 67, § 26c, eff. June 19, 1991; 1997, No. 60, § 73, eff. June 26, 1997; 2003, No. 152 (Adj. Sess.), §§ 3, 4, eff. June 7, 2004; 2005, No. 207 (Adj. Sess.), §§ 14, 16, eff. May 31, 2006; 2009, No. 1 (Sp. Sess.), § H.52, eff. Jan. 1, 2010; 2011, No. 143 (Adj. Sess.), § 16, eff. May 15, 2012; 2019, No. 51, § 7, eff. Jan. 1, 2019; 2021, No. 148 (Adj. Sess.), § 2, eff. January 1, 2023.)
§ 5832a. Digital business entity franchise tax
(a) There is imposed upon every business entity that qualifies as and has elected to be
taxed as a digital business entity an annual franchise tax equal to:
(1) the greater of 0.02 percent of the current value of the tangible and intangible assets
of the company or $250.00, but in no case more than $500,000.00; or
(2) where the authorized capital stock does not exceed 5,000 shares, $250.00; where the
authorized capital stock exceeds 5,000 shares but is not more than 10,000 shares,
$500.00; and the further sum of $250.00 on each 10,000 shares or part thereof.
(b) In no case shall the tax on any corporation for a full taxable year, whether computed
under subdivision (a)(1) or (2) of this section, be more than $500,000.00 or less
than $250.00.
(c) In the case of a corporation that has not been in existence during the whole year,
the amount of tax due, at the foregoing rates and as provided, shall be prorated for
the portion of the year during which the corporation was in existence.
(d) In the case of a corporation changing during the taxable year the amount of its authorized
capital stock, the total annual franchise tax payable at the foregoing rates shall
be arrived at by adding together the franchise taxes calculated pursuant to subdivision
(a)(2) of this section as prorated for the several periods of the year during which
each distinct authorized amount of capital stock was in effect.
(e) For the purpose of computing the taxes imposed by this section, the authorized capital
stock of a corporation shall be considered to be the total number of shares that the
corporation is authorized to issue without regard to whether the number of shares
that may be outstanding at any one time is limited to a lesser number.
(f) The franchise tax under this section shall be reported and paid in the same manner
as the tax under subdivision 5832(2)(B) of this title; provided, however, that an electing corporation shall also provide the Commissioner
with a copy of its federal tax return. (Added 2009, No. 1 (Sp. Sess.), § H.53, eff. Jan. 1, 2010.)
§ 5833. Allocation and apportionment of income
(a) If the income of a taxable corporation is derived from any trade, business, or activity
conducted entirely within this State, the Vermont net income of the corporation shall
be allocated to this State in full. If the income of a taxable corporation is derived
from any trade, business, or activity conducted both within and outside this State,
the amount of the corporation’s Vermont net income that shall be apportioned to this
State, so as to allocate to this State a fair and equitable portion of that income,
shall be determined by multiplying that Vermont net income by the gross sales, or
charges for services performed, within this State, expressed as a percentage of such
sales or charges whether within or outside this State.
(1) Sales of tangible personal property are made in this State if: the property is delivered
or shipped to a purchaser, other than the U.S. government, who takes possession within
this State, regardless of f.o.b. point or other conditions of sale.
(2) Sales, other than the sale of tangible personal property, are in this State if the
taxpayer’s market for the sales is in this State. The taxpayer’s market for sales
is in this State:
(A) in the case of sale, rental, lease, or license of real property, if and to the extent
the property is located in this State;
(B) in the case of rental, lease, or license of tangible personal property, if and to
the extent the property is located in this State;
(C) in the case of sale of a service, if and to the extent the service is delivered to
a location in this State; and
(D) in the case of intangible property:
(i) that is rented, leased, or licensed, if and to the extent the property is used in
this State, provided that intangible property utilized in marketing a good or service
to a consumer is “used in this State” if that good or service is purchased by a consumer
who is in this State; and
(ii) that is sold, if and to the extent the property is used in this State, provided that:
(I) a contract right, government license, or similar intangible property that authorizes
the holder to conduct a business activity in a specific geographic area is “used in
this State” if the geographic area includes all or part of this State;
(II) receipts from intangible property sales that are contingent on the productivity, use,
or disposition of the intangible property shall be treated as receipts from the rental,
lease, or licensing of such intangible property under subdivision (i) of this subdivision
(2)(D); and
(III) all other receipts from a sale of intangible property shall be excluded from the numerator
and denominator of the receipts factor.
(3) If the state or states of assignment under subdivision (2) of this subsection cannot
be determined, the state or states of assignment shall be reasonably approximated.
(4) If the taxpayer is not taxable in a state to which a receipt is assigned under subdivision
(2) or (3) of this subsection, or if the state of assignment cannot be determined
under subdivision (2) of this subsection or reasonably approximated under subdivision
(3) of this subsection, such receipt shall be excluded from the denominator of the
receipts factor.
(5) The Commissioner of Taxes shall adopt rules as necessary to carry out the purposes
of this section.
(6) A taxable corporation subject to apportionment under this section shall report to
the Commissioner of Taxes:
(A) the average of the value of all the real and tangible property within this State at
the beginning of the taxable year and at the end of the taxable year, provided the
Commissioner may require the use of the average of the value on the 15th or other
day of each month in cases where the Commissioner determines that the computation
is necessary to more accurately reflect the average value of property within Vermont
during the taxable year, expressed as a percentage of all property both within and
outside this State; and
(B) the total wages, salaries, and other personal service compensation paid to employees
within this State during the taxable year, expressed as a percentage of all compensation
paid, whether within or outside this State.
(b) If the application of the provisions of this section does not fairly represent the
extent of the business activities of a corporation within this State, the corporation
may petition for, or the Commissioner may require, with respect to all or any part
of the corporation’s business activity, if reasonable:
(1) separate accounting;
(2) the exclusion or modification of any or all of the factors;
(3) the inclusion of one or more additional factors that will fairly represent the corporation’s
business activity in this State; or
(4) the employment of any other method to effectuate an equitable allocation and apportionment
of the corporation’s income. (Added 1966, No. 61 (Sp. Sess.), § 1, eff. Jan. 1, 1966; amended 1971, No. 73, §§ 15, 16, eff. April 16, 1971; 1987, No. 82, § 6, eff. June 9, 1987; 2003, No. 152 (Adj. Sess.), § 5, eff. June 7, 2004; amended 2019, No. 51, § 8, eff. Jan. 1, 2020; 2021, No. 148 (Adj. Sess.), § 3, eff. January 1, 2023; 2023, No. 6, § 378, eff. July 1, 2023.)
§ 5834. Computation of gains and losses
For the purpose of ascertaining gain or loss from the sale or other disposition of
property, real, personal, or mixed, acquired before January 1, 1931, the taxpayer
may, in lieu of the adjusted basis prescribed by the applicable U.S. Internal Revenue
Code, use the fair market value of such property as of January 1, 1931, adjusted for
the period subsequent thereto. In all other respects, the gain or loss on the sale
or other disposition of property shall be ascertained as prescribed by such Code. (Added 1966, No. 61 (Sp. Sess.), § 1, eff. Jan. 1, 1966.)
§ 5835. Construction of subchapter
Nothing in this subchapter shall be construed to repeal or affect any of the provisions
of chapter 211 of this title. (Added 1966, No. 61 (Sp. Sess.), § 1, eff. Jan. 1, 1966.)
§ 5836. Franchise tax on financial institutions
(a) A tax is imposed for each calendar month or part thereof upon the franchise or privilege
of doing business in this State of every corporation that is a financial institution
as defined in 8 V.S.A. § 11101(32) that has a business location in this State; provided, however, that a merchant bank
organized under 8 V.S.A. § 12603 and an uninsured bank organized under 8 V.S.A. § 12604 shall not be considered to be financial institutions for purposes of the tax imposed
by this section.
(b) The tax imposed by this section for each taxable month shall be equal to 0.000096
of the average monthly deposit for such taxable month held in Vermont by the corporation.
As used in this section, the word “deposit” shall have the same meaning as the word
“deposit” as defined in 12 C.F.R. § 204.2(a)(1). The average monthly deposit for any taxable month shall be determined by the deposits
held in Vermont by the corporation on the last business day of each of the 12 months
directly preceding the taxable month for which the average monthly deposit is to be
determined. The 12 deposits for the preceding 12 months shall be added together and
divided by 12 to produce the average monthly deposit for the taxable month in question.
In the event a corporation has not been doing business for 12 consecutive months prior
to any taxable month for which an average monthly deposit is to be determined, the
average monthly deposit for such taxable months shall be based upon the number of
months (less than 12) that the bank has been doing business prior to the taxable month
in question.
(c) The tax imposed by this section shall be paid monthly to the Commissioner on or before
the 25th day of each month for the tax due in the previous month.
(d), (e) [Repealed.]
(f) To the extent they are not explicitly in conflict with the provisions of this section,
the provisions of subchapters 6, 7, 8, and 9 of this chapter shall apply to the tax
imposed by this section.
(g) A corporation that is subject to the tax imposed by this section shall not be subject
to the tax imposed by section 5832 of this title.
(h) When a taxpayer, under this section, transfers all or a portion of its business assets
to another corporation that is or will be subject to tax under this section, the transferee
corporation shall include, and the transferor shall not include, in the computation
of “average monthly deposit” for purposes of subsection (b) of this section, the transferred
deposits that were held by the transferor corporation during the 12 months directly
preceding the transfer.
(i) An independent trust company established pursuant to 8 V.S.A. chapter 77 is not a financial institution within the meaning of this section.
(j) The Vermont Higher Education Savings Plan shall not be subject to the tax imposed
by this section. (Added 1967, No. 157, § 1; amended 1969, No. 144, § 11, eff. June 1, 1969; 1973, No. 270 (Adj. Sess.), § 2, eff. date, see note set out below; 1983, No. 144 (Adj. Sess.), § 5, eff. April 12, 1984; 1991, No. 32, § 29, eff. May 18, 1991; 1995, No. 29, § 29, eff. April 14, 1995; 1995, No. 169 (Adj. Sess.), § 16, eff. May 15, 1996; 1997, No. 60, § 75; 1997, No. 79 (Adj. Sess.), § 3; 1997, No. 98 (Adj. Sess.), § 8d, eff. April 16, 1998; 1999, No. 153 (Adj. Sess.), § 33, eff. Jan. 1, 2001; 2003, No. 152 (Adj. Sess.), § 6, eff. June 7, 2004; 2015, No. 134 (Adj. Sess.), § 37, eff. Jan. 1, 2017.)
§ 5837. Repealed. 2003, No. 152 (Adj. Sess.), § 8.
§ 5838. Digital business entity election
A corporation shall not be subject to the tax imposed by section 5832 of this title if the corporation qualifies as and elects to be taxed as a digital business entity
for the taxable year. (Added 2009, No. 1 (Sp. Sess.), § H.54, eff. Jan. 1, 2010.)
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Subchapter 004: WITHHOLDING OF TAXES AT SOURCE
§ 5841. Requirement and rate of withholding
(a) Every person who is required under the laws of the United States to withhold federal
income tax from payments that are also subject to Vermont income tax shall deduct
and withhold during the calendar year from the payments made by such person such amount
as the Commissioner shall prescribe. Every person who makes payments of income with
respect to services performed for such person that were previously deferred under
a nonqualified deferred compensation plan shall deduct and withhold during the calendar
year from the payments made by such person six percent of any payment (including any
withheld tax) of such previously deferred income and of income derived from such previously
deferred income. The Commissioner may authorize any person to deduct and withhold
Vermont income tax from any other payments that are subject to the tax imposed by
this chapter. Notwithstanding the foregoing, banks (as defined in 8 V.S.A. § 909a(a)) shall not be required to withhold Vermont income tax from payments that are subject
to federal back-up withholding.
(b) The Commissioner shall establish such withholding tables, schedules, or formulae as
will result in the withholding of such amounts from the payments made by any person
during any taxable year, as shall closely approximate the income tax liabilities of
the recipients of those payments with respect to those payments for that year under
this chapter.
(c) Every person who is required under this subchapter to withhold income taxes from payments
of income, except for the government of the United States, shall provide the aggregate
cost of applicable employer-sponsored coverage required under 26 U.S.C. § 6051(a)(14) regardless of the number of W-2 forms filed. (Added 1966, No. 61 (Sp. Sess.), § 1, eff. Jan. 1, 1966; amended 1985, No. 266 (Adj. Sess.), § 3, eff. June 4, 1986; 1989, No. 210 (Adj. Sess.), § 298, eff. June 1, 1990; 1989, No. 222 (Adj. Sess.), § 6, eff. May 31, 1990; 1991, No. 67, § 24, eff. June 19, 1991; 2015, No. 57, § 67.)
§ 5842. Return and payment of withheld taxes
(a) Every person required to deduct and withhold any amount under section 5841 of this title shall make return thereof and shall pay over that amount to the Commissioner as follows:
(1) In quarterly payments to be made not later than 25 days following the last day of
March, June, September, and December, if the person is required to make quarterly
or annual payments of federal withholding pursuant to the Internal Revenue Code.
(2) In semiweekly payments, if the person is required to make semiweekly payments of federal
withholding pursuant to the Internal Revenue Code. Semiweekly shall mean payment of
tax withheld for pay dates on Wednesday, Thursday, or Friday is due by the following
Wednesday, and tax withheld for pay dates on Saturday, Sunday, Monday, or Tuesday
is due by the following Friday.
(3) In monthly payments to be made not later than the 25th (23rd of February) day following
the close of the calendar month during which the amount was withheld, if subdivisions
(1) and (2) of this subsection do not apply.
(b) The Commissioner shall prescribe the method of payment of tax and may, without limitation,
require electronic funds transfer or payment to a bank depository. The Commissioner
may, in writing, permit or require returns to be made covering other periods and upon
such dates as the Commissioner may specify and require payments of tax liability at
such intervals and based upon such classifications as the Commissioner may designate:
(1) to conform to federal withholding law as the Commissioner deems appropriate;
(2) in cases in which less frequent reporting is determined by the Commissioner to be
sufficient; and
(3) in cases in which the Commissioner determines that the taxpayer’s repeated failure
to file or pay tax makes more frequent reporting necessary to ensure the prompt and
orderly collection of the tax.
(c) In addition to the returns required to be filed and payments required to be made under
subsection (a) of this section, every person required to deduct and withhold any tax
under section 5841 of this title shall file an annual return covering the aggregate amount deducted and withheld during
the entire preceding year, on or before January 31 of each year. At the time of filing
that return, the person shall pay over to the Commissioner any amount deducted and
withheld during the preceding calendar year and not previously paid. The person shall,
further, make such annual report to payees and to the Commissioner of amounts paid
and withheld as the Commissioner by regulation shall prescribe.
(d) Notwithstanding section 5867 of this title, the Commissioner may, in his or her discretion, prescribe that one or more or all
of the returns required by subsection (a) of this section are not required to be signed
or verified by the taxpayer. The Commissioner may require businesses and payroll service
providers to file information under this section by electronic means. (Added 1966, No. 61 (Sp. Sess.), § 1, eff. Jan. 1, 1966; amended 1983, No. 59, § 10, eff. April 22, 1983; 1985, No. 266 (Adj. Sess.), § 3, eff. June 4, 1986; 1989, No. 124 (Adj. Sess.), § 1, eff. Feb. 8, 1990; 1989, No. 222 (Adj. Sess.), §§ 7, 8, eff. May 31, 1990; 1991, No. 186 (Adj. Sess.), § 13, eff. May 7, 1992; 1993, No. 49, §§ 10-12, eff. May 28, 1993; 1995, No. 29, § 9, eff. April 14, 1995; 1999, No. 49, § 73, eff. June 2, 1999; 1999, No. 119 (Adj. Sess.), § 17, eff. May 18, 2000; 2007, No. 81, § 2, eff. July 1, 2008; 2009, No. 146 (Adj. Sess.), § B7; 2015, No. 57, § 68; 2015, No. 134 (Adj. Sess.), § 12.)
§ 5843. Failure to account; maintenance of trust account
If a person fails at any time to comply with the Commissioner’s requirement under
subsection 5842(b) of this title to remit amounts deducted and withheld at such intervals and based upon such classifications
as the Commissioner designates, the Commissioner may petition the Superior Court wherein
the person has a place of business, and, upon the petition and hearing, a judge of
that court shall issue a citation declaring any amounts thereafter deducted and withheld
by the person under section 5841 of this title to be a trust for the State of Vermont. That order shall further require the person,
(and, if the person is a corporation, any principal officer of the corporation), to
remit those amounts as the Commissioner has required to, and to file a return with
respect to each of those payments under the terms of this subchapter with, the court
upon pain of contempt of court. The order of notice upon the petition shall be returnable
not later than seven business days after the filing of the petition. The petition
shall be heard and determined on the return day, or on such day as soon thereafter
as the court considers practicable and shall fix, having regard to the circumstances
of the case. The costs of the proceeding shall be payable as the court determines.
The remittance of those amounts shall be made to the court or, if the court so directs,
to the Commissioner, as the Commissioner has required for such period of time as the
Commissioner determines with the approval of the court, whether or not all tax liabilities
theretofore due have been satisfied, having regard to the maintenance of regular future
payments by the person. All amounts and all returns received by the court under this
section shall be remitted as soon as is practicable by the court to the Commissioner. (Added 1966, No. 61 (Sp. Sess.), § 1, eff. Jan. 1, 1966; amended 1973, No. 193 (Adj. Sess.), § 3, eff. April 9, 1974; 1985, No. 266 (Adj. Sess.), § 3, eff. June 4, 1986; 1991, No. 186 (Adj. Sess.), § 14, eff. May 7, 1992; 1995, No. 29, § 10, eff. April 14, 1995; 2017, No. 11, § 61.)
§ 5844. Liability; penalty; trust for the State
(a) Withholding requirement. Any person who fails to withhold the required tax or to pay it to the Commissioner
as required under this subchapter shall be personally and individually liable for
the amount of such tax, and if the person is a corporation or other entity, the personal
liability shall extend and be applicable to any officer or agent of the corporation
or entity who, as an officer or agent of the same, is under a duty to withhold the
tax and transmit it to the Commissioner as required in this chapter.
(b) Held in trust for State. Any sum or sums withheld in accordance with this subchapter shall be deemed to be
held by the person in trust for the State of Vermont. Such sums shall be recorded
by such person in a ledger account so as clearly to indicate the amount of tax withheld
and that the same are the property of the State of Vermont.
(c) Withholding penalties.
(1) Failure to file; failure to withhold; failure to remit. Any employer, including any corporate officer or agent, who knowingly fails to file
a return, fails to withhold a tax, or fails to remit a tax required under this subchapter
shall be imprisoned not more than one year or fined not more than $1,000.00, or both.
(2) Failure to file; failure to withhold; failure to remit; over $500.00. Any employer, including any corporate officer or agent, who with intent to evade a
tax liability fails to file a return, fails to withhold a tax, or fails to remit a
tax required under this subchapter shall, if the amount of tax withheld or required
to be withheld exceeds $500.00 in a single calendar year, be imprisoned not more than
three years or fined not more than $10,000.00, or both.
(3) False or fraudulent return. Any employer, including any corporate officer or agent, who knowingly makes, signs,
verifies, or files with the Commissioner a false or fraudulent tax return shall be
imprisoned not more than one year or fined not more than $1,000.00, or both. Any
employer, including any corporate officer or agent, who with intent to evade a tax
liability makes, signs, verifies, or files with the Commissioner a false or fraudulent
return, if the amount of tax withheld or required to be withheld exceeds $500.00,
shall be imprisoned not more than three years or fined not more than $10,000.00, or
both.
(4) Lien. In addition, an unpaid tax shall constitute a lien in favor of the State of Vermont
as provided in this chapter.
(d) Withholding liability. Any amount required to be deducted and withheld, and to be paid over to the Commissioner,
by a person under this subchapter shall be considered to be a tax liability of the
person for purposes of this chapter. The person shall be subject, with respect to
that tax liability, to the provisions of this chapter, including the provisions governing
returns, fees for late filing of returns, interest and penalties for nonpayment of
tax liabilities, liens, levies, and appeals, except as those provisions conflict with
the express provisions of this subchapter. Any report required under subsection 5842(c) of this title or rules issued under that section shall be considered to be a return for the purposes
of this chapter. (Added 1966, No. 61 (Sp. Sess.), § 1, eff. Jan. 1, 1966; amended 1971, No. 73, § 17, eff. April 16, 1971; 1985, No. 266 (Adj. Sess.), § 3, eff. June 4, 1986; 1987, No. 48, § 8; 1997, No. 50, § 17, eff. June 26, 1997; 2019, No. 14, § 79, eff. April 30, 2019; 2021, No. 105 (Adj. Sess.), § 535, eff. July 1, 2022.)
§ 5845. Repealed. 1991, No. 186 (Adj. Sess.), § 8(e), eff. May 7, 1992.
§ 5846. Repealed. 1991, No. 186 (Adj. Sess.), § 8(f), eff. May 7, 1992.
§ 5847. Withholding on sales or exchanges of real estate
(a) Except as otherwise provided in this section, in the case of any sale or exchange
of real property located in Vermont by a nonresident of Vermont, the transferee shall
be required to withhold and transmit to the Commissioner within 30 days of such sale
or transfer, a withholding tax equal to 2 1/2 percent of the consideration paid for
the transfer. Any transferee who fails to withhold such amount shall be personally
liable for the amount of such tax.
(b) Subject to subsection (d) of this section, no person shall be required to withhold
any amount under subsection (a) of this section if:
(1) the transferor furnishes to the transferee a certificate by the transferor stating,
under penalty of perjury, the transferor’s Social Security number and the fact that
the transferor is a Vermont resident; or
(2) the transferor or transferee has received a certificate from the Commissioner stating
that:
(A) no tax is due on the gain from that transfer; or
(B) the transferor or transferee has satisfied the transferor’s tax liability or has provided
adequate security to cover such liability; or
(3) the transferor is a mortgagor conveying the mortgaged property to a mortgagee in foreclosure,
or in a transfer in lieu of foreclosure, with no additional consideration.
(c) At the request of the transferor or transferee, the Commissioner may issue the certificate
referred to in subdivision (b)(2) of this section or a certificate prescribing a reduced
amount to be withheld under this section if the Commissioner determines that such
reduced amount will not jeopardize the collection of the tax imposed by this chapter
and the transferor is in good standing with the Department of Taxes with respect to
any and all taxes. For purposes of this section, a transferor is in good standing
with respect to any and all taxes if:
(1) all returns due from the transferor for any and all taxes have been filed; and
(2) no taxes are due and payable, except those on appeal.
(d) If a transferee has actual knowledge that a certificate furnished under subsection
(b) of this section is false and the transferee fails to withhold the prescribed amount,
the transferee shall be liable for an amount equal to the amount that should have
been withheld together with penalty and interest as provided by this title.
(e) As used in this section “nonresident” of Vermont shall include individuals, trusts,
partnerships, and corporations, but not estates. A nonresident individual is an individual
who is domiciled outside Vermont at the time of closing. A nonresident trust is a
trust that, at the time of closing, does not qualify for Vermont residency as defined
in subdivision 5811(11) of this title. A nonresident partnership is a partnership, the controlling interest in which is
held by nonresidents. A nonresident corporation, other than a Subchapter S corporation,
is a corporation that is incorporated outside Vermont other than a corporation that
has its principal place of business in Vermont and does no business in its state of
incorporation. A nonresident Subchapter S corporation is a Subchapter S corporation
the controlling interest in which is held by nonresidents. A nonresident limited liability
company is a limited liability company the controlling interest in which is held by
nonresidents.
(f) The amount withheld pursuant to this section shall be deemed to be a payment against
the tax imposed by this chapter on income received by the seller.
(g) The Commissioner shall, by rule, establish a procedure by which a seller may apply
for an early refund of the tax withheld when the seller establishes that no tax under
this chapter will be owed or that a tax less than the amount withheld will be owed.
The Commissioner shall, by rule, establish methods by which nonresident transferors
may provide security in lieu of withholding.
(h) In the case of an installment sale, the seller may elect for Vermont purposes to report
the entire gain in the year of the sale and to pay a tax equal to six percent of that
gain. If the seller does not make this election, the real estate withholding will
be retained by the Department and applied as a credit against the seller’s tax liability
in each year that an installment is received. (Added 1989, No. 93; amended 1989, No. 222 (Adj. Sess.), § 9, eff. May 31, 1990; 1991, No. 67, § 26a, eff. June 19, 1991; 1995, No. 29, § 41, eff. April 14, 1995; 1997, No. 50, § 18, eff. June 26, 1997; 2021, No. 105 (Adj. Sess.), § 536, eff. July 1, 2022.)
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Subchapter 006: RETURNS
§ 5861. Returns by individuals, trusts, and estates
(a) Every individual, trust, or estate subject to taxation for any taxable year under
section 5822 of this title shall file a Vermont personal income tax return for that taxable year if that person
is required to file a United States income tax return for that year and (1) earned
or received more than $100.00 of Vermont income, or (2) earned or received more than
$1,000.00 in gross income from the sources listed in subdivisions 5823(b)(1) through
(6) of this title, whether or not a resident, in that year, or has a tax liability
under this chapter for that year.
(b) The return required to be filed under this section shall be filed on or before the
date a United States income tax return is originally required to be filed by the individual,
trust, or estate under the laws of the United States for the taxable year or the date
as extended by the Commissioner under section 5868 of this title.
(c) Spouses or a surviving spouse shall file a joint Vermont personal income tax return
for any taxable year for which the spouses file or the surviving spouse files a joint
federal income tax return under the laws of the United States, unless the Commissioner
allows a different filing status.
(d) If a joint Vermont personal income tax return is filed by spouses or by a surviving
spouse for any taxable year, the tax under this chapter shall be measured by the joint
federal income tax liability of the taxpayers for that taxable year and their liability
with respect to the tax under this chapter shall be joint and several.
(e) The Commissioner may require information on a Vermont personal income tax return that
is sufficient to identify the school district, as defined in 16 V.S.A. § 11(a)(10), in which the taxpayer resides. The Commissioner may consider a return incomplete
if the information required under this subsection is not provided and shall cause
the return to be completed.
(f) [Repealed.]
(g) [Repealed.] (Added 1966, No. 61 (Sp. Sess.), § 1, eff. Jan. 1, 1966; amended 1967, No. 121, § 13, eff. Jan. 1, 1968; 1981, No. 170 (Adj. Sess.), § 5, eff. April 19, 1982; 1987, No. 82, § 3, eff. June 9, 1987; 1993, No. 49, §§ 13, 14, eff. May 28, 1993; 1995, No. 47, § 20, eff. April 20, 1995; 1999, No. 49, § 56, eff. June 2, 1999; 2007, No. 33, § 2, eff. May 18, 2007; 2021, No. 105 (Adj. Sess.), § 538, eff. July 1, 2022; 2025, No. 27, § E.111.2, eff. January 1, 2025.)
§ 5861a. Returns by partnerships
(a) Every partnership having any income derived from Vermont sources shall file with the
Commissioner a Vermont partnership income tax return and a copy of the federal form
1065, including Schedules K and K-1 (U.S. Partnership Return of Income and Partner’s
Share of Income, Credits, Deductions, etc.), required to be filed with the federal
authorities at such time as such schedule is required to be filed or is, in fact,
filed with the federal authorities. A partnership is considered to have income from
Vermont sources if it earned or received more than $100.00 of Vermont income or earned
or received more than $1,000.00 of gross income from the sources listed in subdivisions
5823(b)(1) through (6) of this title or associated with or attributable to business
activities carried on in Vermont.
(b) The returns and schedules required to be filed under this section shall be treated
as a return for all purposes under this chapter. (Added 1983, No. 59, § 11, eff. April 22, 1983; amended 1989, No. 222 (Adj. Sess.), § 10, eff. May 31, 1990; 1997, No. 50, § 19, eff. June 26, 1997.)
§ 5862. Returns by corporations
(a) Every corporation that is a taxable corporation, for any taxable year, shall file
a Vermont corporate income tax return for that taxable year on or before the date
a U.S. income tax return is required to be filed for that year by that corporation
under the laws of the United States.
(b) If such corporation fails to file such return on or before such date, the corporation
shall pay a penalty of $50.00 in addition to any other penalties, interest, or fees
provided by this chapter. If a petition is filed under section 5864 of this title in order to force the filing of such return, then a further penalty of $200.00 shall
be paid in addition to any other penalties, interest, or fees provided by this chapter
and in addition to the $50.00 penalty provided herein. However, if a judge of the
Superior Court finds that there was no cause for the Commissioner to file the petition,
he or she shall order that the $200.00 penalty not be imposed. Such penalties shall
be paid at the time the return is filed, without assessment or demand.
(c) Taxable corporations that received any income allocated or apportioned to this State
under the provisions of section 5833 of this title for the taxable year and that under the laws of the United States constitute an affiliated
group of corporations may elect to file a consolidated return in lieu of separate
returns if such corporations qualify and elect to file a consolidated federal income
tax return for that taxable year. Such an election to file a Vermont consolidated
return shall continue for five years, including the year the election is made.
(d) A taxable corporation that is part of an affiliated group engaged in a unitary business
shall be treated as a single taxpayer and shall file a group return containing the
combined net income of the affiliated group and such other informational returns as
the Commissioner shall require by rule. A unitary combined return shall include the
income and apportionment factors of any taxable corporation incorporated in the United
States or formed under the laws of any state, the District of Columbia, or any territory
or possession of the United States and in a unitary relationship with the taxpayer.
The income, gain, or losses from members of a combined group shall be combined to
the extent allowed under the Internal Revenue Code for consolidated filing as if the
combined group was a consolidated filing group, provided that a state tax credit shall
not be combined and shall be limited to the member to which the credit is attributed. (Added 1966, No. 61 (Sp. Sess.), § 1, eff. Jan. 1, 1966; amended 1971, No. 73, § 18, eff. April 16, 1971; 1973, No. 193 (Adj. Sess.), § 3, eff. April 9, 1974; 1987, No. 82, § 8, eff. June 9, 1987; 1991, No. 67, § 4, eff. June 19, 1991; 2003, No. 152 (Adj. Sess.), § 7, eff. June 7, 2004; 2013, No. 174 (Adj. Sess.), § 2, eff. Jan. 1, 2014; 2021, No. 148 (Adj. Sess.), § 4, eff. January 1, 2023.)
§ 5862a. Nongame Wildlife Account checkoff
(a) Returns filed by individuals shall include, on a form prescribed by the Commissioner
of Taxes, an opportunity for the taxpayer to designate funds to reimburse the State,
in all or in part, for its General Fund appropriation to the Nongame Wildlife Account.
(b) Amounts so designated shall be deducted from refunds due to, or overpayments made
by, the designating taxpayers. All amounts so designated and deducted shall be deposited
in the Nongame Wildlife Account by the Commissioner of Taxes. If at any time after
the payment of amounts so designated to the Nongame Wildlife Account it is determined
that the taxpayer was not entitled to all or any part of the amount so designated,
the Commissioner may assess, and the Nongame Wildlife Account shall then pay to the
Commissioner, the amount received, together with interest at the rate prescribed by
section 3108 of this title, from the date the payment was made until the date of repayment.
(c) The Commissioner of Taxes may encourage taxpayers to make designations to the Account,
including explaining the purposes of the Account and how to contribute to it.
(d) If amounts paid with respect to a return are insufficient to cover both the amount
owed on the return under this chapter and the amount designated by the taxpayer as
a contribution to the Nongame Wildlife Account, the payment shall first be applied
to the amount owed on the return under this chapter and the balance, if any, shall
be deposited in the Nongame Wildlife Account.
(e) Nothing in this section shall be construed to require the Commissioner to collect
any amount designated as a contribution to the Nongame Wildlife Account. (Added 1985, No. 191 (Adj. Sess.), § 4, eff. May 14, 1986; amended 1987, No. 221 (Adj. Sess.), §§ 1, 2, eff. May 27, 1988.)
§ 5862b. Vermont Children’s Trust Foundation checkoff
(a) Returns filed by individuals shall include, on a form prescribed by the Commissioner
of Taxes, an opportunity for the taxpayer to designate funds to the Vermont Children’s
Trust Foundation.
(b) Amounts so designated shall be deducted from refunds due to, or overpayments made
by, the designating taxpayers. All amounts so designated and deducted shall be deposited
in an account by the Commissioner of Taxes for payment to the Vermont Children’s Trust
Foundation. If at any time after the payment of amounts so designated to the account
it is determined that the taxpayer was not entitled to all or any part of the amount
so designated, the Commissioner may assess, and the account shall then pay to the
Commissioner, the amount received, together with interest at the rate prescribed by
section 3108 of this title, from the date the payment was made until the date of repayment.
(c) The Commissioner of Taxes shall explain to taxpayers the purposes of the account and
how to contribute to it. The Commissioner shall make available to taxpayers the annual
income and expense report of the Vermont Children’s Trust Foundation and shall provide
notice in the instructions for the State individual income tax return that the report
is available at the Department of Taxes.
(d) If amounts paid with respect to a return are insufficient to cover both the amount
owed on the return under this chapter and the amount designated by the taxpayer as
a contribution to the Vermont Children’s Trust Foundation, the payment shall first
be applied to the amount owed on the return under this chapter and the balance, if
any, shall be deposited in the account.
(e) Nothing in this section shall be construed to require the Commissioner to collect
any amount designated as a contribution to the Vermont Children’s Trust Foundation.
(f) The Vermont Children’s Trust Foundation shall use the revenue received under this
section to provide funds for community-based primary prevention programs that have
been shown to be effective for juveniles. The Foundation shall solicit proposals for
grant awards from public and private persons and agencies and shall evaluate the proposals
on the basis of the following criteria:
(1) the demonstrated effectiveness of the program upon which the proposal is based;
(2) the need for such services within the community;
(3) other resources available to meet the need for primary prevention services; and
(4) the ability of the applicant to obtain funding from another source to cover a portion
of the program costs.
(g) To the extent that funds permit, the Vermont Children’s Trust Foundation shall award
and administer grants to applicants of proposals that the Foundation determines to
have met the criteria established in subsection (f) of this section. The Foundation
shall monitor expenditures by grantees and evaluate the effectiveness of the programs,
assistance, or services financed by the revenue received under this section. The Foundation
shall develop guidelines for the coordination of community-based primary prevention
programs, the application process, and the distribution of grants under this section. (Added 1995, No. 164 (Adj. Sess.), § 1; amended 2021, No. 179 (Adj. Sess.), § 8, eff. July 1, 2022; 2023, No. 6, § 379, eff. July 1, 2023.)
§ 5862c. Repealed. 2009, No. 160 (Adj. Sess.), § 51(c)(1) repealed effective for taxable years beginning on and after January 1, 2010.
§ 5862d. Filing of federal form 1099
(a) Any individual or business required to file a federal form 1099 with respect to a
nonresident who performed services within the State during the taxable year shall
file a copy of the form with the Department. The Commissioner may authorize electronic
filing of the form.
(b) Any person required to file information returns pursuant to 26 U.S.C. § 6050W shall, within 30 days of the date the filing is due to the Internal Revenue Service,
file with the Commissioner a duplicate of such information returns on which the recipient
has a Vermont address. In addition, at the same time the information in this subsection
is required, third-party settlement organizations shall report to the Department of
Taxes, and to any participating payee with a Vermont address, any information required
by 26 U.S.C. § 6050W with respect to third-party network transactions related to that participating payee,
as if the de minimis limitations of 26 U.S.C. § 6050W(e) did not apply, but that the de minimis limitations of 26 U.S.C. § 6041(a) did apply. The Commissioner may adopt rules and authorize electronic filing of the
information required by this subsection.
(c) A failure to provide the information required by subsections (a) and (b) of this section
shall be considered a failure to provide a return or return information required by
this chapter, for the purposes of sections 3202, 5863, and 5864 of this title. (Added 1997, No. 156 (Adj. Sess.), § 8, eff. April 29, 1998; amended 2013, No. 174 (Adj. Sess.), § 1, eff. Jan. 1, 2014; 2017, No. 73, § 22, eff. Jan. 1, 2017.)
§ 5862e. Vermont Veterans’ Fund checkoff
(a) Returns filed by individuals shall include, on a form prescribed by the Commissioner
of Taxes, an opportunity for the taxpayer to designate funds to the Vermont Veterans’
Fund.
(b) Amounts designated under subsection (a) of this section shall be deducted from refunds
due to, or overpayment made by, the designating taxpayer. All amounts so designated
and deducted shall be deposited in an account by the Commissioner of Taxes for payment
to the Vermont Veterans’ Fund. If at any time after the payment of amounts so designated
to the account it is determined that the taxpayer was not entitled to all or any part
of the amount so designated, the Commissioner may assess, and the account shall then
pay to the Commissioner, the amount received, together with interest at the rate prescribed
by section 3108 of this title, from the date the payment was made until the date of repayment.
(c) The Commissioner of Taxes shall explain to taxpayers the purpose of the account and
how to contribute to it. The Commissioner shall provide notice in the instructions
for the State individual income tax return as to how to obtain a copy of the annual
income and expense report of the Vermont Veterans’ Fund.
(d) If amounts paid with respect to a return are insufficient to cover both the amount
owed on the return under this chapter and the amount designated as a contribution
to the Vermont Veterans’ Fund, the payment shall first be applied to the amount owed
on the return under this chapter and the balance, if any, shall be deposited in the
Fund.
(e) Nothing in this section shall be construed to require the Commissioner to collect
any amount designated as a contribution to the Vermont Veterans’ Fund. (Added 2009, No. 160 (Adj. Sess.), § 49.)
§ 5862f. Vermont Green Up checkoff
(a) Returns filed by individuals shall include, on a form prescribed by the Commissioner
of Taxes, an opportunity for the taxpayer to designate funds to Vermont Green Up,
Inc.
(b) Amounts so designated shall be deducted from refunds due to, or overpayments made
by, the designating taxpayers. All amounts so designated and deducted shall be deposited
in an account by the Commissioner of Taxes for payment to Vermont Green Up, Inc. If
at any time after the payment of amounts so designated to the account it is determined
that the taxpayer was not entitled to all or any part of the amount so designated,
the Commissioner may assess, and the account shall then pay to the Commissioner, the
amount received, together with interest at the rate prescribed by section 3108 of this title, from the date the payment was made until the date of repayment.
(c) The Commissioner of Taxes shall explain to taxpayers the purposes of the account and
how to contribute to it. The Commissioner shall make available to taxpayers the annual
income and expense report of Vermont Green Up, Inc., and shall provide notice in the
instructions for the State individual income tax return that the report is available
at the Department of Taxes.
(d) If amounts paid with respect to a return are insufficient to cover both the amount
owed on the return under this chapter and the amount designated by the taxpayer as
a contribution to Vermont Green Up, Inc., the payment shall first be applied to the
amount owed on the return under this chapter and the balance, if any, shall be deposited
in the account.
(e) Nothing in this section shall be construed to require the Commissioner to collect
any amount designated as a contribution to Vermont Green Up, Inc. (Added 2013, No. 174 (Adj. Sess.), § 3, eff. Jan. 1, 2015.)
§ 5863. Additional returns
When the Commissioner is of the opinion that a taxpayer has failed to file any return
required by this chapter, or to include in any return so filed, either intentionally
or through error, information by which the taxpayer’s tax liability may correctly
be determined, the Commissioner may, by written notice to the taxpayer, require that
the taxpayer file that return, or an additional supplementary return containing such
information, verified as provided in section 5867 of this title, in such form as the Commissioner shall prescribe. The filing of that return shall
not relieve the taxpayer from any of the penalties to which he or she may be liable
under this chapter. (Added 1966, No. 61 (Sp. Sess.), § 1, eff. Jan. 1, 1966.)
§ 5864. Failure to file a return; petition and computation of tax
(a) Upon the failure of a taxpayer to file any return required under this chapter within
15 days of the date of a notice to the taxpayer under section 5863 of this title, the Commissioner may petition a judge of the Superior Court in the county wherein
the taxpayer resides or has a place of business or, if the taxpayer neither resides
nor has a place of business in this State, the Commissioner may petition the Washington
Superior Court, and upon the petition of the Commissioner and a hearing, the judge
shall issue a citation requiring the taxpayer and, if the taxpayer is a corporation,
any principal officer of such corporation to file a proper return in accordance with
this chapter, upon pain of contempt. The order of notice upon the petition shall
be returnable not later than 20 days after the filing of the petition. The petition
shall be heard and determined on the return day or on such day thereafter as the court
shall fix, having regard to the speediest possible determination of the case consistent
with the rights of the parties. The judgment shall include costs in favor of the
prevailing party.
(b) Upon the failure of a taxpayer to file any return required under this chapter within
15 days of the date of a notice to the taxpayer under section 5863 of this title, whether or not a petition has been or will be filed under subsection (a) of this
section, the Commissioner may compute the tax liability of the taxpayer with respect
to which the return was required to be filed, according to the Commissioner’s best
information and belief. Upon that computation, the Commissioner shall notify the taxpayer
of his or her deficiency with respect to the payment of that tax liability, and may
assess any penalty or interest with respect thereto, under sections 3202 and 3203 of this title. (Added 1966, No. 61 (Sp. Sess.), § 1, eff. Jan. 1, 1966; amended 1973, No. 193 (Adj. Sess.), § 3, eff. April 9, 1974; 2017, No. 74, § 137.)
§ 5865. Repealed. 1991, No. 186 (Adj. Sess.), § 8(g), eff. May 7, 1992.
§ 5866. Supplemental information; changes in federal tax liability or taxable income
(a) If, after the time for filing any return required by this chapter, a taxpayer:
(1) becomes aware of any information that makes that return materially false, inaccurate,
or incomplete;
(2) is notified of any assertion by the United States, whether under 26 U.S.C. § 6212 or otherwise, that the taxpayer’s taxable income under the laws of the United States
is other than the amount stated in the return; or
(3) files an amended return under the laws of the United States, the taxpayer shall, within
180 days of the receipt of that information or notification of that assertion or filing
that amended return, notify the Commissioner thereof, and of such particulars as may
be relevant to the amount of any tax liability of the taxpayer under this chapter.
(b) Any notice required to be given to the Commissioner under this section shall be considered
to be a return for purposes of this chapter, and a taxpayer required to file any such
return shall be subject, with respect thereto, to the provisions of this chapter,
including the provisions governing fees for failure to file a return, except as those
provisions conflict with the express provisions of this section.
(c) If a change in federal tax liability results from the audit of a partnership or an
adjustment of a partnership’s taxable income under 26 U.S.C. subtitle F, chapter 63,
subchapter C, the taxpayer shall file and amend returns and pay tax owed pursuant
to section 5866a of this title. (Added 1966, No. 61 (Sp. Sess.), § 1, eff. Jan. 1, 1966; amended 2005, No. 94 (Adj. Sess.), § 4, eff. March 8, 2006; 2019, No. 175 (Adj. Sess.), § 17, eff. Oct. 8, 2020; 2021, No. 105 (Adj. Sess.), § 539, eff. July 1, 2022; 2021, No. 179 (Adj. Sess.), § 12, eff. January 1, 2022.)
§ 5866a. Reporting adjustments to federal taxable income and federal partnership audits
(a) Definitions. As used in this section:
(1) “Administrative adjustment request” means an administrative adjustment request filed
by a partnership under 26 U.S.C. § 6227.
(2) “Audited partnership” means a partnership subject to a partnership-level audit resulting
in a federal adjustment.
(3) “Corporate partner” means a partner that is subject to tax under chapter 151, subchapter
3 of this title.
(4) “Direct partner” means a partner that holds an interest directly in a partnership
or pass-through entity.
(5) “Exempt partner” means a partner that is exempt from taxation under this chapter but
not an entity with federal exempt status having taxable income under subdivision 5811(18) of this title.
(6) “Federal adjustment” means a change to an item or amount determined under the Internal
Revenue Code that is used by a taxpayer to compute tax owed, whether that change results
from action by the Internal Revenue Service, including a partnership-level audit,
or the filing of an amended federal return, federal refund claim, or an administrative
adjustment request by the taxpayer. A federal adjustment is positive to the extent
that it increases State taxable income as determined under this chapter and is negative
to the extent that it decreases State taxable income as determined under this chapter.
(7) “Federal adjustments report” includes methods or forms required by the Commissioner
for use by a taxpayer to report final federal adjustments, including an amended tax
return, information return, or uniform multistate report.
(8) “Federal partnership representative” means the person that the partnership designates
for the taxable year as the partnership’s representative or the person that the Internal
Revenue Service appoints to act as the federal partnership representative pursuant
to 26 U.S.C. § 6223(a).
(9) “Final determination date” means the following:
(A) Except as provided in subdivisions (B) and (C) of this subdivision (a)(9), if the
federal adjustment arises from an audit or other action by the Internal Revenue Service,
“final determination date” means the first day on which no federal adjustments arising
from that audit or other action remain to be finally determined, whether by Internal
Revenue Service decision with respect to which all rights of appeal have been waived
or exhausted, by agreement, or, if appealed or contested, by a final decision with
respect to which all rights of appeal have been waived or exhausted. For agreements
required to be signed by the Internal Revenue Service and the taxpayer, the “final
determination date” means the date on which the last party signed the agreement.
(B) For federal adjustments arising from an audit or other action by the Internal Revenue
Service, if the taxpayer filed as a member of an affiliated group electing to file
a consolidated return under subsection 5862(c) of this title or filed as a member of a unitary combined group under subsection 5862(d) of this title, the “final determination date” means the first day on which no related federal adjustments
arising from that audit remain to be finally determined, as described in subdivision
(A) of this subdivision (a)(9), for the entire group.
(C) If the federal adjustment results from filing an amended federal return, a federal
refund claim, or an administrative adjustment request, or if it is a federal adjustment
reported on an amended federal return or other similar report filed pursuant to 26 U.S.C. § 6225(c), the “final determination date” means the day on which the amended return, refund
claim, administrative adjustment request, or other similar report was filed.
(10) “Final federal adjustment” means a federal adjustment after the final determination
date for that federal adjustment has passed.
(11) “Indirect partner” means a partner in a partnership or pass-through entity that itself
holds an interest directly, or through another indirect partner, in a partnership
or pass-through entity.
(12) “I.R.C.” means the Internal Revenue Code of 1986, as codified under 26 U.S.C. subtitles
A–K, and applicable regulations as promulgated by the U.S. Department of the Treasury.
To the extent that the terms used in this section are not defined under this section,
it is the intent of the General Assembly to conform to the definitions and terminology
used in the amendments to the I.R.C., subtitle F, chapter 63 pertaining to the comprehensive
partnership audit regime contained in the Bipartisan Budget Act of 2015, Pub. L. No. 114-74, as amended, and this section shall be interpreted accordingly.
(13) “Nonresident partner” means an individual, trust, or estate partner that is not a
resident partner.
(14) “Partner” means a person that holds an interest, directly or indirectly, in a partnership
or other pass-through entity.
(15) “Partnership” means an entity subject to taxation under 26 U.S.C. subtitle A, chapter
1, subchapter K.
(16) “Partnership-level audit” means an examination by the Internal Revenue Service at
the partnership level pursuant to 26 U.S.C. subtitle F, chapter 63, subchapter C that
results in federal adjustments.
(17) “Pass-through entity” means an entity other than a partnership that is not subject
to tax under section 5822 or 5832 of this title.
(18) “Reallocation adjustment” means a federal adjustment resulting from a partnership-level
audit or an administrative adjustment request that changes the shares of one or more
items of partnership income, gain, loss, expense, or credit allocated to direct partners.
A positive reallocation adjustment means the portion of a reallocation adjustment
that would increase federal income for one or more direct partners, and a negative
reallocation adjustment means the portion of a reallocation adjustment that would
decrease federal income for one or more direct partners.
(19) “Resident partner” means an individual, trust, or estate partner that is a resident
under section 5811 of this title for the relevant tax period.
(20) “Reviewed year” means the taxable year of a partnership that is subject to a partnership-level
audit from which federal adjustments arise.
(21) “Taxpayer” means any person or entity required to file a return or pay tax under this
chapter and, unless the context clearly indicates otherwise, includes a partnership,
including a tiered partner of a partnership, subject to a partnership-level audit
and a partnership, including a tiered partner of a partnership, that has made an administrative
adjustment request.
(22) “Tiered partner” means any partner that is a partnership or pass-through entity.
(23) “Unrelated business taxable income” has the same meaning as in 26 U.S.C. § 512.
(b) Reporting adjustments to federal taxable income; general rule.
(1) Except in the case of final federal adjustments that are required to be reported by
a partnership and its partners using the procedures in subsection (c) of this section,
a taxpayer shall report and pay any Vermont tax due with respect to the following
final federal adjustments:
(A) arising from an audit or other action by the Internal Revenue Service;
(B) reported by the taxpayer on a timely filed amended federal income tax return, including
a return or other similar report filed pursuant to 26 U.S.C. § 6225(c)(2); or
(C) a federal claim for refund.
(2) A taxpayer shall report and pay any tax due under this subsection by filing a federal
adjustments report with the Commissioner for the reviewed year and, if applicable,
paying the additional Vermont tax owed not later than 180 days after the final determination
date.
(c) Reporting federal adjustments; partnership-level audit and administrative adjustment request. Except for negative federal adjustments required under federal law or regulations
to be taken into account by the partnership in the partnership return for the adjustment
or other year, and the distributive share of adjustments reported as required under
subsection (b) of this section, partnerships and partners shall report final federal
adjustments arising from a partnership-level audit or an administrative adjustment
request and make payments as required under this subsection (c).
(1) State partnership representative.
(A) With respect to an action required or permitted to be taken by a partnership under
this subsection and a petition for a hearing under sections 5883, 5884, or 5885 of this title with respect to that action, the State partnership representative for the reviewed
year shall have the sole authority to act on behalf of the partnership, and the partnership’s
direct partners and indirect partners shall be bound by those actions.
(B) The State partnership representative for the reviewed year is the partnership’s federal
partnership representative unless the partnership designates in writing another person
as its State partnership representative.
(C) The Commissioner may establish reasonable qualifications and procedures for designating
a person, other than the federal partnership representative, to be the State partnership
representative.
(2) Reporting and payment requirements for partnerships subject to a final federal adjustment
and their direct partners. Final federal adjustments subject to the requirements of this subsection, except for
those subject to an election that is properly made under subdivision (3) of this subsection,
shall be reported as follows:
(A) Not later than 90 days after the final determination date, the partnership shall:
(i) File a completed federal adjustments report with the Commissioner, including any other
information required by the Commissioner. The federal adjustments report shall:
(I) Identify each partner during the reviewed year.
(II) Specify each item addressed by, and the amount included in, the final federal adjustment.
(III) Explain how the final federal adjustment needs to be modified for State tax purposes
to reflect relevant differences between federal and State law.
(IV) Provide any other information related to the final determination or modification as
the Commissioner may require. If the audited partnership has received an approved
modification, the audited partnership shall notify the Commissioner of this approval
not later than 90 days after the date of approval. An audited partnership that fails
to meet the filing requirements under this subsection (c) shall be subject to the
penalties for failure to file under section 3202 of this title. The statute of limitations for assessing a partner or an audited partnership pursuant
to this section shall be tolled in any instance in which the audited partnership has
not provided the Commissioner with the notice and filing required by this subsection
(c).
(ii) Notify each of its direct partners of their distributive share of the final federal
adjustments.
(iii) File an amended composite return for direct partners as required under subsections
5914(a) and (b) and 5920(a) and (b) of this title and, as applicable, an amended withholding
return for direct partners as required under subchapter 4 of this chapter and pay
the additional tax that would have been due had the final federal adjustments been
reported properly.
(B) Not later than 180 days after the final determination date, each direct partner that
is taxed under sections 5822 and 5832 of this title shall:
(i) file a federal adjustments report reporting their distributive share of the adjustments
reported to them under subdivision (A)(ii) of this subdivision (c)(2) as required
under this chapter; and
(ii) pay any additional amount of tax that would have been due if final federal adjustments
had been reported properly, plus any penalty and interest due under section 3202 of this title, and less any credit for related amounts paid or withheld and remitted on behalf
of the direct partner under subdivision (A)(iii) of this subdivision (c)(2).
(3) Election; partnership pays. Subject to the limitations under subdivision (C) of this subdivision, an audited partnership
making an election under this subdivision shall do the following:
(A) Not later than 90 days after the final determination date, file a completed federal
adjustments report as required by subdivision (2) of this subsection (c) and notify
the Commissioner that it is making the election under this subdivision (3).
(B) Not later than 180 days after the final determination date, pay an amount, determined
as follows, in lieu of taxes owed by its direct and indirect partners:
(i) Exclude from final federal adjustments the distributive share of these adjustments
reported to a direct exempt partner not subject to tax under this chapter.
(ii) For the total distributive shares of the remaining final federal adjustments reported
to direct corporate partners subject to tax under section 5832 of this title, apportion and allocate the adjustments as provided under section 5833 of this title, and multiply the result by the highest tax rate imposed under section 5832 of this title.
(iii) For the total distributive shares of the remaining final federal adjustments reported
to nonresident direct partners subject to tax under this chapter, determine the amount
of the adjustments that is Vermont-source income, and multiply the result by the highest
tax rate imposed under section 5822 of this title.
(iv) For the total distributive shares of the remaining final federal adjustments reported
to tiered partners:
(I) Determine the amount of the adjustments that is of a type that it would be subject
to sourcing to Vermont under this chapter and then determine the portion of the amount
that would be sourced to Vermont.
(II) Determine the amount of the adjustments that is of a type that it would not be subject
to sourcing to Vermont by a nonresident partner under this chapter.
(III) Determine the portion of the amount determined in subdivision (iv)(II) of this subdivision
(3)(B) that can be established as properly allocable to nonresident indirect partners
or other partners not subject to tax on the adjustments or that can be excluded under
procedures for modified reporting and payment method allowed under subdivision (5)
of this subsection (c).
(v) Multiply the total of the amounts determined in subdivisions (iv)(I) and (iv)(II)
of this subdivision (3)(B) reduced by the amount determined in subdivision (iv)(III)
of this subdivision (3)(B) by the highest tax rate under section 5822 of this title.
(vi) For the total distributive shares of the remaining final federal adjustments reported
to resident direct partners subject to tax under section 5822 of this title, multiply the amount reported by the highest tax rate under section 5822 of this title.
(vii) Add the amounts determined in subdivisions (ii), (iii), (v), and (vi) of this subdivision
(3)(B), along with penalty and interest as calculated under subsection 3202(a) and
subdivisions 3202(b)(2) and (b)(3) of this title.
(C) Final federal adjustments subject to the election under this subdivision (c)(3) exclude:
(i) the distributive share of final audit adjustments that, under subsection 5862(d) of this title, must be included in the unitary combined business income of any direct or indirect
corporate partner, provided that the audited partnership can reasonably determine
this; and
(ii) any final federal adjustments resulting from an administrative adjustment request.
(D) An audited partnership that is not otherwise subject to any reporting or payment obligations
to Vermont and that makes an election under this subdivision (c)(3), consents to be
subject to Vermont laws related to reporting, assessment, payment, and collection
of Vermont tax calculated under the election.
(4) Tiered partners. The direct and indirect partners of an audited partnership that are tiered partners,
and all partners of those tiered partners that are subject to tax under this chapter,
are subject to the reporting and payment requirements of subdivision (2) of this subsection,
and the tiered partners are entitled to make the elections provided in subdivisions
(3) and (5) of this subsection. The tiered partners or their partners shall make required
reports and payments not later than 90 days after the time for filing and furnishing
statements to tiered partners and their partners as established under 26 U.S.C. § 6226 and the associated regulations. The Commissioner may adopt rules to establish procedures
and interim time periods for the reports and payments required by tiered partners
and their partners and for making the elections under this subsection.
(5) Alternative reporting and payment methods.
(A) Pursuant to any procedures established by the Commissioner, an audited partnership
or tiered partner may request approval by the Commissioner to utilize alternative
reporting and payment methods, including modifying applicable time requirements and
any other requirement of this subsection (c), provided that:
(i) the audited partnership or tiered partner demonstrates to the Commissioner’s satisfaction
that the requested method will reasonably provide for the reporting and payment of
taxes, penalties, and interest due under this subsection (c); or
(ii) the audited partnership or tiered partner establishes to the Commissioner’s satisfaction
that their direct partners have agreed to allow a refund of the State tax to the entity.
(B) A request for approval of alternative reporting and payment methods by the Commissioner
shall be made by the audited partnership or tiered partner within the time for election
provided in subdivision (3) or (4) of this subsection (c), as applicable.
(6) Effect of election by audited partnership or tiered partner and payment of amount
due.
(A) The election made pursuant to subdivision (3) or (5) of this subsection (c) is irrevocable
unless the Commissioner, at the Commissioner’s discretion, determines otherwise.
(B) If reported properly and paid by the audited partnership or tiered partner, the amount
determined under subdivision (3)(B) of this subsection (c) or under an optional election
under subdivision (5) of this subsection (c) shall be treated as paid in lieu of taxes
owed by its direct and indirect partners, to the extent applicable, on the same final
federal adjustments. The direct or indirect partners shall not be eligible to take
any deduction or credit for this amount or claim a refund of the amount in this State.
Nothing in this subdivision (6) shall preclude a direct resident partner from claiming
a credit against taxes paid or any amounts paid by the audited partnership or tiered
partner on the resident partner’s behalf to another state or local tax jurisdiction
pursuant to section 5825 of this title.
(7) Failure of audited partnership or tiered partner to report or pay. Nothing in this subsection prevents the Commissioner from using the best information
available to assess a direct or indirect partner for taxes owed by those partners
if a partnership or tiered partner fails, for any reason, to make any report or payment
required by this subsection in a timely manner.
(d) De minimis exception. The Commissioner may, at the Commissioner’s discretion, adopt rules to establish a
de minimis amount below which a taxpayer shall not be required to comply with subsections
(b) and (c) of this section.
(e) Assessments of additional tax, interest, and penalties arising from adjustments to federal taxable income; statute of limitations. The Commissioner shall assess additional tax, interest, and penalties arising from
final federal adjustments arising from an audit by the Internal Revenue Service, including
a partnership-level audit, as reported by the taxpayer on an amended federal income
tax return, or as part of an administrative adjustment request, by the following dates:
(1) Timely reported federal adjustments. If a taxpayer files with the Commissioner a federal adjustments report or an amended
tax return as required within the period prescribed in subsection (b) or (c) of this
section, the Commissioner may assess any amounts, including in-lieu-of amounts, taxes,
interest, and penalties arising from those federal adjustments, if a notice of the
assessment to the taxpayer is issued not later than:
(A) the expiration of the limitations period prescribed in section 5882 of this title; or
(B) the expiration of the one-year period following the date of filing the federal adjustments
report with the Commissioner.
(2) Untimely reported federal adjustments. If the taxpayer fails to file the federal adjustments report within the period prescribed
in subsection (b) or (c) of this section, as appropriate, or if the federal adjustments
report filed by the taxpayer omits final federal adjustments or understates the correct
amount of tax owed, the Commissioner may assess amounts or additional amounts, including
in-lieu-of amounts, taxes, interest, and penalties arising from the final federal
adjustments, if the Commissioner mails a notice of the assessment to the taxpayer
by a date that is the latest of one of the following:
(A) the expiration of the limitations period prescribed in section 5882 of this title;
(B) the expiration of the one-year period following the date of filing the federal adjustments
report with the Commissioner; or
(C) absent fraud, the expiration of the six-year period following the final determination
date.
(f) Estimated tax payments made during a pending federal audit. A taxpayer may make estimated payments, according to the process prescribed by the
Commissioner, of the tax expected to result from a pending Internal Revenue Service
audit and prior to the due date of the federal adjustments report, without filing
the report with the Commissioner. The estimated tax payments shall be credited against
the final Vermont tax liability and shall limit the accrual of further statutory interest
on that amount. If the estimated tax payments exceed the final Vermont tax liability
and statutory interest ultimately determined to be due, the taxpayer is entitled to
a refund or credit for the excess, provided the taxpayer files a federal adjustments
report or claim for refund or credit of tax paid pursuant to section 5884 of this title, not later than one year following the final determination date. As used in this
subsection, “final Vermont tax liability” means the amount of any Vermont tax liability
ultimately found to be due to the State.
(g) Claims for refund or credits of tax paid arising from final federal adjustments made
by the Internal Revenue Service or by administrative adjustment request.
(1) Except for negative federal adjustments required by federal law to be taken into account
by the partnership in the partnership return for the adjustment or other year, a taxpayer
may file a claim for refund or credit of tax paid arising from final federal adjustments
on or before the later of:
(A) the expiration of the last day for filing a claim for refund or credit of tax paid
pursuant to section 5884 of this title, including any extensions; or
(B) one year from the date a federal adjustments report prescribed in subsection (b) or
(c) of this section, as applicable, was due to the Commissioner, including any extensions
pursuant to subsection (h) of this section.
(2) The federal adjustments report shall serve as the means for the taxpayer, including
a partnership and its tiered partners, direct partners, and indirect partners, to
report additional tax due, report a claim for refund or credit of tax paid, and make
other adjustments, including to its net operating losses, resulting from adjustments
to the taxpayer’s federal taxable income. Any refund granted to the partnership under
subsection (c) of this section shall be in lieu of State tax paid that may be owed
to the partners.
(h) Scope of adjustments and extensions of time.
(1) Unless otherwise agreed in writing by the taxpayer and the Commissioner, any adjustments
made by the Commissioner or the taxpayer after the expiration of the limitations periods
prescribed in sections 5882 and 5884 of this title are limited to changes to the taxpayer’s tax liability arising from federal adjustments.
(2) The time periods provided for in this subsection may be extended:
(A) automatically by 60 days for an audited partnership or tiered partner that has 10,000
or more direct partners, upon written notice to the Commissioner; or
(B) by written agreement between the taxpayer and the Commissioner.
(3) Any extension granted under this subsection for filing the federal adjustments report
extends the last day prescribed by law for assessing any additional tax arising from
the adjustments to federal taxable income and the period for filing a claim for refund
or credit of taxes.
(i) Commissioner’s rule-making authority. The Commissioner may adopt rules or issue other guidance to implement or explain the
provisions of this section. The rules adopted or guidance issued with regard to this
section may apply the principles set forth in 26 U.S.C. subtitle F, chapter 63, subchapter
C; federal regulations; and other related guidance issued by the U.S. Department of
the Treasury in order to prevent the omission or duplication of State tax due as the
result of a partnership-level audit and to account for differences between federal
and State law. (Added 2021, No. 179 (Adj. Sess.), § 13, eff. January 1, 2022; amended 2023, No. 6, § 380, eff. July 1, 2023.)
§ 5867. Form and verification of returns
The returns required to be filed under this chapter shall be in such form and manner
as the Commissioner prescribes in order to ensure payment of the taxes imposed by
this chapter and shall be filed at the main office of the Department of Taxes. Those
returns shall be verified by written declarations that the statements therein are
made subject to the pains and penalties of perjury. When a return is made by a corporation,
the person signing it shall be considered to be the person who is subject to the pains
and penalties of perjury. The Commissioner shall cause to be prepared blank forms
for the returns and shall cause them to be distributed throughout the State and to
be furnished upon application, but failure to secure or receive such a form shall
not relieve a taxpayer from the obligation of filing any return herein required. (Added 1966, No. 61 (Sp. Sess.), § 1, eff. Jan. 1, 1966.)
§ 5868. Extension of time for filing of returns
The Commissioner may extend the time within which a taxpayer is required to file a
return. The Commissioner shall extend the time for filing a taxpayer’s Vermont income
tax return to the extended date for filing the United States income tax return if
the taxpayer has been granted either an automatic or a good cause extension of time
for filing the United States income tax return, except that the time for filing a
corporation’s Vermont income tax return shall be extended to one month after the extended
date for filing the United States income tax return. An extension of the time in which
to file a return will not result in a corresponding extension of the time for the
payment of the tax liability with respect to which the return is filed. (Added 1966, No. 61 (Sp. Sess.), § 1, eff. Jan. 1, 1966; amended 1979, No. 105 (Adj. Sess.), § 6; 1981, No. 191 (Adj. Sess.), § 7; 1989, No. 222 (Adj. Sess.), § 11, eff. May 31, 1990; 1991, No. 67, § 5, eff. June 19, 1991; 2019, No. 175 (Adj. Sess.), § 18, eff. Oct. 8, 2020.)
§ 5869. Repealed. 1997, No. 156 (Adj. Sess.), § 37.
§ 5870. Reporting use tax on individual income tax returns
(a) The Commissioner of Taxes shall provide that individuals report use tax on their State
individual income tax returns. Taxpayers are required to attest to the amount of their
use tax liability under chapter 233 of this title for the period of the tax return.
Alternatively, they may elect to report an amount that is a percentage of their adjusted
gross income determined under subsection (b) of this section, and use tax liability
arising from the purchase of each item with a purchase price in excess of $1,000.00
shall be added to the table amount shown under subsection (b) of this section.
(b) The amount of use tax a taxpayer may elect to report under subsection (a) of this
section shall be based on the taxpayer’s adjusted gross income as determined by the
following tables; provided, however, that a taxpayer shall not be required to pay
more than $150.00 for use tax liability under this subsection arising from total purchases
of items with a purchase price of $1,000.00 or less.
| If adjusted gross income is: |
The tax is: |
| Not over $20,000.00 |
$ 0.00 |
| $20,001.00 to $30,000.00 |
$10.00 |
| $30,001.00 to $40,000.00 |
$15.00 |
| $40,001.00 to $50,000.00 |
$20.00 |
| $50,001.00 to $60,000.00 |
$25.00 |
| $60,001.00 to $70,000.00 |
$30.00 |
| $70,001.00 to $80,000.00 |
$35.00 |
| $80,001.00 to $90,000.00 |
$40.00 |
| $90,001.00 to $100,000.00 |
$45.00 |
| $100,001.00 and over |
the lesser of $150.00 or 0.05% of adjusted gross income |
(Added 2003, No. 68, § 35, eff. June 18, 2003; amended 2009, No. 160 (Adj. Sess.), § 37; 2013, No. 174 (Adj. Sess.), § 33, eff. Jan. 1, 2015; 2015, No. 57, § 95, eff. Jan. 1, 2016; 2015, No. 57, § 96, eff. Jan. 1, 2017; 2017, No. 73, § 20, eff. Jan. 1, 2017; 2019, No. 175 (Adj. Sess.), § 8, eff. Jan. 1, 2020.)
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Subchapter 008: DEFICIENCIES, ASSESSMENTS, REFUNDS, AND APPEALS
§ 5881. Repealed. 1997, No. 156 (Adj. Sess.), § 37.
§ 5882. Time limitation on notices of deficiency and assessment of penalty and interest
(a) The Commissioner may notify a taxpayer of a deficiency with respect to the payment
of any tax liability, or assess a penalty or interest with respect thereto, in accordance
with section 3202 of this title, at any time within three years after the date that tax liability was originally
required to be paid under this chapter.
(b) Notwithstanding subsection (a) of this section:
(1) If the taxpayer fails to file a proper return with respect to any tax liability at
the time prescribed for its filing, the notification or assessment may be made at
any time before the end of three years after the taxpayer files such a return.
(2) If the deficiency is caused by reason of fraud or the willful intent of the taxpayer
to defeat or evade this chapter, the notification or assessment may be made at any
time.
(3) If the notice of deficiency or assessment is founded upon an assertion or determination
by the United States that the taxable income, or income tax liability, of the taxpayer
under the laws of the United States is greater than the amount of the taxable income
or income tax liability reported on any return of the taxpayer filed under the laws
of the United States, the notification or assessment under section 3203 of this title may be made within the time prescribed under subsection (a) of this section, or at
any time before the expiration of six months after the date the Commissioner is notified,
in writing, by the taxpayer or by the United States of the federal assertion or determination,
whichever period is the later to expire.
(4) If the taxpayer and Commissioner agree, the notification or assessment may be made
at any time before the date so agreed upon.
(5) If a person withholds tax under subchapter 4 of this chapter but underreports the
tax withheld by 20 percent or more, the notification or assessment may be made at
any time before the expiration of six years from the date of the filing of such return.
(6) If the notice or deficiency is based upon a refund that was paid in error, the notification
or assessment under section 3203 of this title may be made within the time prescribed under subsection (a) of this section or at
any time before the expiration of one year after the date the refund was paid, whichever
period is the later to expire. (Added 1966, No. 61 (Sp. Sess.), § 1, eff. Jan. 1, 1966; amended 1989, No. 119, § 13, eff. June 22, 1989; 2007, No. 190 (Adj. Sess.), § 21, eff. June 6, 2008.)
§ 5883. Determination of deficiency, refund, or assessment
Upon receipt of a notice of deficiency, of denial or reduction of a refund claim,
or of assessment of penalty or interest under section 3203 of this title, the taxpayer may, within 60 days after the date of mailing of the notice or assessment,
petition the Commissioner in writing for a determination of that deficiency, refund,
or assessment. The Commissioner shall thereafter grant a hearing upon the matter and
notify the taxpayer in writing of his or her determination concerning the deficiency,
refund, or assessment. (Added 1966 (Sp. Sess.), § 1, eff. Jan. 1, 1966; amended 1975, No. 154 (Adj. Sess.), § 1, eff. date, see note set out below; 1979, No. 105 (Adj. Sess.), § 12; 1989, No. 222 (Adj. Sess.), § 34; 2007, No. 190 (Adj. Sess.), § 22, eff. June 6, 2008; 2013, No. 73, § 23, eff. June 5, 2013.)
§ 5884. Refunds; petitions for refunds
(a) At any time within three years after the date a return is required to be filed under
this chapter, six months from the date a tax liability is paid or offset, or six months
after a refund was received from the United States with respect to an income tax liability,
or an amount of taxable income, under the laws of the United States, reported in a
return filed under the laws of the United States for the taxable year, with respect
to which that return was filed under this chapter, whichever is later, a taxpayer
may petition the Commissioner for the refund of all or any part of the amount of tax
paid. Unless the period is extended by agreement of the Commissioner and the taxpayer,
the Commissioner shall thereafter, upon notice to the taxpayer, hold a hearing on
the claim and shall notify the taxpayer of his or her determination of the claim within
30 days of the hearing. The failure of the Commissioner to refund the amount claimed
by a taxpayer within six months of the date of the petition for the refund, under
this subsection, shall be considered to be a notification to the taxpayer of the Commissioner’s
determination concerning the claim. The notification shall be considered to have been
given on the date of the expiration of the six-month period.
(b) If the Commissioner determines, with respect to a timely filed return or otherwise,
that a taxpayer has paid an amount of tax under this chapter that, as of the date
of the determination, exceeds the amount of tax liability owing from the taxpayer
to the State, with respect to the current and all preceding taxable years, under any
provision of this title, the Commissioner shall forthwith refund the excess amount
to the taxpayer together with interest at the rate per annum established from time
to time by the Commissioner pursuant to section 3108 of this title. That interest shall be computed from 45 days after the date the return was filed
or from 45 days after the date the return was due, including any extensions of time
thereto, with respect to which the excess payment was made, whichever is the later
date.
(c) Notwithstanding subsection (b) of this section, in the case of a refund claimed on
a return that is filed after the last date prescribed for filing such return, including
any extensions of time thereto, or claimed on an amended return, the interest on the
excess amount to be refunded by the Commissioner to the taxpayer shall be computed
from 45 days after the date the late or amended return is filed.
(d) Notwithstanding subsection (a) of this section, a report required by subsection 5842(c) of this title may be amended after the due date of such report only for an administrative error.
An administrative error is one that does not change the amount of tax withheld. (Added 1966, No. 61 (Sp. Sess.), § 1, eff. Jan. 1, 1966; amended 1971, No. 73, § 21, eff. April 16, 1971; 1979, No. 105 (Adj. Sess.), § 48, see change of interest rate note set out below; 1983, No. 59, § 4, eff. April 22, 1983; 2003, No. 68, § 81, eff. June 18, 2003; 2011, No. 45, § 3, eff. May 24, 2011; 2019, No. 175 (Adj. Sess.), § 15, eff. Oct. 8, 2020.)
§ 5885. Procedure for hearings by Commissioner; appeals
(a) Any hearing granted by the Commissioner under section 5883 or 5884 of this title shall be subject to and governed by 3 V.S.A. chapter 25.
(b) Any aggrieved taxpayer may, within 30 days after a determination by the Commissioner
concerning a notice of deficiency, an assessment of penalty or interest, or a claim
to refund, appeal that determination to the Washington Superior Court or the Superior
Court of the county in which the taxpayer resides or has a place of business. (Added 1966, No. 61 (Sp. Sess.), § 1, eff. Jan. 1, 1966; amended 1971, No. 185 (Adj. Sess.), § 224, eff. March 29, 1972; 1973, No. 193 (Adj. Sess.), § 3, eff. April 9, 1974; 1979, No. 105 (Adj. Sess.), § 13; 1997, No. 50, § 20, eff. June 26, 1997.)
§ 5886. Payment and collection of deficiencies and assessments; jeopardy notices
(a) Upon notification to a taxpayer of any deficiency, and upon assessment against the
taxpayer of any penalty or interest, under sections 3202 and 3203 of this title, the amount of the assessment shall be payable immediately and the amount of the
deficiency and assessment shall be collectible by the Commissioner 60 days after the
date of the notification or assessment. The collection by the Commissioner of the
deficiency, penalty, or interest shall be stayed:
(1) if the taxpayer files a petition for determination by the Commissioner in accordance
with section 5883 of this title, collection shall be stayed until 30 days after the notification of the taxpayer
of the determination;
(2) if within 30 days of the notification of determination the taxpayer files a notice
of appeal, collection shall be stayed pending judgment of the court upon the appeal;
and
(3) under such further circumstances and upon such terms as the Commissioner prescribes.
(b) Notwithstanding subsection (a) of this section, the Commissioner, if he or she believes
the collection from a taxpayer of any deficiency, penalty, or interest to be in jeopardy,
may demand, in writing, that the taxpayer pay the deficiency, penalty, or interest
forthwith. The demand may be made concurrently with, or after, the notice of deficiency
or the assessment of penalty, or interest given to the taxpayer under sections 3202 and 3203 of this title. The amount of deficiency, penalty, or interest shall be collectible by the Commissioner
on the date of the demand, unless the taxpayer files with the Commissioner a bond
in an amount equal to the deficiency, penalty, or interest sought to be collected
as security for such amount as finally may be determined. In the event that it is
finally determined that the taxpayer was not liable for the amount of the deficiency,
penalty, or interest referred to in any demand under this subsection, the Commissioner
shall reimburse the taxpayer promptly upon such determination for the reasonable cost
to the taxpayer of any bond obtained by him or her for the purposes of this subsection. (Added 1966, No. 61 (Sp. Sess.), § 1, eff. Jan. 1, 1966; amended 1971, No. 185 (Adj. Sess.), § 225, eff. March 29, 1972; 1979, No. 105 (Adj. Sess.), § 14; 1995, No. 29, § 23, eff. April 14, 1995; 2017, No. 74, § 138; 2021, No. 105 (Adj. Sess.), § 540, eff. July 1, 2022.)
§ 5887. Remedy exclusive; determination final
(a) The exclusive remedy of a taxpayer with respect to the refund of monies paid in connection
with a return filed under this chapter shall be the petition for refund provided under
section 5884 of this title and the appeal from an adverse determination of the petition for refund provided
under section 5885 of this title. The exclusive remedy of a taxpayer with respect to a notification of deficiency
or assessment of penalty or interest under sections 3202 and 3203 of this title shall be the petition for determination of the deficiency or assessment provided
under section 5883 of this title and the appeal from an adverse determination of deficiency or assessment provided
under section 5885 of this title.
(b) Upon the failure of a taxpayer to petition in accordance with section 5883 of this title from a notice of deficiency or assessment under sections 3202 and 3203 of this title, or to appeal in accordance with section 5885 of this title from a determination of a deficiency or assessment of tax liability under section 5883 of this title, the taxpayer shall be bound by the terms of the notification, assessment, or determination,
as the case may be. The taxpayer shall not thereafter contest, either directly or
indirectly, the tax liability as therein set forth in any proceeding, including a
proceeding upon a claim of refund of all or any part of any payment made with respect
to the tax liability or a proceeding for the enforcement or collection of all or any
part of the tax liability.
(c) Notwithstanding subsections (a) and (b) of this section, the Commissioner may compromise
a tax liability arising under this title upon the grounds of doubt as to liability
or doubt as to collectibility, or both. Upon acceptance by the Commissioner of an
offer in compromise, the liability of the taxpayer in question is conclusively settled,
and neither the taxpayer nor the Commissioner may reopen the case except by reason
of falsification or concealment of assets by the taxpayer or mutual mistake of a material
fact or if, in the opinion of the Commissioner, justice requires it. The decision
of the Commissioner to reject an offer in compromise is not subject to review. The
Commissioner may adopt rules regarding the procedures to be followed for the submission
and consideration of offers in compromise. (Added 1966, No. 61 (Sp. Sess.), § 1, eff. Jan. 1, 1966; amended 2011, No. 45, § 36f, eff. May 24, 2011; 2017, No. 74, § 139.)
§ 5888. Determination of taxable income and income tax liability under the laws of the United
States
For purposes of this chapter, a taxpayer’s taxable income or income tax liability
under the laws of the United States shall be determined by reference to the judicial
decisions and administrative rulings of the United States.
(1) A determination by the United States that establishes the amount of a taxpayer’s taxable
income or income tax liability under the laws of the United States for any taxable
year shall be binding on the taxpayer and the State in calculating the taxpayer’s
liability to Vermont under this chapter. As used in this section, “determination
by the United States” means:
(A) a decision by the Tax Court of the United States or a judgment, decree, or other order
by any U.S. court of competent jurisdiction that has become final;
(B) a closing agreement under 26 U.S.C. § 7121; or
(C) an agreement executed under 26 U.S.C. § 1313(a)(4).
(2) For any taxable year, the payment to the United States by any taxpayer of an aggregate
amount of income tax, whether by withholding or otherwise; whether under a claim of
deficiency, demand or otherwise; and whether under protest or otherwise, shall be
prima facie evidence, for purposes of this chapter, that such aggregate amount, less
any refunds received by the taxpayer from the United States with respect to his or
her income tax payments for that year, constitutes the income tax liability of the
taxpayer for that taxable year under the laws of the United States, and that the items
of income, deductions, exemptions, and credits with respect to which the income tax
liability was calculated are the items of income, deductions, exemptions, and credits
of the taxpayer for that taxable year under the laws of the United States.
(3) For purposes of this section, the affidavit of any U.S. District Director of Internal
Revenue that a taxpayer:
(A) has paid a specified aggregate amount of income tax;
(B) has received a specified amount of refund with respect to the taxpayer’s income tax
payments; or
(C) has paid any amount of tax calculated with respect to specified items of income, deductions,
exemptions, or credits, shall be prima facie evidence of the truth of those matters
set forth in the affidavit.
(4) Notwithstanding any other provision of law:
(A) Any adjustments made to basis or deductions taken under the laws of the United States
in connection with the claiming of a federal tax credit shall also be made for the
calculation of Vermont tax, whether or not such federal credit is available to the
taxpayer in the determination of the amount of the taxpayer’s Vermont tax.
(B) The amount of any Vermont net operating loss shall be available to a taxpayer as a
carryforward in the 10 years following the loss year. (Added 1966, No. 61 (Sp. Sess.), § 1, eff. Jan. 1, 1966; amended 1971, No. 73, § 22, eff. April 16, 1971; 1983, No. 206 (Adj. Sess.), § 2, eff. April 26, 1984; 1985, No. 262 (Adj. Sess.), § 4, eff. June 4, 1986; 1991, No. 32, § 33, eff. May 18, 1991; 1993, No. 89, § 13; 2005, No. 207 (Adj. Sess.), § 17, eff. May 31, 2006; 2021, No. 105 (Adj. Sess.), § 541, eff. July 1, 2022.)
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Subchapter 011J: VERMONT DOWNTOWN AND VILLAGE CENTER TAX CREDIT PROGRAM
§ 5930aa. Definitions
As used in this subchapter:
(1) “Qualified applicant” means an owner or lessee of a qualified building involving a
qualified project but does not include a State or federal agency or a political subdivision
of either or an instrumentality of the United States.
(2) “Qualified building” means a building built at least 30 years before the date of application,
located within a designated downtown, village center, or neighborhood development
area, which, upon completion of the project supported by the tax credit, will be an
income-producing building not used solely as a single-family residence. Churches and
other buildings owned by religious organization may be qualified buildings, but in
no event shall tax credits be used for religious worship.
(3) “Qualified code improvement project” means a project:
(A) to install or improve platform lifts suitable for transporting personal mobility devices,
limited use or limited application elevators, elevators, sprinkler systems, and capital
improvements in a qualified building, and the installations or improvements are required
to bring the building into compliance with the statutory requirements and rules regarding
fire prevention, life safety, and electrical, plumbing, and accessibility codes as
determined by the Department of Public Safety;
(B) to abate lead paint conditions or other substances hazardous to human health or safety
in a qualified building; or
(C) to redevelop a contaminated property in a designated downtown, village center, or
neighborhood development area under a plan approved by the Secretary of Natural Resources
pursuant to 10 V.S.A. § 6615a.
(4) “Qualified expenditures” means construction-related expenses of the taxpayer directly
related to the project for which the tax credit is sought but excluding any expenses
related to a private residence.
(5) “Qualified façade improvement project” means the rehabilitation of the Façade of a qualified building that contributes to the integrity of the designated downtown, designated village center, or neighborhood development area. Façade improvements to qualified buildings listed, or eligible for listing, in the State or National Register of Historic Places must be consistent with Secretary of the Interior Standards, as determined by the Vermont Division for Historic Preservation.
(6) “Qualified Flood Mitigation Project” means any combination of structural and nonstructural
changes to a qualified building that reduces or eliminates flood damage to the building
or its contents. This may include relocation of HVAC, electrical, plumbing, and other
building systems, and equipment above the flood level; repairs or reinforcement of
foundation walls, including flood gates; or elevation of an entire eligible building
above the flood level. Further eligible projects may be defined via program guidance.
The project shall comply with the municipality’s adopted flood hazard bylaw, if applicable,
and a certificate of completion shall be submitted by a registered engineer, architect,
qualified contractor, or qualified local official to program staff. Improvements to
qualified buildings listed, or eligible for listing, in the State or National Register
of Historic Places shall be consistent with Secretary of the Interior’s Standards
for Rehabilitation, as determined by the Vermont Division for Historic Preservation.
(7) “Qualified historic rehabilitation project” means an historic rehabilitation project
that has received federal certification for the rehabilitation project.
(8) “Qualified project” means a qualified code improvement, qualified façade improvement, or qualified historic rehabilitation project as defined by this subchapter.
(9) “State Board” means the Vermont Downtown Development Board established pursuant to
24 V.S.A. chapter 76A. (Added 2005, No. 183 (Adj. Sess.), § 12; amended 2013, No. 199 (Adj. Sess.), §§ 8, 9; 2015, No. 57, § 71, eff. June 11, 2015; 2019, No. 71, § 4; 2019, No. 131 (Adj. Sess.), § 294; 2021, No. 182 (Adj. Sess.), § 5, eff. July 1, 2022; 2023, No. 181 (Adj. Sess.), § 69, eff. June 17, 2024.)
§ 5930bb. Eligibility and administration
(a) Qualified applicants may apply to the State Board to obtain the tax credits provided
by this subchapter for a qualified project at any time before the completion of the
qualified project.
(b) To qualify for any of the tax credits under this subchapter, expenditures for the
qualified project must exceed $5,000.00.
(c) Application shall be made in accordance with the guidelines set by the State Board.
(d) Beginning on July 1, 2025, under this subchapter no new tax credit may be allocated
by the State Board to a qualified building located in a neighborhood development area
unless specific funds have been appropriated for that purpose. (Added 2005, No. 183 (Adj. Sess.), § 12; amended 2011, No. 143 (Adj. Sess.), § 22; 2013, No. 199 (Adj. Sess.), § 10; 2017, No. 69, § H.9, eff. June 28, 2017; 2021, No. 182 (Adj. Sess.), § 6, eff. July 1, 2022; 2023, No. 6, § 381, eff. July 1, 2023; 2023, No. 181 (Adj. Sess.), § 70, eff. June 17, 2024.)
§ 5930cc. Downtown and Village Center Program tax credits
(a) Historic rehabilitation tax credit. The qualified applicant of a qualified historic rehabilitation project shall be entitled,
upon the approval of the State Board, to claim against the taxpayer’s State individual
income tax, corporate income tax, or bank franchise or insurance premiums tax liability
a credit of 10 percent of qualified rehabilitation expenditures as defined in 26 U.S.C. § 47(c), properly chargeable to the federally certified rehabilitation.
(b) Façade improvement tax credit. The qualified applicant of a qualified façade improvement project shall be entitled, upon the approval of the State Board, to claim against the taxpayer’s State individual income tax, State corporate income tax, or bank franchise or insurance premiums tax liability a credit of 25 percent of qualified expenditures up to a maximum tax credit of $25,000.00.
(c) Code improvement tax credit. The qualified applicant of a qualified code improvement project shall be entitled,
upon the approval of the State Board, to claim against the taxpayer’s State individual
income tax, State corporate income tax, or bank franchise or insurance premiums tax
liability a credit of 50 percent of qualified expenditures up to a maximum tax credit
of $12,000.00 for installation or improvement of a platform lift, a maximum credit
of $60,000.00 for the installation or improvement of a limited use or limited application
elevator, a maximum tax credit of $75,000.00 for installation or improvement of an
elevator, a maximum tax credit of $50,000.00 for installation or improvement of a
sprinkler system, and a maximum tax credit of $100,000.00 for the combined costs of
all other qualified code improvements.
(d) Flood Mitigation Tax Credit. The qualified applicant of a qualified flood mitigation project shall be entitled,
upon the approval of the State Board, to claim against the taxpayer’s State individual
income tax, State corporate income tax, or bank franchise or insurance premiums tax
liability a credit of 50 percent of qualified expenditures up to a maximum tax credit
of $100,000.00. (Added 2005, No. 183 (Adj. Sess.), § 12; amended 2013, No. 199 (Adj. Sess.), § 11; 2015, No. 57, § 72, eff. June 11, 2015; 2019, No. 71, § 4; 2021, No. 105 (Adj. Sess.), § 548, eff. July 1, 2022; 2021, No. 182 (Adj. Sess.), § 10, eff. July 1, 2022; 2023, No. 181 (Adj. Sess.), § 71, eff. June 17, 2024.)
§ 5930dd. Claims; availability
(a) A taxpayer claiming credit under this subchapter shall submit to the Department of
Taxes with the first return on which a credit is claimed a copy of the State Board’s
tax credit allocation.
(b) A credit under this subchapter shall be available for the first tax year in which
the qualified project is complete. In the alternative, the State Board may allocate
the credit available under this subchapter and make an allocation available upon completion
of any distinct phase of a qualified project. The allocation and distinct phases of
the qualified project shall be identified in the application package approved by the
State Board.
(c) If within three years after the date of the credit allocation to the applicant no
claim for tax credit has been filed, the tax credit allocation shall be rescinded,
unless the project has an approved federal application for a phased (60 month) project
pursuant to Treasury Regulation § 1.48-12(b)(2)(v), in which case the credit will not be rescinded until five years from the date of
the credit allocation.
(d) Any unused credit under this section may be carried forward for no more than nine
tax years following the first year for which the tax credit is claimed.
(e) In lieu of using a tax credit to reduce its own tax liability, an applicant may request
the credit in the form of a bank credit certificate that a bank may accept in return
for cash or may accept for adjusting the rate or term of the applicant’s mortgage
or loan related to an ownership or leasehold interest in the qualified building. The
amount of the bank credit certificate shall equal the unused portion of the credit
allocated under this subchapter, and an applicant requesting a bank credit certificate
shall provide to the State Board a copy of any returns on which any portion of the
allocated credit under this section was claimed. A bank that purchases a bank credit
certificate may use it to reduce its franchise tax liability under section 5836 of this title in the first tax year in which the qualified building is placed back in service after
completion of the qualified project or in the subsequent nine years.
(f) In lieu of using a tax credit to reduce its own tax liability, an applicant may request
the credit in the form of an insurance credit certificate that an insurance company
may accept in return for cash and for use in reducing its tax liability under chapter
211, subchapter 7 of this title in the first tax year in which the qualified building
is placed back in service after completion of the qualified project or in the subsequent
nine years. The amount of the insurance credit certificate shall equal the unused
portion of the credit allocated under this subchapter, and an applicant requesting
an insurance credit certificate shall provide to the State Board a copy of any returns
on which any portion of the allocated credit under this section was claimed. (Added 2005, No. 183 (Adj. Sess.), § 12; amended 2009, No. 160 (Adj. Sess.), § 30; 2011, No. 45, § 18, eff. May 24, 2011; 2019, No. 71, § 4.)
§ 5930ee. Limitations
Beginning in fiscal year 2010 and thereafter, the State Board may award tax credits
to all qualified applicants under this subchapter, provided that:
(1) the total amount of tax credits awarded annually, together with sales tax reallocated
under section 9819 of this title, does not exceed $3,000,000.00;
(2) a total annual allocation of no more than 30 percent of these tax credits in combination
with sales tax reallocation may be awarded in connection with all of the projects
in a single municipality;
(3) façade tax credits shall not be available for projects that qualify for the federal rehabilitation tax credit;
(4) no credit shall be allowed under this subchapter for the cost of acquiring any building
or interest in a building;
(5) credit under any one subsection of 5930cc of this subchapter may not be allocated
more often than once every two years with respect to the same building; and
(6) credit awarded under section 5930cc of this subchapter that is rescinded or recaptured
by the State Board shall be available for the State Board to award to applicants in
any subsequent year, in addition to the total amount of tax credits authorized under
this section. (Added 2005, No. 183 (Adj. Sess.), § 12; amended 2007, No. 81, § 23, eff. June 11, 2007; 2009, No. 54, § 29, eff. June 1, 2009; 2011, No. 45, § 19, eff. May 24, 2011; 2013, No. 174 (Adj. Sess.), § 35; 2017, No. 69, § H.8, eff. June 28, 2018; 2019, No. 71, § 4; 2019, No. 154 (Adj. Sess.), § E.802, eff. Oct. 2, 2020.)
§ 5930ff. Recapture
If, within five years after completion of the qualified project, either of the following
events occurs, the applicant shall be liable for a recapture penalty in an amount
equal to the total tax credit claimed plus an amount equal to any value received from
a bank for a bank or insurance credit certificate, and any credit allocated but unclaimed
shall be disallowed to the applicant:
(1) The State Board finds that any work performed on the qualified project is inconsistent
with the approved application; or the applicant knowingly failed to supply any information,
or supplied incorrect or untrue information required by the State Board, or failed
to comply with any award condition required by the State Board.
(2) The National Park Service revoked certification for unapproved alterations or for
work not done as described in the historic preservation certification application. (Added 2005, No. 183 (Adj. Sess.), § 12; amended 2009, No. 160 (Adj. Sess.), § 31.)
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Subchapter 012: SETOFF DEBT COLLECTION
§ 5931. Short title
This subchapter may be cited as the Vermont Setoff Debt Collection Act. (Added 1981, No. 228 (Adj. Sess.), § 1, eff. May 4, 1982.)
§ 5932. Definitions
As used in this chapter:
(1) “Claimant agency” means any unit of State government, including agencies, departments,
boards, commissions, authorities, or public corporations, including the Vermont Student
Assistance Corporation and a collection agency under contract with the Court Administrator
pursuant to 4 V.S.A. § 1109(d) or 13 V.S.A. § 7171. Notwithstanding the foregoing, the Department of Taxes shall not be considered a
claimant agency and shall not be subject to the limitations contained in this chapter
when it applies a refund to the outstanding Vermont State tax liability of a taxpayer,
including a taxpayer’s liability for interest, penalties, and fees.
(2) “Debtor” means any individual owing a debt to a claimant agency or owing any support
debt that may be collected by the Department for Children and Families.
(3) “Nondebtor spouse” means any individual who is not a debtor, but has filed a joint
income tax return or claim under chapter 154 of this title with a debtor.
(4) “Debt” means any obligation to pay a sum of money to a claimant agency, the amount
of which is fixed by agreement between the debtor and the claimant agency or by operation
of law.
(5) “Department” means the Vermont Department of Taxes.
(6) “Refund” means any individual’s State income tax refund under chapter 151 of this
title and any payment due a claimant under chapter 154 of this title.
(7) “Support debt” means a support delinquency pursuant to an obligation determined under
a court order or as a result of an administrative process established by this or another
state.
(8) “Court” means a Superior Court or the Judicial Bureau.
(9) “Judgment debtor” means any person who has not paid in full a court judgment for payment
of a fine, penalty, surcharge, or fee, but not damages, due and payable to the State
or a political subdivision thereof. (Added 1981, No. 228 (Adj. Sess.), § 1, eff. May 4, 1982; amended 1985, No. 63, §§ 15, 15a; 1987, No. 278 (Adj. Sess.), § 14, eff. June 21, 1988; 1999, No. 147 (Adj. Sess.), § 4; 2001, No. 144 (Adj. Sess.), § 26, eff. June 21, 2002; 2003, No. 57, § 13, eff. July 1, 2004; 2005, No. 38, § 11, eff. June 2, 2005; 2005, No. 167 (Adj. Sess.), § 4, eff. Sept. 1, 2006; 2005, No. 174 (Adj. Sess.), § 64; 2007, No. 33, § 3, eff. May 18, 2007; 2009, No. 4, § 115, eff. April 24, 2009; 2009, No. 154 (Adj. Sess.), § 216.)
§ 5933. Collection of debts through setoff
(a) A claimant agency may submit any debt of $45.00 or more to the Department for collection
under the procedure established by this chapter. This setoff debt collection remedy
is in addition to and not in substitution for any other remedy available by law.
(b) The Department shall, upon request of a claimant agency, set off any refund that it
owes to a debtor against the amount of debt certified by a claimant agency in accordance
with the procedure established by section 5934 of this chapter. (Added 1981, No. 228 (Adj. Sess.), § 1, eff. May 4, 1982; amended 2019, No. 175 (Adj. Sess.), § 25a, eff. Oct. 8, 2020.)
§ 5934. Procedure for setoff
(a) Annually, on or before a date specified by the Department, a claimant agency shall
supply the Department with information necessary to identify each debtor whose refund
is sought to be set off and shall certify in writing the amount of each debt submitted
to the Department for collection through setoff.
(b) If a debtor identified by a claimant agency is entitled to a refund, the Department
shall transfer to the claimant agency an amount equal to the refund owed or the amount
of the debt certified by the claimant agency, whichever is less.
(c) Prior to requesting the Department to reduce a taxpayer’s refund by the amount of
certified debt in accord with this subchapter, the claimant agency shall notify the
debtor at the debtor’s last known address. The notice shall state that the agency
intends to request a setoff and shall advise the debtor of the procedure, the amount
and basis for the alleged debt, and that the debtor may contest the validity and amount
of the debt sought to be collected through setoff by applying in writing for a hearing
before the claimant agency within 30 days of the date of mailing of the notice. The
notice shall also include the name and mailing address of the claimant agency to which
the application for a hearing must be sent and shall advise the taxpayer that failure
to apply in writing for a hearing within the 30-day period will be deemed a waiver
of the opportunity to contest the setoff. (Added 1981, No. 228 (Adj. Sess.), § 1, eff. May 4, 1982; amended 1997, No. 156 (Adj. Sess.), § 9, eff. April 29, 1998.)
§ 5935. Joint returns
(a) With respect to State income tax refunds under chapter 151 of this title and renter
credit payments due a claimant under chapter 154 of this title, when the Department
transfers funds payable on a joint return to a claimant agency and only one of the
spouses filing the return is identified as a debtor of the claimant agency, the nondebtor
spouse may, within 30 days after the date of mailing of the notice to the taxpayer
described in subsection 5934(c) of this subchapter, petition the Department in writing
for a return of that portion of the refund attributable to the income of the nondebtor
spouse. The Commissioner shall thereafter conduct a hearing at which the nondebtor
spouse shall bear the burden of establishing what portion of a refund transferred
to a claimant agency, if any, is attributable to the nondebtor’s income.
(b) With respect to payments due a claimant under chapter 154 of this title based on property
ownership, when the Department transfers funds payable on a claim filed with a joint
return to a claimant agency and only one of the spouses filing the return is identified
as a debtor of the claimant agency, the nondebtor spouse may, within 30 days of the
date of mailing of the notice to the taxpayer described in subsection 5934(c) of this title, petition the Department in writing for a return of that portion of the claim equal
to the ownership share that the nondebtor spouse holds in the property upon which
the claim is based. If the property is held as tenancy by the entirety, the claim
shall be divided equally. The Commissioner shall thereafter conduct a hearing at which
the nondebtor spouse shall bear the burden of establishing his or her ownership interest
in the property.
(c) The final determination of the Commissioner regarding the amount of a refund attributable
to the income of a nondebtor spouse or the ownership interest of a nondebtor spouse
may be appealed in the same manner as income tax appeals under subsection 5885(b) of this title.
(d) Upon receipt of a petition under this section, the Department shall notify each claimant
agency to which funds payable on a joint return or claim have been transferred that
the petition is pending. If it is established that any amount of a refund or claim
transferred to a claimant agency is attributable to the income or ownership interest
of a nondebtor spouse, that amount shall be refunded to the nondebtor spouse. (Added 1981, No. 228 (Adj. Sess.), § 1, eff. May 4, 1982; amended 2003, No. 70 (Adj. Sess.), § 45, eff. March 1, 2004; 2021, No. 105 (Adj. Sess.), § 549, eff. July 1, 2022; 2023, No. 6, § 383, eff. July 1, 2023.)
§ 5936. Hearing procedure
(a) If a debtor applies in writing for a hearing before a claimant agency within 30 days
of the date of mailing of the notice described in subsection 5934(c) of this chapter,
the claimant agency shall conduct a hearing to determine the validity and amount of
debt owed by the debtor. The hearing shall be held in accordance with 3 V.S.A. §§ 809 through 813.
(b) The final determination of any claimant agency regarding the validity and amount of
any debt may be appealed within 30 days to the Civil Division of the Superior Court
of the unit in which the taxpayer resides, except that if the claimant agency is the
Office of Child Support, the appeal shall be to the Family Division of the Superior
Court. Upon appeal, the provisions of the Vermont Rules of Civil Procedure or the
Vermont Rules for Family Proceedings, as appropriate, shall apply, and the court shall
proceed de novo to determine the debt owed.
(c) Upon conclusion of the hearings and appeals granted under this section, and upon notification
by the Commissioner of the result of any appeal under section 5935 of this chapter,
a claimant agency shall notify each taxpayer whose refund is set off that a final
setoff has occurred. The notice shall include the amount of refund transferred to
the claimant agency, the amount of debt finally determined to be owed to the claimant
agency, the amount of refund, if any, returned to a non-debtor spouse, and the amount
of any outstanding balance due the debtor after final setoff. The claimant agency
shall disburse any outstanding balance due the debtor along with the notice of the
final setoff. (Added 1981, No. 228 (Adj. Sess.), § 1, eff. May 4, 1982; amended 1997, No. 63, § 20, eff. Sept. 1, 1997; 2009, No. 154 (Adj. Sess.), § 217.)
§ 5937. Priorities in claims to setoff
(a) Priority in multiple claims to refunds allowed to be set off under the provisions
of this chapter shall be in descending order of magnitude.
(b) Notwithstanding the priority set forth in subsection (a) of this section, the Department
may apply a refund to the outstanding Vermont State tax liability of a taxpayer, including
a taxpayer’s liability for interest, penalties, and fees, before any portion of a
refund is transferred to a claimant agency. (Added 1981, No. 228 (Adj. Sess.), § 1, eff. May 4, 1982; amended 2021, No. 105 (Adj. Sess.), § 550, eff. July 1, 2022.)
§ 5938. Collection assistance fees
Annually, the Department shall determine the actual per-offset costs incurred by the
Department in setting off debts and, notwithstanding section 502 of this title, the Department may assess against a debtor a collection assistance fee equal to
the per-offset cost so determined. (Added 1981, No. 228 (Adj. Sess.), § 1, eff. May 4, 1982; amended 2009, No. 160 (Adj. Sess.), § 6.)
§ 5939. Confidentiality exemption; nondisclosure
(a) Notwithstanding any other provision of law prohibiting disclosure by the Department
of the contents of taxpayer records or information and notwithstanding any confidentiality
statute of any claimant agency, disclosure of the name, address, and Social Security
number of a debtor; amount of refund owed to a debtor; amount of debt owed by a debtor;
and amount of refund attributable to the income of non-debtor spouse, between the
Department and the claimant agency as necessary to effectuate the intent of this chapter,
is lawful.
(b) The information obtained by a claimant agency from the Department in accordance with
the exemption allowed by this section shall only be used by a claimant agency in the
pursuit of its debt collection duties and practices, and any person employed by, or
formerly employed by, a claimant agency who discloses any such information for any
other purpose, except as otherwise allowed by law, shall be penalized in accordance
with the terms of section 3102 of this title as if that person were an agent of the Commissioner. The claimant agency to which
information is disclosed shall provide for the protection and security of the information
as required by the Commissioner. (Added 1981, No. 228 (Adj. Sess.), § 1, eff. May 4, 1982; amended 2005, No. 14, § 12, eff. May 3, 2005.)
§ 5940. Rules and regulations
The Commissioner of Taxes and the head of any claimant agency are authorized to prescribe
forms and make procedural rules and regulations under 3 V.S.A. chapter 25 that they deem necessary to effectuate the purposes of this subchapter, to include
identification of any information regarding the debtor and the debt, holding of hearings,
assessment and transfer of funds, and exchange and security of information. (Added 1981, No. 228 (Adj. Sess.), § 1, eff. May 4, 1982.)
§ 5941. Procedure for setoff of court judgments
(a) The court shall include in any judgment a notice that any unpaid amount of a fine,
penalty, surcharge, or fee, but not damages, may be certified to the Department for
a setoff on the judgment debtor’s income tax refund and property tax credit under
chapter 154 of this title, and the notice shall explain how the judgment debtor may
challenge the certification.
(b) Subsection 5934(c) and section 5936 of this title, relating to the procedure for contesting
the debt, shall not apply to a court seeking setoff from a judgment debtor under this
subchapter.
(c) Notwithstanding section 502 of this title, the Department may assess against the judgment debtor a collection assistance fee
in an amount established pursuant to section 5938 of this title.
(d) If a judgment debtor identified by the court clerk is entitled to a refund, the Department
shall retain the collection assistance fee and then transfer to the court in which
the judgment was issued an amount equal to the refund owed or the amount unpaid, whichever
is less.
(e) The Court Administrator may contract with one or more collection agencies to serve
as a claimant agency on behalf of a court for purposes of this subchapter. (Added 2005, No. 167 (Adj. Sess.), § 5, eff. Sept. 1, 2006; amended 2007, No. 33, § 4, eff. May 18, 2007; 2009, No. 4, § 116, eff. April 24, 2009; 2021, No. 105 (Adj. Sess.), § 551, eff. July 1, 2022.)
§ 5942. Offset for taxes owed in another state; reciprocity
(a) Upon the request and certification of a tax officer of a claimant state to the Commissioner
that a taxpayer owes taxes to the claimant state and that the debt is fixed and no
longer subject to appeal under the laws of that state, the Commissioner may set off
any refund that it owes to the taxpayer against the amount of the certified debt and
pay that amount to the requesting state.
(b) The Commissioner shall not set off any debt unless the laws of the requesting state
allow the Commissioner, in cases where the taxpayer owes taxes to this State, to certify
that a tax is owed and to request a tax officer of the requesting state to set off
any refund owed to the taxpayer and pay that amount to this State. (Added 2009, No. 160 (Adj. Sess.), § 7, eff. June 4, 2010.)