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Vermont Sales Tax Guide

By Cristina Garza

🌄Vermont, the Green Mountain State, packs a big punch for such a small state. One of the most beautifully scenic states in the US, it is where the Von Trapp family made home after their exodus from Austria (as depicted in the Sound of Music). The first state to abolish slavery, it’s also home to famously liberal ice cream maker Ben & Jerry’s, as well as the US Senate’s most fiercely independent representative, Bernie Sanders. With the lowest violent crime rate of any state, and a state-wide ban on billboard advertising, Vermont has much to offer its citizens. If you’re one of the lucky small business owners who calls Vermont home, you’re going to want to be sure your business stays in line with Vermont's sales tax laws. Fret not! That’s why we have assembled this all-in-one guide; so that you can readily meet the sales tax compliance requirements for a small business in Vermont. 

 

After reading this guide, you will have learned:

  • How to be prepared for your call with the Vermont Department of Taxes.
  • How to contact the Vermont Department of Taxes.
  • When to charge sales tax in Vermont.
  • What goods, products, and services are taxable in Vermont.
  • When you establish a sales tax nexus with the state of Vermont, and the nuances of various thresholds.
  • How to register for a sales tax license in Vermont.
  • How to collect sales tax in Vermont.
  • How to file and pay sales tax in Vermont.

If, after reading, you still have any questions to help you determine your tax sales obligations in Vermont and how to fulfill them, we are here for your small business bookkeeping needs! 

 

 


Vermont Sales Tax Contacts 

Vermont Sales Tax Contacts

 

âś…  Do you need to get in touch with the Vermont Department of Taxes?

âś…  Are you uncertain about whether to visit, call them, or contact them through their website?  

âś… Do you wonder what information you should have ready before you contact them?

 

If you answered “Yes” to any of these questions, please read onward, as we have just the information you need! :)

The Vermont Department of Taxes is reachable by phone at 802-828-2551 (option 3). 

You can also visit their taxpayer assistance window or send them an email. If you are hoping for the fastest response, we always suggest that you call rather than visit in person or emailing. 

When you do call the Vermont Department of Taxes, you will want to have some information on hand. It will save time to have the following information easily accessible before you call: 

  • Taxpayer Name
  • EIN
  • Sales & Use Tax ID Number

If you plan on having a third party contact them on your behalf, you’ll want to be sure to have completed a power of attorney form (PA-1, PDF). If you don’t have a completed form they won’t be able to assist someone else on your behalf.

If you have any more questions, please feel free to contact us so we can assist you with your sales tax needs.

 

 


Vermont Sales Tax Registration

Vermont Sales Tax Registration

 

Are you a new business selling tangible property in Vermont? If yes, you are going to want to register your business with the Vermont Department of Taxes so that you can pay your sales tax on time. 

You need not fret as this is a relatively simple process and one for which you’re about to be fully prepared. We are going to outline the steps below so you are totally ready to register for your sales tax license.

Here we go! Remember...

Preparation is key. 

Let’s get started!

 

 

How do I register to collect sales tax in Vermont?

You can apply or register for a Vermont sales tax permit by visiting the Vermont MyVtax site and following the instructions provided.

Vermont prefers online registration but offers an old school paper based form (BR-400, PDF) you can print and mail in. We suggest new businesses who are able to register online.

 

 

What information do I need to register for a Vermont sales tax permit?

Great question!

Before you sign up for Vermont sales tax permit you’ll want the following information on hand:

  • Business name
  • Business entity type 
  • Description of business activities
  • Date business activities began or will begin
  • Business address and mailing address
  • Business contact information
  • Associated business entities 
  • NAICS code that best matches the business
  • Federal Employer Identification Number (FEIN)
  • List of business officers, partners, managing members, and/or trustees

Don’t forget! Preparation is key. When you have all this information ready, you can go online and register for your permit at the Vermont MyVtax site

 

 

How much does it cost to register for a Vermont sales tax permit?

Zilch! Vermont charges precisely $0 to register a new business sales tax permit, or to renew an existing one.

 

 

Do I need a Federal Tax ID Number or EIN to register for a Vermont sales tax permit?

Quite right! For anything but a sole proprietorship, you will most assuredly need one. If you don’t already have one and need to get a new EIN, it’s a painless process. You can register for a Federal EIN right here :). 

 

 

Which agencies in Vermont do I need to additionally register with?

You may need to check with some of the following agencies or resources: 

You’ll want to give this some thought and do a little research or investigating; since every business is unique, and there are such different rules, regulations, and laws that may apply. 

We suggest contacting the Vermont Department of Taxes to verify which additional government agencies you may be required to register with. 

 

*****

 

Huzzah!!!

You are now prepared to register for your Vermont sales tax permit in Vermont. 

Let’s summarize what we have covered:  

  • Have all the required information easily accessible before registering online.
  • Acquire a tax ID or EIN before registering for a Vermont sales tax permit.
  • Register online at the Vermont MyVtax site.
  • Look into what other agencies you may have to additionally register with.

Registering for your Vermont sales tax permit will be stress free as long as you are prepared. We recommend organizing all the essential information in a folder, preferably using a system like Box.com or Dropbox (something we’re happy to handle for our customers). 

 

 


Vermont Sales Tax FAQ

Vermont Sales Tax FAQ 

 

By now, you may have already contacted the Vermont Department of Taxes and applied for a Vermont sales tax permit. 

Once you have a license to collect and remit sales taxes in Vermont, you will probably be asking yourself two questions: 

  • When do I charge a sales tax in Vermont?
  • What goods and services are subject to sales taxes in Vermont? 

We are going to go over some common questions that our clients have asked. We believe these questions will help you appreciate the nuances of taxable goods so you can be confident in fulfilling your tax obligations. 

Let’s start with the first question…

 

What goods and services are considered taxable in Vermont?

The following items are all taxable in the state of Vermont: 

  • Sales of tangible goods at retail.
  • Repairs or alterations of tangible personal property.
  • Property rentals, leases, or licenses [e.g. commercial, mini-warehouse]
  • Selling service warranty contracts.
  • Short-term rentals for living accommodations (e.g. motel/hotel, beach houses, condos, timeshares, vacation homes, or RV homes).
  • Rental/lease of personal goods (e.g.: machinery, vehicles, equipment, or other property).
  • Charges for admission to any place of amusement, sport, or recreation.
  • Manufacturing or producing goods for retail sales.
  • Operating vending machines or amusement rides.
  • Most services are exempted

 

 

The bottom line is …

Your business must pay taxes on sales of any non-exempt goods, and some taxable services.

 

*****

 

 

Let’s now review some of our clients’ frequently asked questions:

  • Is Vermont an Origin or Destination sales tax State?
  • What creates a sales tax nexus in Vermont?
  • What is the economic threshold in Vermont?
  • Does Amazon have fulfillment centers in Vermont?
  • Does Vermont have a Click-Through Nexus?

To best understand your tax obligations, new businesses need to consider how they are doing business and the type of relationships they have with buyers and any third parties to their transactions. 

 Let’s discuss some questions that will help you understand the nature of your small business and the subsequent tax implications.   

 

 

Is Vermont an origin or destination-based sales tax state?

Vermont is a Destination-based sales tax state. This simply means you’ll want to have your Point-of-Sales system configured to track sales tax based on your buyer’s location vs your business location.

 

 

 Protip: Charge sales tax based on your buyer’s location rather than your location

 

What creates a tax nexus with the state of Vermont?  

Having nexus, also known as "sufficient business presence,” with Vermont means your business has established a taxing connection with a state. When this happens, you are required to collect and remit sales tax in Vermont because you created a sales tax Nexus.

Even if your business maintains its main headquarters in another state, you may still have to charge and pay sales tax to the Vermont Department of Taxes even if you never step foot in Vermont.   

So, how do you create sales tax nexus in Vermont?

 

 

What creates sales tax nexus? 

 A business establishes a nexus in Vermont by:

  • having a business location in Vermont;
  • having property stored in Vermont;
  • employing any person in Vermont;
  • contracting with a salesperson or other agent in Vermont;
  • leasing equipment used in Vermont;
  • performing services in Vermont;
  • licensing the use of intangible property in Vermont, or transporting property in Vermont using the taxpayer’s vehicles.

Let’s talk a bit more specifically about where your goods are stored, such as in the instance of an Amazon warehouse. 

 

 

Does Amazon have fulfillment centers in Vermont?

No, not at this time. 

This is relevant for our customers that sell on Amazon or through Amazon’s FBA program.

In such cases we can help guide a small business through this regulatory maze! We use tools like A2X and Wherestock to identify where our clients' inventory is currently being held and shipped from so that we can keep them in compliance. 

 

 

Does Vermont have economic nexus?

Yes! As of July 1st, 2018, remote sellers are liable to pay sales tax beyond a certain threshold. This means that even businesses without a physical presence or traditional nexus can be required to register for, collect, and pay sales taxes.

The threshold for registering is having a cumulative gross revenue of over $100,000 or more than 200 transactions in a year to Vermont purchasers.

For  more information see the Vermont DOT’s remote sellers page here.

 

 

Does Vermont have click-through nexus?

Yes, it does, as of Oct. 13th, 2005. This impacts affiliate marketers or those who gain income by referring rather than transacting sales. Those earning more than $10k/year in revenue may be required to register and pay taxes. For more information, consult Vermont’s Click-through Nexus page.

 

 

Is Vermont a streamlined sales tax state?

Yep! Since January, 2007 Vermont has been a full member of Streamlined Sales Tax.

If you are planning on taking advantage of the Streamlined Sales Tax as a business, it is recommended that you use a Certified Service Provider though businesses may opt to register themselves without a CSP. Ultimately the aim of streamlined sales tax is to simplify payment to multiple different states of sales and use tax. It isn’t required that you utilize them, but it can significantly reduce complexity to do so, especially if your business sells in multiple states.

 

 

More effectively manage your tax needs by keeping this guide handy. 

You and your business can be better equipped to avoid situations like paying fines, paying back taxes that you did know you had to pay in the first place, or facing an audit by the tax authorities in Vermont.

 

 


Collecting Sales Tax in Vermont

 

Collecting Sales Tax in Vermont

By now you know if you are a business that has established a nexus with Vermont. So you have an understanding about whether, or when, you are required to collect sales tax. Knowing this is just half the battle! Now, we are going to help you with the next half of the battle: how to navigate the process of collecting taxes.

Let’s review some common questions our clients have asked regarding their Vermont Sales Tax obligations. 

  • How do I collect Vermont Sales Tax?
  • Who is eligible for Vermont Sales Tax exemptions?
  • What should I do if my customer is exempt from sales tax in Vermont?
  • What happens if I lose a Vermont nontaxable transaction certificate? 

After reading this, you will be better equipped to determine when --and when not-- to collect sales tax in Vermont.

 

 

How do I collect Vermont sales tax?

Because Vermont is a destination-based sales tax state, your business should charge sales tax at the time of the transaction based on the buyer’s location rather than that of the business. 

 

 

What are the current Vermont sales tax rates?   

Vermont’s state-wide sales tax rate is 6% at the time of this article’s writing, with local option taxes potentially adding on to that. Since sales tax rates may change, we advise you to check out the Vermont Department of Taxes Tax Rate page which has the current rate and links to lookup specific municipal rates. Any changes will be reflected on that page.

It always helps to be accurate and up to date with this type of information! :) 

 

 

What is exempt from Vermont sales tax?

Here is a sample list of exemptions: 

  • Non-prepared food
  • purchases for resale
  • Industrial Machinery
  • Medical supplies

And that’s it! Most items of tangible property are taxable in Vermont. They do have a handy page with a detailed list of what is exempt from sales tax in Vermont.

 

 

Who are eligible for Vermont sales tax exemptions?

At this point, you should know what products are exempt from sales tax in Vermont. You also want to know who may be exempt. 

Under Vermont law, the type of buyer or the way the goods will be used can qualify can buyer for a sales tax exemption. A good example of this is a merchant purchasing goods for resale, aka a wholesaler.

Other common examples of an exempt buyer may include:

  • Government agencies
  • Non-profit organizations
  • Religious groups
  • Out-of-state buyers (should their business not have nexus in their home state).

Note that a non-profit status doesn’t instantly confer tax exemption. Same page as above has information on which entities are tax exempt in Vermont.

 

 

What should I do if my customer is exempt from sales tax in Vermont?

Purchasers who are tax exempt must have completed exemption certificate and must present their completed exemption certificate at the time of purchase. It is then incumbent upon the seller to hold on to this exemption certificate. Failure to do so may leave you unable to justify tax exempt sales.

Remember, you always want to collect and file a copy of the exemption certificate. Such certificates must be produced upon request to justify tax-exempt sales in the event of an audit.

 

 

What happens if I lose a Vermont sales tax exemption certificate?

Obviously this issue is best to be avoided! Imagine finding out you’ll be audited and discovering you cannot produce an exemption certificate for a buyer... That nightmare scenario would mean you could be held liable to pay all taxes on behalf of the buyer. This is a bad scene and can be avoided by taking proper care of your paperwork... Which happens to be one of our areas of expertise! :) 

 

 

Does Vermont have a sales tax holiday?

Negative, no break from sales tax in Vermont at this time. Boo!

 

***** 

 

We have now covered who you need to collect sales taxes from, how to determine whether goods for sale are deemed taxable, what goods and services fall under tax exemptions, who is eligible for tax exemption certificates, and, finally, the process of collecting sales tax in Vermont state. 

Now that we’re this far down the rabbit hole there’s only one thing we need to learn about next… how to pay the piper! 

 

 


Filing and Paying Sales Tax in Vermont

Filing and Paying Sales Tax in Vermont

It is time to talk about filing and paying your sales taxes in Vermont. In this section, We are going to cover the following frequently asked questions from our clients:

  • When is Vermont Sales Tax due?
  • What are the Vermont Sales Tax thresholds?
  • What if a Vermont Sales Tax filing date falls on a weekend or holiday?
  • How do I file a Vermont Sales Tax Return?
  • How do I correct a Vermont Sales Tax return?
  • What happens if I don’t collect sales tax?
  • What happens if I file or pay my sales tax return late?
  • Do I need to file a return if I don’t collect any sales tax in Vermont?
  • If I close my business, do I need to file a final sales tax return?
  • Does the Vermont Department of Taxes offer a discount for filing on time?

By the time you finish reading this, you will feel confident enough to file and pay your Vermont Sales Tax.

 

When is Vermont sales tax due?

Vermont sales tax payments are due based on the filing interval and type. Filing intervals are based on the company’s tax liability [detailed ahead, be patient! :p] and the type refers to paper vs. online.

The state of Vermont requires payment by no later than the 25th day of the month following the reporting period for paper and electronic filing.

 

 

What are the Vermont sales tax filing interval thresholds?

The thresholds for filing intervals are based on the expected or actual tax liability owed:

 

Average Tax Liability Owed Monthly*

Filing interval

From $0 to $41.66

Annual 

From $41.67  to $208.33

Semi-annual

More than $208.33

Monthly or Quarterly, at VT DOT discretion

 

*anticipated if new business, actual if existing company

 

Not sure how to determine your tax filing frequency?

You can review your eCommerce or Point-of-Sale Software to see the volume of sales you have generated. 

Don't worry though! The state will let you know when your due dates change. :) 

Keep an eye out for notices in your mail from the State of Vermont so that you don't miss any shift in deadlines.

 

 

What if a Vermont sales tax filing date falls on a weekend or holiday?

The deadline is moved to the next business day, typically the Monday following the weekend or the day after the holiday. Where possible, we always suggest filing well before the holiday, of course ;). 

 

 

How do I file a Vermont sales tax return?

Paper: Fill out form SUT-451 (PDF) and mail to the address on the form. 

Electronic: File online via MyVtax site and submit payment via EFT.

 

  

How do I correct a Vermont sales tax return?

Paper: Fill out form SUT-451 (PDF) but check “Amended” option at the top, mail to address on the form.

Electronic: Amend the return within the MyVtax portal.

 

 

What happens if I don’t collect sales tax?

If you were required to collect sales taxes and failed to do so for whatever reason, that’s a big no-no! Ultimately the business will be held liable for the due tax. Always be sure to collect sales tax at the point of sale. Attempting to collect after the fact will be time consuming and most likely unsuccessful. 

 

 

Protip: You are still responsible for remitting sales taxes even if you failed to collect them. 

 

 

What happens if I file or pay my sales tax return late?

Vermont's Department of Taxation charges a penalty for late payment:

 

Late filing results in a penalty of 5% per month of tax due if a return isn’t filed by the due date.

 

Late filing, even with no tax due, can cause a penalty of $50 if the filing is later than 60 days from due date.

 

 

Do I need to file a return if I don’t collect any sales tax in Vermont?

Yep! Vermont requires businesses file a “Zero-Tax” return even when they have no sales during a taxing period.

 

 

If I close my business, do I need to file a final sales tax return?

Absolutely, Vermont requires businesses to file a “Final sales tax” return when closing their doors.

 

 

Does the Vermont Department of Taxes offer a discount for filing on time?

No they do not! Paying on time is its own reward.

 

*****

 

Now that we have covered all our bases for filing and paying sales taxes in the state of Vermont, you should feel more at ease about the process.

 

Some things to remember:

  • Due dates are important. If anything, file and pay your taxes early.
  • There are three payment plans for filing and paying your sales taxes depending on how much you collect in sales tax on average in a month.
  • You can file and pay your taxes electronically or by mail
  • If you need to amend a return, you may do so electronically or by paper.
  • If you don’t collect sales tax and you were supposed to, you (not the buyer) is liable to pay the sales tax to the state of Vermont.
  • You will have to pay late fees if you fail to file your tax return on time and/or if you fail to make your tax payment on time.
  • Even if you collect no sales tax, you still need to file a return.
  • You need to file a “Final sales tax report” when you close your business.

 

Now, you are ready to file and pay your sales tax in Vermont. If you have any more questions, feel free to contact us.

  

Click here if you think sales tax is boring. Book a meeting.  


Please note: This blog is for informational purposes only and the information is accurate as of 10/24/2019. If you want legal advice on sales tax law for your business, please contact a Sales Tax professional. Keep in mind that sales tax regulations and laws are subject to change at any time. While we strive to keep our blog current, this blog possibly may be out of date by the time you review it.