An act relating to technical and administrative changes to Vermont’s tax laws
What changed between versions
New Section 15 (32 V.S.A. 5828b(a)) creates a Vermont earned income tax credit equal to 38% of the federal EITC for individuals who would qualify federally but lack a qualifying taxpayer identification number.
New Section 16 (32 V.S.A. 5830f(a)) creates a refundable Vermont child tax credit of $1,000 per qualifying child (age 5 or younger) for individuals who would qualify federally but lack a taxpayer identification number.
New subsection (c) in the meals and rooms tax refund provision (32 V.S.A. 9245(c)) gives purchasers a direct right to seek a refund from the Department if they establish that tax was erroneously or illegally collected, with refunds processed the same way as operator refunds.
The alcoholic beverages tax exemption (32 V.S.A. 9202(11)(B)) was expanded by adding a new condition (ii): alcoholic beverages are also exempt when served under the same circumstances that cause food or beverages to be excepted from the 'taxable meal' definition, broadening the scope of exempt alcohol sales.
New Section 17 (32 V.S.A. 5830) establishes a process for claiming these credits without a TIN, prohibits the Commissioner from inquiring about or recording citizenship or immigration status, requires individuals to provide identity and income documents upon request, and mandates confidentiality of all related records under the Public Records Act.
In the property transfer tax nonprofit exemption (32 V.S.A. 9603(14)(C)), the standard for denying the exemption was changed from 'a primary purpose of the transaction is to avoid the tax' to 'a major purpose of the transaction is to avoid the tax,' which is a lower threshold making it easier for the Commissioner to deny the exemption.
New Section 18 (32 V.S.A. 5830f(d)) authorizes the Commissioner to make advance quarterly payments totaling 50% of the annual child tax credit during the calendar year, with the remaining 50% determined at filing time. Individuals may elect out of advance payments.
The composite return rate for S corporations (32 V.S.A. 5914(b)) and partnerships/LLCs (32 V.S.A. 5920(b)) was changed from the 'middle' marginal rate to the 'second-highest' marginal rate, which will increase the tax collected through composite filings. Both provisions also now require entities with more than 50 nonresident shareholders or partners to file composite returns.
The property transfer tax exemption for transfers between related nonprofit organizations (32 V.S.A. 9603(14)(C)(ii)) was restructured: the lookback period was shortened from five years to three years, and the tax now applies only if all three conditions are met - the second transfer occurs within three years, is not itself exempt as a related-organization transfer, and the Commissioner determines a major purpose is tax avoidance.
The federal income tax code adoption date (32 V.S.A. 5824 and 7402(8)) was updated from December 31, 2021 to December 31, 2022, incorporating one additional year of federal tax law changes into Vermont's personal income tax base.
New Section 7 requires the Department of Taxes to submit a written report by January 15, 2024 to legislative committees recommending whether to require restaurants and vendors to notify purchasers when tax has been erroneously collected, including recommendations on dollar or transaction thresholds, notice formats, Department oversight role, and confidentiality considerations.
New subdivision (2) in the local option tax provision (24 V.S.A. 138(c)(2)) requires the Commissioner to either refund or deposit as state tax any local option tax collected in a municipality not authorized to impose it, providing a mechanism for correcting erroneous collections.
The sales tax exemption for advanced wood boilers (2018 Acts and Resolves No. 194, Sec. 26b(a)) was extended from expiring July 1, 2023 to July 1, 2024, giving manufacturers and buyers one additional year of the exemption.