Download this document in WordPerfect 6.1 format

NO. 50. AN ACT RELATING TO MISCELLANEOUS TAXES.

(H.539)

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1. 9 V.S.A. 2480g(d) is added to read:

(d) The provisions of section 2480e of this title shall not apply to the tax department, its agents or assigns:

(1) where the department has reason to believe that the taxpayer is liable for delinquent taxes, and the department is seeking the taxpayer's credit report in furtherance of the investigation or collection of such delinquent taxes; or

(2) where the department is seeking the taxpayer's credit report in furtherance of the collection of a debt owed by the taxpayer to the state of Vermont.

Sec. 2. 26 V.S.A. 1272(9) is added to read:

(9) Establishment of a funeral services trust account. For purposes of funding the funeral services trust account, the board shall assess each funeral establishment a per funeral, burial or disposition fee of $6.00. The account shall be administered by the secretary of state and shall be used for the sole purpose of protecting prepaid funeral contract holders in the event a funeral establishment defaults on its obligations under the contract. The account shall consist of all fees collected under this subdivision and any assessments authorized by the general assembly. The principal and interest remaining in the account at the close of any fiscal year shall not revert but shall remain in the account for use in succeeding fiscal years. Notwithstanding the foregoing, if the fund balance at the beginning of a fiscal year is at least $200,000.00 no fees shall be imposed during that fiscal year. Payments from the fund shall be made on warrants by the commissioner of finance and management, at the direction of the board of funeral services.

Sec. 3. SPECIAL ASSESSMENT FOR FUNERAL SERVICES TRUST ACCOUNT

(a) A special assessment is imposed on funeral establishments for purposes of funding the funeral services trust account established pursuant to 26 V.S.A. 1272(9). The assessment shall be as follows: establishments that performed fewer than 51 funerals during the preceding calendar year, $150.00; establishments that performed between 51 and 150 funerals during the preceding calendar year, $250.00; establishments thatperformed between 151 and 350 funerals during the preceding calendar year, $500.00; and establishments that performed more than 350 funerals during the preceding calendar year, $750.00.

(b) The assessment imposed under this section shall be paid to the secretary of state no later than July 1, 1997, for deposit in the funeral services trust account.

Sec. 4. 10 V.S.A. 387 is amended to read:

387. GUARANTY FEE

The board shall collect from the lender a guaranty fee of up to *[one and three-tenths]* 1.68 percent of the amount of *[the]* a fixed rate loan, up to 1.83 percent of the amount of a variable rate loan, or up to three percent of the amount of the loan in cases of loan guaranties made pursuant to section 398 of this title. Such fee may be assessed by the lender against the borrower as a permitted loan charge, anything to the contrary notwithstanding, and may be collected either at the closing or on a monthly basis until the present value of the monthly collections equals the maximum fee allowable under this section. The board shall segregate those fees into a special reserve account subject to withdrawal, to the extent that those reserves are available, to discharge any of the board's guaranty liabilities or personnel and administrative expenses as provided in section 382 of this title.

Sec. 5. 10 V.S.A. 390 is amended to read:

390. LIMITATIONS ON GUARANTIES

Prior to issuing any guaranty on any loan hereunder, the board shall first determine that the amount of such guaranty as of its proposed date of issuance, when combined with the aggregate outstanding guaranty liability on all existing guaranties, shall not exceed *[$110,000,000.00 effective July 1, 1994, $120,000,000.00 effective July 1, 1995 and $130,000,000.00 effective July 1, 1996]* $135,000,000.00 effective July 1, 1997, and $145,000,000.00 effective July 1, 1998.

Sec. 6. 32 V.S.A. 9602(1) is amended to read:

9602. TAX ON TRANSFER OF TITLE TO PROPERTY

A tax is hereby imposed upon the transfer by deed of title to property located in thisstate. The amount of the tax equals one and one quarter percent of the value of the property transferred, or $1.00, whichever is greater, except as follows:

(1) with respect to the transfer of property to be used for the principal residence of the transferee the tax shall be imposed at the rate of five-tenths of one percent of the first $100,000.00 in value of the property transferred and at the rate of one and one quarter percent of the value of the property transferred in excess of $100,000.00, provided that no tax shall be imposed on the first $100,000.00 in value of the property if, in connection with the transfer, a guaranty fee is paid to the Vermont home mortgage guarantee program in accordance with section 387 of Title 10;

* * *

Sec. 7. QUARTERLY FINANCIAL STATEMENTS

The Vermont home mortgage guarantee board shall submit quarterly financial statements to the general assembly. Such statements shall include an accounting of the manner in which the Vermont housing finance agency has accomplished the administrative efficiencies and savings for the benefit of the Vermont home mortgage guarantee program intended by the general assembly.

Sec. 8. 32 V.S.A. 3001 is amended to read:

3001. PERSON CONSTRUED

The word "person" used in Parts 2, 4 and 5 of this subtitle shall include a partnership, association, *[or]* corporation or limited liability company.

Sec. 9. 32 V.S.A. 3113(g) is amended to read:

(g) For the purposes of this section, a person is in good standing with respect to any and all taxes payable if:

(l) no taxes are due and payable and all returns have been filed;

(2) the liability for any taxes due and payable is on appeal;

(3) the person is in compliance with a payment plan approved by the commissioner; or

(4) in the case of a licensee, the agency finds that requiring immediate payment of taxes due and payable would impose an unreasonable hardship.

Sec. 10. 32 V.S.A. 3412 is amended to read:

3412. ANNUAL REPORT

Before January *[12]* 15 of each year, the director shall deliver to the speaker of the house of representatives and to the president pro tempore of the senate copies of an annual report including in that report all rules issued in the preceding year. The report shall include the rate per dollar and the amount of all taxes assessed in each and all of the towns, gores, school and fire districts and villages for and during the year ending with June 30, preceding. The report shall also include an analysis of the appraisal practices and methods employed through the state. The director shall include recommendations for statutory changes as he feels necessary. Copies of the annual report shall be forwarded to the chairman of the board of selectmen of each town. The presiding officer shall refer the report to the appropriate committees of the general assembly for their review and recommendation.

Sec. 11. 32 V.S.A. 4962 is amended to read:

4962. TAX BILLS DELIVERED TO THE DIRECTOR OF TAXES; CONTENTS

Annually, on or before July 15, the appraisers for unorganized towns and gores shall make out and deliver to the *[commissioner of taxes]* director tax bills for the state tax so assessed upon the polls and taxable property in such unorganized places, respectively, based upon the lists annually completed by June 15 next prior thereto. Such tax bills shall contain the name of each person taxed, with his residence, if known, and the amount of his tax. If a corporation is so taxed, such tax bill shall state its principal place of business. The *[commissioner]* director shall issue a receipt for such tax bills.

Sec. 12. 32 V.S.A. 5136 is amended to read:

5136. INTEREST ON OVER-DUE TAXES

(a) When a municipality votes under an article in the warning to collect interest on over-due taxes, such taxes, however collected, shall be due and payable not later than December 1, and shall bear interest at the rate of not more than one percent per month, or fraction thereof, for the first three months and thereafter one and one-half percent per month or fraction thereof, from the due date of such tax. Such interest shall be imposedon a fraction of a month as if it were an entire month. A municipality having so voted to collect interest as hereinbefore provided, and the amount thereof, shall thereafter collect such interest each year until the municipality shall vote otherwise at a meeting duly warned for the purpose of voting on such question.

(b) Whenever a municipality votes to collect interest on over-due taxes pursuant to this section, interest in like amount shall be paid by the municipality to any person making any overpayment of taxes occurring as a result of a redetermination of the grand list of the taxpayer on appeal provided by chapter 131 of this title.

Sec. 13. 32 V.S.A. 5823 is amended to read:

5823. VERMONT INCOME OF INDIVIDUALS, ESTATES AND TRUSTS

(a) For any taxable year, the Vermont income of a resident individual, estate or trust is the adjusted gross income of the taxpayers for that taxable year less:

* * *

(2) Military pay for full-time active duty with the armed services earned outside of the state; and the first $1,500.00 of military pay for unit training assemblies in the state to National Guard personnel who were enlisted for the full calendar year, attended all 48 unit training assemblies as certified by the federal Defense Finance and Accounting Service Military Leave and Earnings Statement, DFAS Form 702, or for whom the adjutant general certifies that the taxpayer completed all unit training assemblies of his or her unit during the training year, and who had a federal adjusted gross income of less than $47,000.00 in the prior tax 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 taxpayer for the taxable year:

* * *

(3) Wages, salaries, commissions or other income (excluding military pay for full-time active duty with the armed services and also excluding funds received through the federal armed forces educational loan repayment program under 10 U.S.C. chapters109 and 1609; and also excluding the first $1,500.00 of military pay for unit training assemblies in the state to National Guard personnel who were enlisted for the full calendar year, attended all 48 unit training assemblies as certified by the federal Defense Finance and Accounting Service Military Leave and Earnings Statement, DFAS Form 702, or for whom the adjutant general certifies that the taxpayer completed all unit training assembliesof his or her unit during the training year, and who had a federal adjusted gross income of less than $47,000.00 in the prior tax year) received with respect to services performed within this state;

* * *

Sec. 14. 32 V.S.A. 5823(b)(4) is amended to read:

(4) Income (other than income exempted from state taxation under the laws of the United States) derived from every business, trade, occupation or profession *[of the taxpayer]* 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.

Sec. 15. 32 V.S.A. 5824 is amended to read:

5824. CREDIT FOR CHANGES IN FEDERAL LAW

If, for any taxable year, the tax liability of an individual, estate or trust under this chapter exceeds, by any amount, what that liability would have been had the "laws of the United States" been defined, under this chapter, as "the statutes of the United States relating to federal income taxes in effect on December 31, *[1995]* 1996," the taxpayer shall be entitled to a credit equal to that excess amount plus six percent of such amount, against the taxpayer's tax liability under this chapter for the next succeeding taxable year. In the event the tax liability of the taxpayer under this chapter for the next succeeding taxable year is less than the amount of such credit, the difference between such liability and such credit shall be refunded to the taxpayer by the commissioner. Any taxpayer claiming a credit under this section shall establish and verify that claim in such manner, and by use of such forms or schedules, as the commissioner shall by regulation prescribe.

Sec. 16. 32 V.S.A. 5825 is amended to read:

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 anyportion of a taxable year shall receive credit against the tax imposed, for that taxable year, by section 5822 of this title for 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, except that any such credit for Canadian provincial tax shall be limited to the amount of the provincial tax which does not decrease the taxpayer's federal income tax liability. 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 32 V.S.A. 5811(11)(A)(ii), 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.

Sec. 17. 32 V.S.A. 5844(a) is amended to read:

(a) 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 *[corporate]* 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 *[corporation]* same is under a duty to withhold the tax and transmit *[the same]* it to the commissioner as required in this chapter.

Sec. 18. 32 V.S.A. 5847 is amended to read:

5847. WITHHOLDING ON SALES OR EXCHANGES OF REAL ESTATE

* * *

(e) For purposes of 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 of 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 insubdivision 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.

* * *

(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.

Sec. 19. 32 V.S.A. 5861a(a) is amended to read:

(a) Every partnership having *[a resident partner, or having]* any income derived from Vermont sources *[as provided under section 5823 of this title for a nonresident individual,]* 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 section 5823(b)(1) through (5) of this title or associated with or attributable to business activities carried on in Vermont.

Sec. 20. 32 V.S.A. 5885(b) is amended to read:

(b) Any aggrieved taxpayer may, within thirty days*[, appeal]* 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 thesuperior court of the county in which the taxpayer resides or has a place of business.

Sec. 21. 32 V.S.A. 5920(c) is amended to read:

(c) With respect to each of its nonresident partners or nonresident members, a partnership or limited liability company shall for each taxable period be liable for all income taxes, together with related interest and penalties, imposed on the partner or member by Vermont with respect to the income of the partnership or limited liability company. A partnership or limited liability company shall declare estimated tax, and shall pay estimated tax, including applicable interest and penalties, on such liability in the manner and at the times specified in subchapter 5 of this chapter. For purposes of this subsection, "estimated tax" as used in subchapter 5 of this chapter shall mean an amount equal to the highest federal marginal tax rate in effect for individuals multiplied by the rate prescribed under section 5822 of this title, multiplied by the partner's or member's pro rata share of the income attributable to Vermont, reflected on the partnership's or limited liability company's declaration of estimated tax of the taxable period.

Sec. 22. 32 V.S.A. 5920(f) is added to read:

(f) Subsection (c) of this section shall not apply to a partnership or limited liability company engaged solely in the business of operating one or more affordable housing projects in this state, provided such partnership or limited liability company shall notify its nonresident partners or nonresident members of their obligation under subchapter 6 of this chapter to file Vermont personal income tax returns and under subchapter 2 of this chapter to pay a tax on income earned from such investment; instruct each nonresident partner or nonresident member to pay such tax; and in addition to filing copies of all schedules K-1 with its partnership or limited liability company return shall file with the commissioner segregated duplicate copies of all nonresident schedules K-1. In this subsection, "affordable housing project" means a rental residential development that is intended primarily to benefit low income Vermont residents throughout the period of the investment and that is subject to one or more of the following:

(1) A housing subsidy covenant that has been granted to the Vermont housing and conservation board;

(2) A regulatory agreement or LIHTC housing subsidy covenant that has beengranted to the Vermont housing finance agency;

(3) A housing assistance payment contract with the United States Department of Housing and Urban Development pursuant to 24 CFR Part 883; or

(4) A regulatory agreement that has been granted to the Farmers Home Administration of the United States Department of Agriculture.

In this subsection, "low income" means income that is less than or equal to area median income based on statistics from state or federal sources.

Sec. 23. 32 V.S.A. 5921 is amended to read:

5921. MINIMUM TAX

A partnership or a limited liability company which is taxed as a partnership under the Internal Revenue Code and is subject to the provisions of section 5920 of this title shall pay an annual tax of $150.00 to the commissioner of taxes on or before the due date prescribed for the filing of the entity’s federal return. The tax shall be submitted together with a form prescribed by the commissioner. A limited liability company that does not receive partnership treatment under the Internal Revenue Code shall be taxed *[as a corporation under this chapter]* for state purposes in the same manner as taxed under the Internal Revenue Code.

Sec. 24. 32 V.S.A. 5961(5) is amended to read:

(5) "Modified adjusted gross income" means the sum of "adjusted gross income" as defined in section 5811 of this title (but before the deduction of any trade or business loss, loss from a partnership, loss from a small business or "subchapter S" corporation, loss from a rental property, or capital loss), alimony, support money, cash public assistance and relief (not including relief granted under this subchapter), cost of living allowances paid to federal employees, allowances received by dependents of servicemen, the gross amount of any pension or annuity (including railroad retirement benefits, all payments received under the Federal Social Security Act, and all benefits under Veteran's Acts), nontaxable interest received from the state or federal government or any of its instrumentalities, workers' compensation, the gross amount of "loss of time" insurance, and the amount of capital gains excluded from adjusted gross income, less the net employment and self-employment taxes withheld from or paid by the individual (exclusive of any amounts deducted to arriveat adjusted gross income) on account of income included in that sum under this section, less any amounts paid as child support money if substantiated by receipts or other evidence that the commissioner may require. It does not include gifts from nongovernmental sources, surplus food or other relief in kind supplied by a governmental agency, or the first $4,000.00 of income earned by a full-time student who qualifies as a dependent of the claimant under the Federal Internal Revenue Code, or the first $4,000.00 of income received by a parent who qualifies as a dependent of the claimant under the Internal Revenue Code, or payments made by the state for foster care or to a family for the support of an eligible person with a developmental disability as defined in section 8722(2) of Title 18. If the commissioner determines, upon application by the claimant, that a *[relative]* person resides with *[an elderly or disabled]* a claimant who was 62 years of age as of the end of the year preceding the claim or is disabled, for the *[sole]* primary purpose of providing attendant care services (as defined in section 6321 of Title 33) or homemaker or companionship services, with or without compensation, which allow the claimant *[requires to]* to remain in his or her home or avoid institutionalization, the commissioner shall exclude that *[relative's]* person’s modified adjusted gross income from the claimant's household income. The commissioner may require that a certificate from a licensed or certified health care professional, in a form satisfactory to the commissioner, be submitted which supports the claim.

Sec. 25. 32 V.S.A. 5977(d) and (e) are amended to read:

(d) The commissioner shall not pay any claims to claimants who were under 62 years of age on the last day of the taxable year for which the claim is made until the total amount of all timely-filed claims has been paid under subsection (c) of this section. After payment of the claims under subsection (c) of this section the balance of the property tax rebate trust fund shall be available to pay the claims of claimants under the age of 62 on the last day of the taxable year for which the claim is made. Such balance shall be determined as of June 30 annually, less the sum of *[$50,000.00]* $100,000.00 annually for payment of late-filed claims approved by the commissioner under section 5970 of this title and less the sum of an amount to be determined in the annual tax department appropriation provided for administrative expenses under section 5976(a) of this title.

(e) If insufficient funds exist as of June 30 annually to pay the full amount of all claims of persons under age 62 on the last day of the taxable year for which the claim is made, payments may be made from amounts appropriated or otherwise available to the property tax rebate trust fund for the fiscal year beginning on the July 1 following the year for which the claims are made, less the best available estimate of the amount needed to pay claims to persons over 62 for the fiscal year beginning on that July 1 and less the sums of *[$50,000.00]* $100,000.00 to pay late filed claims approved by the commissioner under section 5970 of this title and an amount to be determined in the annual tax department appropriation to pay administrative expenses under section 5976(a) of this title for the following fiscal year. If funds appropriated or otherwise available for the fiscal year beginning July 1 following the year for which the claims are made are insufficient to pay the full amount of all claims of persons under age 62 on the last day of the taxable year for which the claim is made, payments shall be made to such claimants proportionately. No payment shall exceed 100 percent of the amount of the claim.

Sec. 26. 32 V.S.A. 9272(e) is amended to read:

(e) Upon suspension or revocation, or in case of an unlicensed business, the commissioner may cause to be posted, at every public entrance of the operator's premises, a notice identifying the operator and the location and informing the public that the operator has no license or the license has been suspended or revoked, as the case may be, and that no rooms may be offered to the public for occupancy for a consideration or taxable meals or alcoholic beverages sold at that location as those terms are defined in this chapter. No person shall cover or deface the posted notice, and the posted notice shall not be removed until the license is reinstated or a new license issued for the location, or removal is otherwise authorized by the commissioner. Whoever violates the terms of this subsection shall be assessed a penalty of *[$100.00]* $500.00. The commissioner shall give notice of such assessment and make demand for payment.

Sec. 27. 32 V.S.A. 9275 is amended to read:

9275. APPEALS

Any person aggrieved by the *[decision]* determination of the commissioner upon petition provided for in section 9274 of this title may, within thirty days after *[notice thereof from]*determination by the commissioner, appeal therefrom to the Washington superior court or the superior court of any county in which such person has a place of business subject to this chapter, which appeal shall be accompanied by a citation to the commissioner to appear before such court. Such citation shall be signed by the same authority and such appeal shall be returnable at the same time and served and returned in the same manner as is required in the case of a summons in a civil action. The authority issuing the citation shall take from the appellant a bond or recognizance to the state, with surety, to prosecute the appeal to effect, and to comply with the orders and decrees of a court in the premises. Such appeals shall be preferred cases for hearing on the docket of such court. Such court may grant such relief as may be equitable and may order the state treasurer to pay to the aggrieved taxpayer the amount of such relief with interest at the rate established pursuant to 32 V.S.A. 3108. Upon all such appeals which may be denied costs may be taxed against the appellant at the discretion of the court but no costs shall be taxed against the state.

Sec. 28. 32 V.S.A. 9280(a) and (b) are amended to read:

(a) *[All taxes required to be paid by operators and all increases, interest and penalty thereon, shall become from the time due and payable to the commissioner, a personal debt from the operator liable to pay the same to the state of Vermont to be recovered in a civil action under this section.]* Any operator who fails to collect the required tax or to pay it to the commissioner as required under this chapter shall be personally and individually liable for the amount of such tax; and if the operator 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 collect the tax and transmit the tax to the commissioner as required in this chapter.

(b) *[Action may be brought by the attorney general at the instance of the commissioner in the name of the state to recover the amount of taxes, penalties and interest due from such operator, provided such action is brought within six years after the same are due. Such action shall be returnable in the county where the operator resides if a resident of the state; and if a nonresident, the action shall be returnable to the county of Washington. The limitation of six years in this section shall not apply to a suit to collect taxes, penalties,interest and costs when the operator filed a fraudulent return or failed to file a return when the same was due.]* Any sum or sums collected in accordance with this chapter 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 collected and that the same are the property of the state of Vermont.

Sec. 29. 32 V.S.A. 9603(5) is amended to read:

(5) Transfers between husband and wife, or parent and child or child’s spouse, or grandparent and grandchild or grandchild’s spouse, without actual consideration therefor; and also transfers in trust or by decree of court to the extent of the benefit to the donor or one or more of the related persons above named; and transfers from such a trust conveying or releasing the property free of trust as between such persons and without actual consideration therefor;

Sec. 30. 32 V.S.A. 9603(24) is added to read:

(24) Transfers made to a limited liability company at the time of its formation pursuant to which no gain or loss is recognized under the Internal Revenue Code, except

where the commissioner finds that a major purpose of such transaction is to avoid the property transfer tax.

Sec. 31. 32 V.S.A. 9603(25) is added to read:

(25) Transfer made by a limited liability company to a member in connection with a complete dissolution of the limited liability company, pursuant to which transfer no gain or loss is recognized under the Internal Revenue Code, except where the commissioner finds that a major purpose of such dissolution is to avoid the property transfer tax.

Sec. 32. 32 V.S.A. 9703 is amended to read:

9703. LIABILITY FOR TAX

(a) Every person required to collect any tax imposed by this chapter or to pay it to the commissioner as required by this chapter shall be personally and individually liable for the amount of such tax *[imposed, collected or required to be collected under this chapter]*; 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 ofthe same is under a duty to collect the tax and transmit it to the commissioner as required in this chapter.

(b) Any sum or sums collected in accordance with this chapter 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 to clearly indicate the amount of tax collected, and that the same are the property of the state of Vermont.

(c) *[That]* Such person shall have the same rights in collecting the tax from his purchaser or regarding nonpayment of the tax by the purchaser as if the tax were a part of the purchase price of the property or amusement charge, as the case may be, and payable at the same time; provided, however, if the person required to collect the tax has failed to remit any portion of the tax to the commissioner, that the commissioner shall be notified of any action or proceeding brought by such person to collect the tax and shall have the right to intervene in such action or proceeding.

Sec. 33. 32 V.S.A. 9775(c) is amended to read:

(c) The form of returns shall be prescribed by the commissioner and shall contain such information as he or she may deem necessary for the proper administration of this chapter. The commissioner may require returns and amended returns to be filed within twenty days after notice and to contain the information specified in the notice.

Sec. 34. WHITEHALL - RUTLAND RAIL CORRIDOR

Sales and uses of tangible personal property incorporated into the Clarendon & Pittsford Railroad Company’s rail line between Whitehall, New York and Rutland, Vermont, as authorized in Sec. 12a of Act No. 60 of the Acts of 1995, and further authorized in Sec. 6 of Act No. 183 of the Acts of 1996, shall be exempt from the sales and use tax imposed under chapter 233 of Title 32. Formal Ruling 97-01 of the commissioner of taxes is overruled to the extent it is inconsistent with this section.

Sec. 35. 32 V.S.A. 9743(3)(D) is added to read:

(D) Sales of fresh cut flowers only, by a qualified 501(c)(3) organization, during a single annual sales event not to exceed seven days, shall be exempt.

Sec. 36. 32 V.S.A. 9775(d) is added to read:

(d) Upon the failure of a taxpayer to file any return required under this chapter within20 days of the date of a notice to the taxpayer under subsection (c) of this section, 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. The commissioner’s authority to petition under this subsection is in addition to the commissioner’s authority under section 9777(a) of this chapter to compute the tax liability of a taxpayer who fails to file a required return or files an incorrect or insufficient return.

Sec. 37. 32 V.S.A. 9816(e) is amended to read:

(e) Upon suspension or revocation, or in the case of an unregistered business, the commissioner may cause to be posted, at every public entrance of the vendor's premises, a notice identifying the vendor and the location and informing the public that the vendor has no certificate or the certificate has been suspended or revoked, as the case may be, and that no retail sales or amusement charges may be made at that location. No person shall cover or deface the posted notice, and the posted notice shall not be removed until the certificate is reinstated or a new certificate issued for the location, or removal is otherwise authorized by the commissioner. Whoever violates the terms of this subsection shall be assessed a penalty of *[$100.00]* $500.00, and the commissioner shall give notice of such assessment and make demand for payment.

Sec. 38. 32 V.S.A. 10106(c) is added to read:

(c) The exclusive remedy of a taxpayer with respect to a notification of deficiency or assessment of a penalty or interest shall be to petition for determination of the deficiency or assessment as provided by section 10109 of this title and appeal from which adversedetermination of deficiency or assessment. Upon the failure of a taxpayer to petition in accordance with section 10109 of this title from a notice of deficiency or assessment under section 10106 of this title, or to appeal in accordance with section 10109 of this title from a determination of a deficiency or assessment, the taxpayer shall be bound by the terms of the notification, assessment, or determination. The taxpayer shall not thereafter contest, either directly or indirectly, the tax liability as therein set forth, in any proceeding including, without limitation, 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.

Sec. 39. 32 V.S.A. 10107(a) is amended to read:

(a) At any time within three years after the date a tax is *[paid]* due under this chapter, a taxpayer may petition the commissioner for the refund of all or any part of the amount of

tax paid. This shall be a taxpayer’s exclusive remedy with respect to the refund of taxes under this chapter.

Sec. 40. 32 V.S.A. 10109 is amended to read:

10109. DETERMINATION BY COMMISSIONER

(a) Upon receipt of a notice of deficiency or assessment of penalty or interest under section 10106 of this title or upon receipt of a notice of the denial of all or a portion of a refund request under section 10107 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 or assessment. The commissioner shall thereafter grant a hearing upon the matter and notify the taxpayer in writing of the commissioner's determination concerning the deficiency, assessment or refund request.

(b) The 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.

Sec. 41. SUNSET REPEAL

Notwithstanding Sec. 2 of Act No. 71 of the Acts of 1996, Sec. 1 of that act shallapply to tax years beginning on and after January 1, 1996, and the act is not repealed on January 1, 1999, but shall continue in effect until further action of the general assembly.

Sec. 42. REPEAL

11 V.S.A. 3141 (relating to foreign registered limited liability partnerships) is repealed.

Sec. 43. 32 V.S.A. 9602(3) is added to read:

(3) with respect to the transfer to a housing cooperative organized under chapter 7 and whose sole purpose is to provide principal residences for all of its members or shareholders, or to an affordable housing cooperative under chapter 14 of Title 11, of property to be used as the principal residence of a member or shareholder, the tax shall be imposed in the amount of five-tenths of one percent of the first $100,000.00 in value of the residence transferred and at the rate of one and one-quarter percent of the value of the residence transferred in excess of $100,000.00; provided that the homesite leased by the cooperative is used exclusively as the principal residence of a member or shareholder. If the transferee ceases to be an eligible cooperative at any time during the six years following the date of transfer, the transferee shall then become obligated to pay any reduction in property transfer tax provided under this subdivison, and the obligation to pay the additional tax shall also run with the land.

Sec. 44. 23 V.S.A. 4(21) is amended to read:

(21) "Motor vehicle" shall include all vehicles propelled or drawn by power other than muscular power, except tractors used entirely for work on the farm, vehicles running only upon stationary rails or tracks, motorized highway building equipment, road making appliances or snowmobiles, or implements of husbandry, or tracked vehicles;

Sec. 45. 32 V.S.A. 9741 is amended to read:

9741. SALES NOT COVERED

Receipts from the following shall be exempt from the tax on retail sales imposed under section 9771 of this title and the use tax imposed under section 9773 of this title.

* * *

(12) Motor vehicle purchases and use taxed under chapter 219 of this title and the transactions exempted therefrom which are listed in section 8911 of this title. Providedhowever, that notwithstanding section 8911(5), construction, earthmoving, logging and motorized equipment which has not been registered as a motor vehicle is subject to tax under this chapter; and further provided that power take off and other auxiliary equipment on motor vehicles, whether attached prior to or subsequent to registration is not exempt under this section.

* * *

(38) Tax on the purchase or use of a tracked vehicle shall not exceed $900.00.

Sec. 46. 7 V.S.A. 2(16) is amended to read:

(16) "Person", as applied to licensees: individuals who are both citizens and residents of the state, partnerships composed solely of individuals a majority of whom are both citizens and residents of the state, and to corporations organized under the laws of this state whereof a majority of the directors are both citizens of the United States and residents of this state, or to corporations subject to the jurisdiction of the public service board, and to limited liability companies organized under the laws of this state in which a majority of the members are both citizens of the United States and residents of this state.

Sec. 47. TAX EXPENDITURE STUDY

The amount of $100,000.00 is appropriated from the general fund for fiscal year 1997 to the Department of Taxes for the purpose of conducting a tax expenditure study of the personal income tax, the corporate income tax, the meals and rooms tax, and the sales and use tax. The study shall be presented to the House Ways and Means and Commerce Committees, Senate Finance Committee, House and Senate Appropriations Committees, and the Joint Fiscal Committee of the General Assembly no later than December 15, 1997.

Sec. 48. EFFECTIVE DATES

(a) Sec. 7 of this act (Vermont home mortgage guarantee board quarterly financial statements) shall be repealed on July 1, 2002.

(b) Sec. 13 of this act (income tax exemption for National Guard pay) shall apply to tax years beginning on and after January 1, 1997.

(c) Sec. 15 of this act (annual update of piggyback to federal income tax laws) shall take effect on January 1, 1996.

(d) Sec. 24 of this act (exclusion of caregiver's income in property tax rebatecalculation) shall apply to claims filed for property tax rebates for calendar years 1997 and after.

(e) Sec. 36 of this act (exempting certain charitable sales of cut flowers from sales tax) shall apply to sales on or after January 1, 1998.

(f) Sec. 43 of this act (relating to property transfer tax on transfers to housing cooperatives) shall apply to transfers on and after July 1, 1993.

(g) Sec. 6 (property transfer tax exemption) shall be repealed on July 1, 2000.

(h) All other sections of this act shall take effect from passage.

Sec. 49. PROPERTY TRANSFER TAX REFUND REQUESTS

Refund requests under Sec. 43 of this act must be made to the commissioner of taxes in writing by April 15, 1998. If the total amount of refunds due under this section, including interest, exceeds $100,000.00, refunds shall be prorated so that the total payments do not exceed $100,000.00.

Approved: June 26, 1997