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NO. 156. AN ACT RELATING TO MISCELLANEOUS TAX AMENDMENTS.

(H.771)

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

Sec. 1. COMMISSIONER'S AUTHORITY TO CONTRACT FOR PRIVATE

COLLECTION OF TAXES

Notwithstanding Sec. 3 of No. 82 of the Acts of 1995 (Adj. Sess.), Secs. 1 and 2 of No. 82, authorizing the commissioner of taxes to contract with private collection agencies for collection of taxes and requiring quarterly reports to the legislature, are not repealed July 1, 1998, but shall continue in effect until further action of the General Assembly.

Sec. 2. 32 V.S.A. § 3803 is amended to read:

§ 3803. EXEMPTIONS FROM LOCAL TAXATION

Except as otherwise provided, the following property shall not be set in the grand list to the owner thereof:

(1) real and personal estate used in operating a railroad, and appraised under sections 8281-8286, 8301-8306, 8321-8322, of this title including the section of the North Stratford, New Hampshire to Beecher Falls, Vermont railroad line owned by the state of New Hampshire and situated in the town of Canaan exempted from taxation under section 8286 of this title;

Sec. 3. 32 V.S.A. § 5811(3)(A) is amended to read:

(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 theUnited States, with the exception of the following entities which are exempt from taxation under this chapter:

(A) Railroad*[, express, telegraph, steamboat, trolley, or electric railway corporations, pipe line corporations engaged exclusively in interstate commerce with no receipts or deliveries within this state,]* and insurance, surety and guaranty companies, mutual or otherwise;

Sec. 4. 32 V.S.A. § 5823(a)(5) is amended to read:

(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:

* * *

(5) That portion of wages which is required to be included as adjusted gross income as provided in section 280(c) of the United States Income Tax Code which relates to federal tax credit incentive work programs and that portion of expenses which is required to be included as adjusted gross income as provided in section 44 of the United States Tax Code which relates to federal disabled access credit.

Sec. 5. 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, *[1996]* 1997," 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. 6. 32 V.S.A. § 5855(b) is amended to read:

(b) No interest or penalty shall be assessed for underpayment of estimated tax for any taxable year if:

(1) the tax shown on the return for such taxable year (or, if no return is filed, the tax), reduced by the amount deducted and withheld for the taxable year under subchapter 4 of this chapter, is less than *[$125.00]* $250.00; or

(2) the preceding taxable year was a taxable year of 12 months and the taxpayer did not have any liability for tax for the preceding taxable year.

Sec. 7. 32 V.S.A. § 5858(6) is added to read:

(6) The commissioner may authorize payment by electronic funds transfer. The commissioner may require payment by electronic funds transfer from any taxpayer who is required by federal tax law to pay any federal tax in that manner, or from any taxpayer who has submitted to the tax department two or more protested or otherwise uncollectible checks with regard to any state tax payment in the prior two years.

Sec. 8. 32 V.S.A. § 5862d is added to read:

§ 5862d. FILING OF FEDERAL FORM 1099

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.

Sec. 9. 32 V.S.A. § 5934 is amended to read:

§ 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) *[At the time of the transfer of funds to a claimant agency, the department shall notify each taxpayer whose refund is sought to be set off that the transfer has been made, a copy of which shall be sent to the claimant agency. The notice shall state that the taxpayer has the opportunity to]* 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.

Sec. 10. 32 V.S.A. § 8101 is amended to read:

§ 8101. IMPOSITION OF TAX

A state tax for the payment of state expenses is hereby assessed upon the property, business or corporate franchises of railroad, insurance, guaranty, *[express, telegraph,]* *[steamboat, car,]* transportation *[and sleeping car companies]*, mortgage, loan or investment companies, *[and other corporations, persons, associations, societies or firms]* and shall be payable in money to the commissioner of taxes for the use of the state as hereinafter provided.

Sec. 11. REPEAL

The following sections in Title 32 are repealed:

(1) § 8301 (appraisal of power plants for electric railroads).

(2) § 8302 (appraisal of transmission lines relating to electric railroads).

(3) § 8303 (record and use of appraisals).

(4) § 8304 (determination of energy consumption).

(5) § 8305 (apportionment of tax receipts among towns).

(6) § 8306 (payment of apportioned tax receipts to towns).

(7) § 8434 (steamboat operator liability for franchise tax).

Sec. 12. 32 V.S.A. § 8321 is amended to read:

§ 8321. GENERAL RULE

All appraisals made under the provisions of article 4 *[and article 5]* of this subchapter shall be made in each even year on or before December 31.

Sec. 13. 32 V.S.A. § 8322(b) is amended to read:

(b) When, subsequent to the time thereof appraisals are required to be made in an even year, a person or corporation operating a railroad constructs, acquires or begins to use one or more electric power plants subject to the appraisal under the provisions of article 4 *[or 5]* of this subchapter, the commissioner shall, on or before December 31 in the year in which such plant was constructed, acquired or first used in whole or in part for railroad purposes, appraise such plants in the manner hereinbefore provided for appraising such property.

Sec. 14. 32 V.S.A. § 8341 is amended to read:

§ 8341. RECORD OF APPRAISALS

On or before January 15 following any appraisal made under the provisions of articles 4*[, 5]* and 6 of this subchapter, the commissioner shall make a record thereof in a book kept in *[his]* the commissioner's office for that purpose.

Sec. 15. 32 V.S.A. § 8343 is amended to read:

§ 8343. NOTICE OF APPRAISAL; TIME APPRAISAL IN FORCE

On or before January 15 following such appraisals, the commissioner shall notify in writing, by mail or otherwise, every person or corporation operating a railroad located in whole or in part within this state of the amount of all appraisals of property so operated by them and required to be appraised under the provisions of articles 4*[, 5]* and 6 of this subchapter and the amount of taxes annually assessed therein. Failure on the part of the commissioner to give such notice, or of the person or corporation to receive the same, shall not invalidate such appraisal. An appraisal of such property made pursuant to the provisions of this chapter shall remain in full force and effect until a subsequent appraisalhas been lawfully made and established.

Sec. 16. 32 V.S.A. § 8361(c) is amended to read:

(c) Such superior judge shall appraise at its fair and just value all property required to be appraised by the commissioner under the provisions of sections 8281-8286, *[8301-8306,]* 8321 and 8322 of this title, from the appraisal of which an appeal has been taken. Such appraisal shall be made pursuant to the provisions of this chapter and shall stand in lieu of the appraisal made by the commissioner from which such appeal is taken.

Sec. 17. 32 V.S.A. § 8363 is amended to read:

§ 8363. APPRAISAL INVALID IN PART

When an action is pending to recover a tax assessed upon an appraisal made under the provisions of articles 4*[, 5,]* and 6 of this subchapter and it shall be therein determined that such appraisal is valid in part, the court shall render judgment for so much of such tax as is based upon that portion of such appraisal so determined to be valid.

Sec. 17a. 32 V.S.A. § 8431(a) and (c) are amended to read:

(a) A *[steamboat,]* car or transportation company, annually, on or before July 1, shall make returns to the commissioner showing the description and value of all its real and personal estate, its equipment, the amount and value of its capital stock, its funded and floating debts, its bonds secured by mortgage or other security on the property of such corporation, the market value of all its stock and bonds and the amount of dividends, interest or indebtedness paid annually or semiannually, also of all stock, bonds, securities and surplus held by such company.

(c) The term "car or transportation company" includes freight line and equipment companies, but does not include steamboat companies.

Sec. 18. REPEAL

The following sections in Title 32 are repealed:

(1) § 8461 (tax on express companies).

(2) § 8491 (tax on telegraph companies).

(3) § 8492 (alternative tax on telegraph companies).

(4) § 8493 (election of tax).

Sec. 19. 32 V.S.A. § 9243 is amended to read:

§ 9243. RETURNS AND PAYMENT

Sec. 20. 32 V.S.A. § 9617(h) is added to read:

(h) At any time within three years after the date a property is transferred, a taxpayer may petition the commissioner in writing for the refund of all or any part of the amount of tax paid. The commissioner shall thereafter grant a hearing subject to the provisions of chapter 25 of Title 3 upon the matter and notify the taxpayer in writing of his or her determination concerning the refund request. The commissioner's determination may beappealed as provided in subsection (e) of this section. This shall be a taxpayer's exclusive remedy with respect to the refund of taxes under this chapter.

Sec. 21. 32 V.S.A. § 9741(43) is added to read:

(43) Sales of scrap materials generated in the course of construction or demolition and diverted from waste disposal at the construction or demolition job site; provided that the sale is not by the generator and is by a person who received the materials from the generator with no payment.

Sec. 22. 32 V.S.A. § 9775(a) is amended to read:

(a) Every person required to collect or pay tax under this chapter shall, where the sales and use tax liability under this chapter for the immediately preceding calendar year has been (or would have been in cases when the business was not operating for the entire year) $1,000.00 or less, pay the tax imposed by this chapter in quarterly installments on or before the 25th day of the calendar month succeeding the quarter ending on the last day of March, June, September and December of each year. In all other cases, the tax imposed by this chapter shall be due and payable monthly on or before the 25th (23rd of February) day of the month following the month for which the tax is due. Payment by electronic funds transfer does not affect the requirement to file returns. The return of a vendor of tangible personal property shall show his receipts from sales and also the aggregate value of tangible personal property sold by him, the use of which is subject to tax under this chapter. The return of a recipient of amusement charges shall show all those charges and the amount of tax thereon. The return of a telecommunications service provider shall show all receipts on which a tax must be paid by a purchaser and the amount of tax thereon.

Sec. 23. 32 V.S.A. § 9776 is amended to read:

§ 9776. PAYMENT OF TAX

Every person required to file a return under this chapter shall, at the time of filing the return, pay to the commissioner the taxes imposed by this chapter as well as all other moneys collected under this chapter; provided, however, that every person who collects the tax from purchasers of taxable items according to the tax bracket schedule of section9772 of this title shall be allowed to retain, as partial compensation for services rendered to the state of Vermont in collecting the tax, any amount lawfully collected in excess of the tax imposed by this chapter. The commissioner may authorize payment by electronic funds transfer. The commissioner may require payment by electronic funds transfer from any taxpayer who is required by federal tax law to pay any federal tax in that manner, or from any taxpayer who has submitted to the tax department two or more protested or otherwise uncollectible checks with regard to any state tax payment in the prior two years. All the taxes for the period for which a return is required to be filed or for such lesser interval as shall have been designated by the commissioner, shall be due and payable to the commissioner on the date limited for the filing of the return for that period, or on the date limited for such lesser interval as the commissioner has designated, without regard to whether a return is filed or whether the return which is filed correctly shows the amount of receipts, amusement charges or the value of property or services sold or purchased or the taxes due thereon.

Sec. 24. 32 V.S.A. § 9781(a) is amended to read:

(a) As provided in this section the commissioner shall refund or credit any tax, penalty or interest erroneously, illegally or unconstitutionally collected or paid if application to the commissioner for the refund shall be made within three years from the *[payment thereof]* date the return was required to be filed. The application may be made by a customer who has actually paid the tax. The application may also be made by a person required to collect the tax, who has collected and paid over the tax to the commissioner, provided that the application is made within three years of the payment to him by the customer, but no actual refund of moneys shall be made to a person until he shall first establish to the satisfaction of the commissioner, under such regulations as he may prescribe, that he has repaid to the customer the amount for which the application for refund is made. The commissioner may, in lieu of any refund, allow credit on payments due from the applicant.

Sec. 25. 13 V.S.A. § 5236(e) is amended to read:

(e) The commissioner of taxes or the commissioner's designee, when requested by the clerk of court or the judicial officer shall furnish the requester with a nonspecific report ofthe *[taxable income solely attributable to the applicant]* adjusted gross income as shown on the Vermont tax return of the applicant or, in the case of a joint return, the applicant and the applicant's spouse as it relates to the federal poverty income guidelines in effect as of December 31 of the year for which the tax information is requested. Such report shall only identify whether the *[individual's]* income of the applicant (or the applicant and the applicant's spouse in the case of a joint return) is at or below the federal poverty income guidelines applicable to family size or is within the following percentages of those guidelines:

101-124%

125-150%

151-175%

176-200%, or

over 200%

Information furnished to the requester shall be made available to the applicant and the court.

Sec. 26. 33 V.S.A. § 4105(b) is amended to read:

(b) The office of child support may request any information needed to establish, modify, or enforce a child support or parental rights and responsibilities order or to locate any person alleged to be a parent owing a duty of support from the records of all governmental officials, departments and other governmental agencies of this state without a subpoena. The officials and employees of the departments and other agencies shall provide all such information requested. Only information directly bearing on the identity and whereabouts of parents or alleged parents or their assets or income may be requested, used or transmitted by the office of child support under this section. Any information provided by the tax department shall include information about assets held by or income attributable to the parent jointly with any other person *[but shall not include information about the sole assets or income attributed solely to a person not the parent]*.

Sec. 27. 32 V.S.A. § 10208 is added to read:

§ 10208. APPEALS

Any licensee aggrieved by an action taken under subsection 10207(c) of this chapter and any person aggrieved by the commissioner's refusal to issue or renew a license under this chapter may appeal in writing to the commissioner for review of such action. The commissioner shall thereafter grant a hearing subject to the provisions of chapter 25 of Title 3 upon the matter and notify the aggrieved person in writing of his or her determination. The commissioner's determination may be appealed within 30 days to the Washington superior court or the superior court of the county in which the taxpayer resides or has a place of business.

Sec. 28. 24 V.S.A. § 1530 is amended to read:

§ 1530. COMPENSATION

A *[town]* municipality may make such agreement with the collector of taxes or collector of delinquent taxes in respect to *[his]* fees and commissions, as is judged advantageous to the *[town and the town school district]* municipality. However, if *[such]* the municipality votes to pay *[him]* a salary or other compensation for collecting taxes *[,]* in lieu of *[his]* fees and commissions, the latter shall be turned *[into]* in to the *[town or town school district treasury]* municipal treasurer at least once a month.

Sec. 29. 32 V.S.A. § 9771a(b) is amended to read:

(b) No purchaser or user shall be subject to tax under subdivision 9771(5) of this title in excess of $10,000.00 in any one calendar year. *[A purchaser or user may annually, on or after January 1, apply to the commissioner for a refund of taxes paid in the prior calendar year in excess of $10,000.00 on telecommunications services, and upon proof sufficient to the commissioner, the commissioner shall refund the excess to the purchaser or user, without interest.]*

Sec. 30. 32 V.S.A. § 9771(6) is added to read:

(6) The sale at retail of a prepaid telephone calling card or prepaid telephone authorization number; or the reauthorization of a prepaid telephone calling card or a prepaid telephone authorization number. If the sale or recharge of a prepaid telephonecalling card or authorization number does not take place at the vendor's place of business, it shall be conclusively determined to take place at the customer's shipping address, or if there is no item shipped, then at the customer's billing address.

Sec. 31. 30 V.S.A. § 7501(b)(5)(B)(vi) is added to read:

(vi) Charges incurred by utilizing prepaid telephone calling cards or prepaid authorization numbers.

Sec. 32. EXTENSION OF FUEL GROSS RECEIPTS TAX

Notwithstanding Sec. 5 of No. 158 of the Acts of 1996 or any other provision of law, section 2503 of Title 33, imposing a fuel gross receipts tax for the purpose of securing the safety and health of low income Vermont households, particularly families with (or expecting) children eligible and potentially eligible under the applicable income standards for Temporary Assistance to Needy Families, to fund the home weatherization assistance program, shall not terminate on June 30, 1998 but shall continue in effect until July 1, 2003. The Director of the Office of Economic Opportunity shall report to the House Committees on Ways and Means and Health and Welfare and the Senate Committees on Finance and Health and Welfare and to the general assembly on or before December 31, 1999, and on or before December 31, 2001, the results of an independent evaluation of the weatherization program for the prior two program years. The evaluation shall include a report on the cost effectiveness of the program, including the value of energy savings, the number of households served, reduction in air leakage rate and project benefit-to-cost ratio. The auditor of accounts shall conduct a performance audit of the weatherization assistance program, including an evaluation of the program's progress in providing services to all eligible low income Vermont households, and shall report the findings and recommendations of the audit to the general assembly on or before December 31, 2002.

Sec. 33. [DELETED.]

Sec. 34. 32 V.S.A. § 5401(10)(D)(i) is amended to read:

(i) utility cables and lines, poles and fixtures (except those taxed under subchapter 6 of chapter 211 of Title 32); provided that utility cables, lines, poles and fixtures located on homestead property and owned by the person claiming the homesteadshall be taxed as homestead property;

Sec. 35. 32 V.S.A. § 3202 is added to read:

§ 3202. INTEREST AND PENALTIES

(a) Failure to pay; interest. When a taxpayer fails to pay a tax liability imposed by this title (except the motor vehicle purchase and use tax) on the date prescribed therefor, the commissioner may assess and the taxpayer shall then pay, a sum of interest computed at the rate per annum established by the commissioner pursuant to section 3108 of this title on the unpaid amount of that tax liability for the period from the prescribed date to the date of full payment of the liability.

(b) Penalties.

(1) Failure to file. When a taxpayer fails to file a tax return required by this title (other than a return required by subchapter 5 of chapter 151 of this title for estimation of nonwithheld income tax), on the date prescribed therefor or the date as extended pursuant to section 5868 of this title, unless the taxpayer affirmatively shows that such failure is due to reasonable cause and not due to willful neglect, then in addition to any interest payable pursuant to subsection (a) of this section, the commissioner may assess and the taxpayer shall then pay, a penalty which shall be equal to five percent of the outstanding tax liability for each month, or portion thereof, that the tax return is not filed; provided, however, that in no event shall the amount of any penalty imposed under this subdivision exceed 25 percent of the tax liability unpaid on the prescribed date of payment. If the return is not filed within 60 days after the date prescribed therefor, there shall be assessed a minimum penalty of $50.00 regardless of whether there is a tax liability.

(2) Failure to pay estimated tax. When a taxpayer fails to make payments as required by subchapter 5 of chapter 151 of this title (estimations of nonwithheld income tax), the commissioner may assess and the taxpayer shall then pay a penalty which shall be equal to two percent of the outstanding tax liability for each month, or portion thereof, that the tax liability is not paid in full; provided, however, that in no event shall the amount of any penalty assessed under this subdivision exceed 25 percent of the tax liability unpaid on the prescribed date of payment.

(3) Failure to pay. When a taxpayer fails to pay a tax liability imposed by this title (other than a return required by subchapter 5 of chapter 151 of this title for estimation of nonwithheld income tax), on the date prescribed therefor, then in addition to any interest payable pursuant to subsection (a) of this section, the commissioner may assess and the taxpayer shall then pay a penalty which shall be equal to five percent of the outstanding tax liability for each month, or portion thereof, that the tax liability is not paid in full; provided, however, that in no event shall the amount of any penalty assessed under this subdivision exceed 25 percent of the tax liability unpaid on the prescribed date of payment. (4) Negligent failure to pay. When a taxpayer fails to pay a tax liability imposed by this title and the failure is due to negligence or constitutes a substantial understatement of tax, in addition to any interest payable pursuant to subsection (a) of this section, the commissioner may assess and the taxpayer shall then pay a penalty which shall be equal to 25 percent of that portion of the underpayment. For purposes of this subdivision, "negligence" means any failure to make a reasonable attempt to comply with the provisions of the tax code and "substantial understatement" means an understatement of 20 percent or more of the tax.

(5) Fraudulent failure to pay. When a taxpayer fraudulently or with willful intent to defeat or evade a tax liability imposed by this title, either fails to pay a tax liability on the date prescribed therefor or requests and receives a refund of a tax liability, in addition to any interest payable pursuant to subsection (a) of this section, the commissioner may assess and the taxpayer shall then pay, a penalty equal to the amount of the tax liability unpaid on the prescribed date of payment or received as a refund subsequent to that date.

(6) A failure to pay shall not be subject to more than one of the penalties set forth in subdivisions (3), (4) and (5) of this subsection.

Sec. 36. 32 V.S.A. § 3203 is added to read:

§ 3203. NOTICE OF DEFICIENCIES; ASSESSMENT OF PENALTIES AND

INTEREST

If the commissioner finds that any taxpayer has failed to discharge in full the amount of any tax liability incurred under this title, or that a penalty or interest should be assessedunder it, the commissioner shall notify the taxpayer of the deficiency or assess the penalty or interest, as the case may be, by mail. The mailing of the notice shall be presumptive evidence of its receipt by the person to whom it is addressed. Any period of time which is determined under this chapter by the giving of notice shall commence to run from the date of mailing of the notice.

Sec. 37. REPEAL AND CORRECTION OF STATUTORY REFERENCES

The following statutes are repealed:

(1) 32 V.S.A. § 5869 (relating to penalty for late filing);

(2) 32 V.S.A. § 5875 (relating to penalty and interest for delinquent payment);

(3) 32 V.S.A. § 5881 (relating to notice of deficiencies);

(4) 32 V.S.A. § 7482 (relating to penalty for late filing estate tax returns);

(5) 32 V.S.A. § 7484 (relating to penalty and interest for delinquent payment of estate tax);

(6) 32 V.S.A. § 7485 (relating to notices of deficiency and assessment of penalty and interest);

(7) 32 V.S.A. § 7820 (relating to civil penalties for cigarette and tobacco products taxes);

(8) 32 V.S.A. § 9278 (relating to late filing fees, penalties and interest for meals and rooms tax);

(9) 32 V.S.A. § 9612 (relating to interest on property transfer tax);

(10) 32 V.S.A. § 9613 (relating to penalties on property transfer tax); and

(11) 32 V.S.A. § 9814 (relating to late filing fees, penalties and interest for sales and use tax);

and the statutory revision commission is directed to revise all references to penalties in Title 32 to conform with the amendments in Secs. 35, 36 and 37 of this act.

Sec. 37a. 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 shallpay an annual tax of $250.00 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 for state purposes in the same manner as taxed under the Internal Revenue Code. Partnerships whose activities are limited to the maintenance and management of their intangible investments and whose annual investment income does not exceed $5,000.00 and whose total assets are not in excess of $20,000.00 shall be exempt from the tax imposed by this section.

Sec. 38. 32 V.S.A. § 3204 is added to read:

§ 3204. PROCESSING FEE

A manual processing fee of $25.00 may be assessed against any taxpayer who files or on whose behalf is filed an unacceptable return or against any paid preparer who files an unacceptable return on behalf of a taxpayer. An unacceptable return is one which is not on a form issued by or approved by the commissioner or which requires the department to take steps in addition to its normal processing procedures to process. The department may reduce any refund due the taxpayer by the amount of the fee.

Sec. 39. 32 V.S.A. § 435(b)(10) is amended to read:

(b) The general fund shall be composed of revenues from the following sources:

* * *

(10) *[Property]* 32.56 percent of the revenue from the property transfer taxes levied pursuant to chapter 231 of this title and the first $500,000.00 of the gains taxes levied each year pursuant to chapter 236 of this title;

* * *

Sec. 40. 10 V.S.A. § 312 is amended to read:

§ 312. CREATION OF VERMONT HOUSING AND CONSERVATION TRUST

FUND

There is created a special account in the state general fund to be known as the "Vermont housing and conservation trust fund." The fund shall be administered by theboard and expenditures therefrom shall only be made to implement and effectuate the policies and purposes of this chapter. *[Deposits shall be made to the fund from]* The fund shall be comprised of 56 percent of the revenue from the property transfer tax under chapter 231 of Title 32 and any moneys from time to time appropriated *[thereto]* to the fund by the general assembly *[and]* or received from any other source, private or public, approved by the board. Unexpended balances and any earnings shall not revert to the general fund but shall remain in the fund for use in accord with the purposes of this chapter.

Sec. 41. 24 V.S.A. § 4306(a) is amended to read:

(a) A municipal and regional planning fund for the purpose of assisting municipal and regional planning commissions to carry out the intent of this chapter is hereby created in the state treasury. The fund shall be comprised of 11.44 percent of the revenue from the property transfer tax under chapter 231 of Title 32 and any moneys from time to time appropriated to the fund by the general assembly or received from any other source, private or public. All balances at the end of any fiscal year shall be carried forward and remain in the fund. Interest earned by the fund shall be deposited in the fund.

Sec. 42. ALLOCATION OF EXCESS PROPERTY TRANSFER TAX REVENUES

In the event the total annual revenues from the property transfer tax exceed $15.1 million in any fiscal year, then notwithstanding any other provisions of law, such excess amounts shall be paid as follows:

20 percent to the general fund;

30 percent to the Vermont Housing and Conservation Trust Fund;

50 percent to the Municipal and Regional Planning Fund.

Sec. 43. REPEAL

Sec. 281(c) of No. 63 of the Acts of 1995 (transfers of revenues from the property transfer tax to the housing and conservation trust fund and the municipal and regional planning fund) is repealed, effective June 30, 1998.

Sec. 44. EFFECTIVE DATES AND TRANSITIONAL PROVISIONS

Secs. 39 through 42 (allocation of property transfer tax revenue) shall take effect July1, 1998, but shall not be construed to alter or amend the appropriations in Secs. 228 and 266 of H. 755, the fiscal year 1999 general appropriations act. Sec. 42 (allocation of property transfer tax revenue in excess of $15.1 million) shall sunset July 1, 2002.

Sec. 45. 10 V.S.A. § 322(a)(7) is added to read:

§ 322. ALLOCATION SYSTEM

(a) In determining the allocation of funds available for the purposes of this chapter, the board shall give priority to projects which combine the dual goals of creating affordable housing and conserving and protecting Vermont's agricultural land, historic properties, important natural areas or recreation lands and also shall consider, but not be limited to, the following factors:

* * *

(7) geographic distribution of funds.

Sec. 46. 32 V.S.A. § 932 is amended to read:

§ 932. *[PETITION]* CLAIMS AGAINST THE STATE

(a) A person who has a claim against the state, the payment of which is not otherwise specially provided for by law, *[shall file with the commission a petition under oath stating the facts relating to the same. A claim against the state under this subchapter shall be filed within eighteen months after the date the claim accrued]* may file a claim in small claims court in accordance with chapter 187 of Title 12. Notwithstanding 12 V.S.A. § 5531(a), judgments on such claims shall not exceed $2,000.00.

(b) A claim under this subchapter shall be filed within 18 months after the date the claim accrued, and shall not be filed until the claimant has exhausted any duly adopted administrative grievance procedure of the state agency or department against which the claim is made. If the agency or department has not issued a final determination within 90 days after the grievance was filed, then for purposes of a claim under this subchapter, the grievance claim shall be deemed granted.

Sec. 47. 32 V.S.A. § 933 is amended to read:

§ 933. HEARING

(a) Notwithstanding 12 V.S.A. § 5535, claims to the small claims court brought under this subchapter shall be decided by the court with no jury. An appeal from the decision of the small claims court shall be in accordance with provisions of 12 V.S.A. § 5538.

(b) The small claims court shall decide a claim filed under this subchapter by an inmate of a correctional facility on the basis of affidavits of the parties and testimony by telephone; or the court may in its discretion request additional evidence to decide such claims.

(c) Upon award of damages by the small claims court, the commissioner of finance and management shall issue a warrant for such amount, the acceptance of which shall be a full discharge of all claims against the state arising out of the matters involved therein.

Sec. 48. REPEAL

Sections 931 (creation of claims commission) and 934 (proof of claims) of Title 32 are repealed.

Sec. 49. EFFECTIVE DATE AND TRANSITION PROVISIONS

Secs. 46 through 48 of this act (claims commission) shall take effect from passage. Notwithstanding 32 V.S.A. § 932, any person who, at the time of passage of this act, has a claim pending before the claims commission or appeal pending before the legislature may, within six months from the passage of this act, refile the claim or matter being appealed as a small claims procedure in accordance with the provisions of chapter 187 of Title 12.

Sec. 49a. PAYMENT OF CLAIMS

(a) The commissioner of finance and management is directed to pay the sum of $284.00 to Mr. Eric Searles in full discharge of his June 8, 1992 appeal to the general assembly from a decision of the claims commission denying his claim against the state for$970.00.

(b) The commissioner of finance and management is directed to pay the sum of $75.00 to Mr. Reginald E. Duval, Jr. in full discharge of his March 23, 1993 appeal to the general assembly from a decision of the claims commission denying his claim against the state for $196.56.

(c) The general assembly hereby resolves the April 15, 1993 appeal of Mr. Ernest Miller from a decision of the claims commission by affirming the claims commission's denial of Mr. Miller's claim against the state for $707.15 for damage to a television set.

(d) The commissioner of finance and management is directed to pay the sum of $272.06 to Mr. Roscoe Miller in full discharge of his March 16, 1998 appeal to the general assembly from a decision of the claims commission denying his claim against the state for $1,345.00.

Sec. 50. 32 V.S.A. § 5409(6) is added to read:

(6) A municipality's liability to the state for education property taxes shall not be reduced by any early payment property tax discount or similar discount offered by the municipality.

Sec. 51. 32 V.S.A. § 5811(19) is added to read:

(19) "Commercial film production" means production of motion pictures intended for theater or video release or exhibition on international or national television by a network, cable network or for syndication; or production of television advertisements; or production of a pilot for, or an episode or segment of, an internationally or nationally televised series by a network, cable network or for syndication or video release.

Sec. 52. 32 V.S.A. § 5823(b) is amended to read:

(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 throughthe federal armed forces educational loan repayment program under 10 U.S.C. chapters 109 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 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) received with respect to services performed within this state; and also excluding income received for a dramatic performance in a commercial film production to the extent such income would be excluded from personal income taxation in the state of residence;

(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 *[.]* ;

but excluding income received for a dramatic performance in a commercial film production to the extent such income would be excluded from personal income taxation in the state of residence;

* * *

Sec. 53. 32 V.S.A. § 5826 is added to read:

§ 5826. CREDIT FOR INCOME FROM COMMERCIAL FILM PRODUCTION

A credit shall be available against the tax imposed for that taxable year by section 5822 of this title upon the taxpayer's income received for a dramatic performance in a commercial film production during that taxable year. The credit shall be in the amount bywhich the Vermont tax on such income, without regard to this credit, exceeds the highest personal income tax rate in the taxpayer's state of residence, multiplied by the Vermont commercial film production income.

Sec. 54. EFFECTIVE DATES

Secs. 51 through 53 (income from performance in a commercial film production) shall be effective for tax years beginning on and after January 1, 1998 and ending on or before December 31, 2000.

Sec. 55. REPORT ON EFFECTIVENESS OF FILM PRODUCTION TAX BENEFITS

The department of taxes and the Vermont film commission shall study the effectiveness of the commercial film production tax incentives in this act, and shall report to the House Committee on Ways and Means and the Senate Committee on Finance on or before January 10, 2000, the costs and benefits of the incentives, the level of commercial film production activity in Vermont in the prior two years, and any recommendations for additional incentives to encourage the entertainment industry to locate film productions in Vermont.

Sec. 56. DETERMINATION OF FISCAL YEAR 2000 EQUALIZED YIELD

AMOUNT AND STATEWIDE EDUCATION PROPERTY TAX RATE

(a) In fiscal year 2000, any municipality having a fiscal year 1999 equalized statewide education property tax rate of:

(1) at least $0.65 but not more than $1.10 shall be subject to the statewide property tax under chapter 135 of Title 32 at an equalized rate of $1.10;

(2) less than $0.65 shall be subject to the statewide property tax under chapter 135 of Title 32 at an equalized rate of the greater of the 1999 rate plus $0.45, or the 1999 rate plus 80 percent of the difference between that rate and $1.10;

(3) more than $1.10 shall be subject to the statewide property tax under chapter 135 of Title 32 at an equalized rate of $1.11.

(b) In fiscal year 2000 the equalized yield amount, as defined in subdivision 4001(4) of Title 16, shall be guaranteed to yield $40.00.

Sec. 57. 10 V.S.A. § 279b(c) is amended to read:

(c) Upon entering into a contract with a participating bank, the full faith and credit of the state shall be pledged in the amount of $50,000.00 to the reserve account of such bank, created under section 279 of this title. Such amount shall be reduced on a pro rata basis for actual reserve fund contributions resulting from loans made under this subchapter; and such pledge shall be eliminated *[three]* six years from the date that the participating bank contract *[has been]* was executed, or June 20, 1994, whichever is later.

Sec. 58. TRANSITIONAL STATEWIDE PROPERTY TAX RATES

For the purpose of calculating the transitional 1999 statewide property tax rate under Sec. 50(a) of No. 60 of the Acts of 1997, the town school district of Winhall shall have a transitional effective statewide property tax rate under chapter 135 of Title 32 equal to that district's 1996 actual education tax rate plus $0.30, and in addition, for the purposes of calculating the benefits of the 40 percent limitation under Sec. 50(a), the town school district of Winhall shall be considered to have an education budget equal to its education budget in fiscal year 1997 adjusted by any increase in the index for state and local purchases of goods and services.

Sec. 59. EFFECTIVE DATES

(a) Sec. 5 (credit for changes in federal law) shall apply to taxable years beginning on and after January 1, 1997.

(b) Secs. 4 (disabled access credit) and 6 (increase in safe harbor for underpayment of estimated tax) and Sec. 37a (minimum tax exemption for investment partnerships) shall apply to taxable years beginning on and after January 1, 1998.

(c) Sec. 21 (sales tax exemption for recycled construction waste materials) and Secs. 30 and 31 (taxation of prepaid calling cards) shall apply to sales on and after July 1, 1998.

(d) (Deleted.)

(e) Secs. 35, 36 and 37 (tax penalties) shall be effective with respect to interest and penalties assessed for taxable years beginning on and after January 1, 1999.

(f) All other sections of this act shall be effective upon passage.

Approved: April 29, 1998