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ACT NO. 156
Miscellaneous Tax Act
This act makes miscellaneous amendments to state tax laws.
Sec. 1. In 1996 the legislature broadened the authority of the department of taxes to contract with private collection agencies to collect delinquent taxes. Under the broader authority, agencies are no longer limited to collecting from nonresidents or to collecting only withholding, meals and rooms and sales and use taxes which are delinquent 540 days. They may now collect all taxes that are delinquent, regardless of how long they have been delinquent. The 1996 law sunsets on July 1, 1998. This section repeals that sunset.
Sec. 2. Certain kinds of companies (railroads, express companies, telegraph, telephone and insurance companies) are subject to a franchise tax rather than to the general corporate income tax. The property subject to these franchise taxes is also exempted from local property tax. Since some of these types of companies no longer exist in Vermont (express, telegraph, electric railroad), pertinent statutes are being revised to exclude reference to these types of business. Thus, Sec. 2 repeals the exemption from local property tax for express and telegraph companies. See also Secs. 3 and 10 through 18.
Sec. 2 also removes modifying language in subdivision (3) of section 3803 (insurance, surety or guaranty companies) and all of subdivision (5), in order to clarify that intangibles are not subject to property tax regardless of who owns the intangible. These statutes are a holdover from when towns taxed intangible property.
Sec. 3. Removes the exemption from the corporate income tax for types of businesses which no longer exist in Vermont (express, telegraph, etc.). As a result, if any of these companies were being operated in Vermont, they would henceforth be taxed under the corporate income tax (and not taxed under the franchise tax - see Sec. 2 above). Also removes the exemption for steamboats (See Sec. 17a).
Sec. 4. The Vermont Supreme Court has required the state to allow a Vermont income tax benefit to match the federal credit for certain work program expenses. In re Knosher, 139 Vt. 285 (1981). That case appears to require that Vermont also allow a state income tax benefit to match a federal benefit for certain business expenditures made in order to comply with the Americans with Disabilities Act. Sec. 4 provides a Vermont income tax benefit for ADA business expenditures. Fiscal impact is estimated to be so small as to be negligible.
Sec. 5. 32 V.S.A. § 5824. Annual date change to conform Vermont's "piggyback" income tax with current federal law.
Sec. 6. 32 V.S.A. § 5855(b). Increases the safe harbor amount for estimated taxes paid byindividuals from $125.00 to $250.00. This reflects the federal change from $500.00 to $1,000.00. (No interest or penalty would be due for underpayment of estimated taxes if income tax liability is less than $250.00.) Fiscal impact is estimated to be so small as to be negligible.
Sec. 7. 32 V.S.A. § 5858(6). Commissioner may allow payment of corporate estimates by electronic funds transfer, and may require it in certain cases.
Sec. 8. 32 V.S.A. § 5862d. Requires the filing of copies of federal form 1099 by any business or individual required to file the form with the IRS, if the services were provided by a nonresident in Vermont. This helps the tax department to track taxable income paid to nonresidents.
Sec. 9. 32 V.S.A. § 5934. Amends the debt setoff program to comply with a federal district court order in Coleman v. Hoiska. The debt setoff program provides that the tax department will reduce any refund to a taxpayer by a debt owed to a state agency (e.g., child support, department of employment and training, VSAC student loans, department of corrections fines). The court required that the state agency requesting the setoff give the debtor notice before the tax refund was used to pay the debt to the state. The tax department and agencies have followed the decision, but Sec. 9 amends the law to conform to the court order.
(The debt setoff program may not be applied to reduce any payment under the homestead property tax income sensitivity adjustment chapter.)
Sec. 10. Eliminates reference to express, telegraph, electric railroad and other companies from a general franchise tax section. These companies no longer exist, so there is no impact in eliminating the tax. If such a company did exist, it would henceforth be subject to the corporate income tax. (See Sec. 2.) Also eliminates reference to steamboat companies, which will now be subject to corporate income tax (if the company is incorporated) rather than franchise tax.
Sec. 11. Repeals the franchise tax provisions of Chapter 211, subchapter 1, Article 5, relating to electric railroads. No one is subject to these provisions so there is no revenue impact. Also repeals reference under the franchise tax to steamboat companies.
Secs. 12-17. Eliminates references to "Article 5" (electric railroad provisions) which are repealed in Sec. 11.
Sec. 17a. Repeals reference under the franchise tax to "steamboat companies".
Sec. 18. Repeals franchise tax on express and telegraph companies.
Sec. 19. 32 V.S.A. § 9243. Authorizes the commissioner to allow payment of meals and rooms tax by electronic funds transfer, and to require it in certain cases. Payment by EFT does not eliminate the requirement to file returns.
Sec. 20. 32 V.S.A. § 9617(h). Provides the right to petition for a refund of property transfer tax and the method for doing so (conforming to refund provisions for other state taxes: written appeal to commissioner, an APA hearing and a written decision, followed by right of appeal to superior court).
Sec. 21. Creates a sales tax exemption for sales of recycled construction or demolition waste. Fiscal impact is estimated to be negligible.
Sec. 22. Provides that payment of sales tax by electronic funds transfer does not eliminate the requirement to file returns.
Sec. 23. 32 V.S.A. § 9776. Authorizes the commissioner to allow payment of sales and use tax by electronic funds transfer, and to require it in certain cases.
Sec. 24. 32 V.S.A. § 9781. Requires sales and use tax refunds to be requested three years from the due date rather than the payment date. Under prior law, the longer a taxpayer failed to pay, the longer those periods were open to refund. The new rule is the same as that for income tax (§ 5884) and meals and rooms (§ 9245) refunds.
Sec. 25. 13 V.S.A. § 5236(e). Broadens the tax department's authority to release tax information to the court system for determining financial need for defender general services. Under prior law, if the defendant filed a joint income tax return, the department could not release the return, because it contains information pertaining to a taxpayer other than the defendant. The only available information was the defendant's W-2 wage form. The change allows the department to provide adjusted gross income information from a joint return. (The language also specifies that the federal poverty guidelines are those in effect at the date of the request. The entire section was drafted in conjunction with the Court Administrator's Office.)
Sec. 26. 33 V.S.A. § 4105. Broadens the tax department's authority to release tax information to the office of child support. Under prior law, if the parent filed a joint income tax return (with the new spouse), the department could not release the return, because it contains information pertaining to a taxpayer other than the parent; the only available information was the parent's W-2 wage form. The change allows the department to provide adjusted gross income information from a joint return.
Sec. 27. 32 V.S.A. § 10208. Provides the right to appeal from the commissioner's suspension or revocation of a manufacturer's or distributor's license under Title 32, chapter 239 (games of chance, break-open tickets).
Sec. 28. Clarifies that a municipality may pay a collector of taxes or a collector of delinquent taxes either a portion of the fees and commissions or a salary.
Sec. 29. Amends the telecommunications sales tax so that once a customer has reached the $10,000.00 maximum annual tax, the customer may simply stop paying telecommunications tax (rather than continue to pay and then have to file for a refund of the amount over $10,000.00).
Sec. 30. Subjects prepaid telephone calling cards and authorizations to the sales tax. Calls made with these cards were formerly subject to the telecommunications sales tax (at 4.36 percent), but because the calls are not billed through telecommunications service providers, the calls went untaxed. Under this section, the cards are taxed at the point of purchase.
Sec. 31. Exempts from the universal service charge the services paid for by prepaid calling cards and authorizations (leaving these subject only to the sales tax - see Sec. 30).
Sec. 32. Extends the sunset of fuel gross receipts tax from June 30, 1998 to July 1, 2003. Also requires a report to the legislature in 1999 and 2001 on the effectiveness of the weatherization program.
Sec. 33. [Struck]
Sec. 34. Clarifies that utility cables, lines and poles on homestead property will be treated as part of the homestead for education property tax purposes.
Sec. 35. Creates a single section in Title 32 for penalties and interest on delinquent taxes, and reduces the penalty for underpayment of estimated income tax from 5 percent to 2 percent per month, beginning January 1, 1999. This reduction in penalties will reduce general fund revenue beginning in fiscal year 2000; the estimated reduction is $250,000.
Sec. 36. Creates a single section in Title 32 requiring the commissioner's notice of tax delinquency.
Sec. 37. Repeals the various restatements of tax penalties throughout Title 32 (now replaced by the single section in Sec. 35 of the act).
Sec. 37a. Exempts certain small investment partnerships from the minimum tax.
Sec. 38. Adds a manual processing fee of $25.00 for any taxpayer who files a tax return on a form not approved by the commissioner of taxes. The tax department estimates that $25.00 is the cost of manually processing a return which is not computer-readable and which must be pulled out of the automatic processing stream. Accountants and others who intend to use computer-generated forms may obtain prior approval of the forms from the commissioner.
Secs. 39-45. Permanently allocates the first $15.1 million of property transfer tax revenue as follows: 32.56 percent to the general fund; 56 percent to the housing and conservation trust fund; and 11.44 percent to the municipal and regional planning fund. Any additional revenue from that tax is allocated until July 1, 2002 as follows: 20 percent to general fund; 30 percent to housing and conservation; and 50 percent to municipal and regional planning. The allocation begins July 1, 1998, and does not affect the fiscal year 1999 appropriations for these funds. Also requires that in distributing the funds, the Housing and Conservation Trust Board shall take into account the geographic distribution of funds.
Secs. 46-49, 49a. Changes the manner in which a person may bring a small claims action against the state. Under prior law, a claimant filed a petition with the claims commission (attorney general, treasurer and auditor of accounts). The decision of the commission was appealable to the legislature. Claims were limited to $2,000.00. Under the new law, such claims must be filed in small claims court, with the same $2,000.00 limit. Appeal is then through the regular court process. Sec. 49a presents the legislative disposition of four claims commission appeals.
Sec. 50. Clarifies that any municipal discount for early payment of property tax shall not affect the municipality's liability to the state for education property taxes.
Secs. 51-55. Provides that a taxpayer who earns Vermont income from a dramatic performance in a film production is entitled to a credit against Vermont income tax, such that the Vermont income tax rate on the nonresident's film income will be no higher than the highest tax rate in his or her state of residence. If the performance income is exempt in the home state, it is also exempted in Vermont. The exemption applies to tax years 1998, 1999 and 2000. Also requires that the tax department and the Vermont film commission report to the general assembly in 2000 on the costs and benefits of these incentives.
Sec. 56. Sets the fiscal year 2000 statewide education property tax rate and guarantees the yield rate for fiscal year 2000 at $40.00. Also sets transition rates for towns with very low or very high FY 99 education property tax rates.
Sec. 57. Extends for three more years the State pledge to back loans under the Financial Access Program (FAP) of the Vermont Economic Development Authority. Under the program, the State pledges $50,000.00 in full faith and credit for banks which make small business loans under the FAP. The pledge is to cover the risk of loss in excess of the bank's reserve, and is an incentive for banks to participate in this program.
Sec. 58. Provides a transitional statewide property tax rate for Winhall of its 1996 education tax rate plus $0.30; and bases the 40 percent cap on its fiscal year 1997 education budget, rather than on its fiscal 1998 budget.
Sec. 59. Effective dates.
Effective Date: Various