NO. 144.  AN ACT RELATING TO MISCELLANEOUS TAX AMENDMENTS.

(H.771)

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

Sec. 1.  32 V.S.A. § 5823(a)(2) is amended to read:

(2)  Military pay for full-time active duty with the armed services earned outside of the state; and the first $1,500.00 $2,000.00 of military pay for unit training assemblies in the state to National Guard and United States Reserve 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 or reserve component commander certifies that the taxpayer completed all unit training assemblies of his or her unit during the calendar training year, and who had has a federal adjusted gross income of less than $47,000.00 in the prior tax year $50,000.00;

Sec. 2.  32 V.S.A. § 5823(b)(3) is amended to read:

(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. chapters 109 and 1609; and also excluding the first $1,500.00 $2,000.00 of military pay for unit training assemblies in the state to National Guard and United States Reserve 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 or reserve component commander certifies that the taxpayer completed all unit training assemblies of his or her unit during the calendar training year, and who had has a federal adjusted gross income of less than $47,000.00 in the prior tax year $50,000.00) 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;

Sec. 3.  32 V.S.A. § 5401(1)(D) is amended to read:

(D)  Personal property, machinery, inventory and equipment, ski lifts and snow-making equipment for a ski area; provided, however, that this subdivision shall not exclude from the definition of “nonresidential property” the following real or personal property:

(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 homestead shall be taxed as homestead property;

(ii)  gas distribution lines (except aboveground meters, regulators and gauges, and leased water heaters are excluded personal property);

(iii)  ski lifts and fixtures and snow-making equipment for a ski area affixed to the land excluding transportable equipment.

Sec. 4.  DEFINITIONS

As used in Secs. 4 through 11 of this act:

(1)  “Agreement” means the Streamlined Sales and Use Tax Agreement.

(2)  “Certified Automated System” means software certified jointly by the states that are signatories to the Agreement to calculate the tax imposed by each jurisdiction on a transaction, determine the amount of tax to remit to the appropriate state, and maintain a record of the transaction.

(3)  “Certified Service Provider” means an agent certified jointly by the states that are signatories to the Agreement to perform all of the seller’s sales tax functions.

(4)  “Person” means an individual, trust, estate, fiduciary, partnership, limited liability company, limited liability partnership, corporation, or any other legal entity.

(5)  “Sales Tax” means the tax levied under chapter 233 of Title 32.

(6)  “Seller” means any person making sales, leases, or rentals of personal property or services.

(7)  “State” means any state of the United States and the District of Columbia.

(8)  “Use Tax” means the tax levied under chapter 233 of Title 32.

Sec. 5.  LEGISLATIVE FINDING  

The General Assembly finds that this state should enter into an agreement with one or more states to simplify and modernize sales and use tax administration in order to substantially reduce the burden of tax compliance for all sellers and for all types of commerce.

Sec. 6.  AUTHORITY TO ENTER AGREEMENT

(a)  The Department of Taxes is authorized and directed to enter into the Streamlined Sales and Use Tax Agreement for the State of Vermont with one or more states to simplify and modernize sales and use tax administration in order to substantially reduce the burden of tax compliance for all sellers and for all types of commerce.  In furtherance of the Agreement, the Department of Taxes is authorized to act jointly with other states that are members of the Agreement to establish standards for certification of a certified service provider and certified automated system; and establish performance standards for multistate sellers.  The commissioner shall publicize reasonable and timely notice to any interested parties of all times and dates of formal meetings of the Streamlined Sales and Use Tax negotiations.

(b)  The Department of Taxes is further authorized to take other actions reasonably required to implement the provisions set forth in this act.  Other actions authorized by this section include, but are not limited to, the adoption of rules and regulations and the joint procurement, with other member states, of goods and services in furtherance of the cooperative agreement.  The Commissioner of Taxes, or the commissioner’s designee, is authorized to represent this state before the other states that are signatories to the Agreement.

Sec. 7.  RELATIONSHIP TO STATE LAW

No provision of the Agreement authorized by this act in whole or part invalidates or amends any provision of the law of this state.  Adoption of the Agreement by this state does not amend or modify any law of this state.  Implementation of any condition of the Agreement in this state, whether adopted before, at, or after membership of this state in the Agreement, must be by the specific action of this state.

Sec. 8.  AGREEMENT REQUIREMENTS

The Department of Taxes shall not enter into the Streamlined Sales and Use Tax Agreement unless the Agreement requires each state to abide by the following requirements:

(1)  Uniform State Rate.  The Agreement must set restrictions to achieve, over time, more uniform state rates through limiting:

(A)  the number of state rates;

(B)  the application of maximums on the amount of state tax that is due on a transaction; and

(C)  limiting the application of thresholds on the application of state tax.

(2)  Uniform Standards.  The Agreement must establish uniform standards for:

(A)  the sourcing of transactions to taxing jurisdictions;

(B)  the administration of exempt sales;

(C)  the allowances a seller can take for bad debts; and

(D)  sales and use tax returns and remittances.

(3)  Uniform Definitions.  The Agreement must require states to develop and adopt uniform definitions of sales and use tax terms.  The definitions must enable a state to preserve its ability to make policy choices not inconsistent with the uniform definitions.

(4)  Central Registration.  The Agreement must provide a central, electronic registration system that allows a seller to register to collect and remit sales and use taxes for all signatory states.

(5)  No Nexus Attribution.  The Agreement must provide that registration with the central registration system and the collection of sales and use taxes in the signatory states will not be used as a factor in determining whether the seller has nexus with a state for any tax.

(6)  Local Sales and Use Taxes.  The Agreement must provide for reduction of the burdens of complying with local sales and use taxes through:

(A)  restricting variances between the state and local tax bases;

(B)  requiring states to administer any sales and use taxes levied by local jurisdictions within the state so sellers collecting and remitting these taxes will not have to register or file returns with, remit funds to, or be subject to independent audits from local taxing jurisdictions;

(C)  restricting the frequency of changes in the local sales and use tax rates and setting effective dates for the application of local jurisdictional boundary changes to local sales and use taxes; and

(D)  providing notice of changes in local sales and use tax rates and of changes in the boundaries of local taxing jurisdictions.

(7)  Monetary Allowances.  The Agreement must outline any monetary allowances that are to be provided by the states to sellers or certified service providers.

(8)  State Compliance.  The Agreement must require each state to certify compliance with the terms of the Agreement prior to joining, and to maintain compliance, under the laws of the member state, with all provisions of the Agreement while a member.

(9)  Consumer Privacy.  The Agreement must require each state to adopt a uniform policy for Certified Service Providers that protects the privacy of consumers and maintains the confidentiality of tax information.

(10)  Advisory Councils.  The Agreement must provide for the appointment of an advisory council of private sector representatives and an advisory council of nonmember state representatives to consult with in the administration of the Agreement.

Sec. 9.  COOPERATING SOVEREIGNS

The Agreement authorized by this act is an accord among individual cooperating sovereigns in furtherance of their governmental functions.  The Agreement provides a mechanism among the member states to establish and maintain a cooperative, simplified system for the application and administration of sales and use taxes under the duly adopted law of each member state.

Sec. 10.  LIMITED BINDING AND BENEFICIAL EFFECT

(a)  The Agreement authorized by this act binds and inures only to the benefit of this state and the other member states.  No person, other than a member state, is an intended beneficiary of the Agreement.  Any benefit to a person other than a state is established by the law of this state and the other member states, and not by the terms of the Agreement.

(b)  Consistent with subsection (a) of this section, no person shall have any cause of action or defense under the Agreement or by virtue of this state’s approval of the Agreement.  No person may challenge, in any action brought under any provision of law, any action or inaction by any department, agency, or other instrumentality of this state, or any political subdivision of this state on the ground that the action or inaction is inconsistent with the Agreement.

(c)  No law of this state, or the application thereof, may be declared invalid as to any person or circumstance on the ground that the provision or application is inconsistent with the Agreement. 

Sec. 11.  SELLER AND THIRD PARTY LIABILITY

(a)  A Certified Service Provider is the agent of a seller with whom the Certified Service Provider has contracted for the collection and remittance of sales and use taxes.  As the seller’s agent, the Certified Service Provider is liable for sales and use tax due each member state on all sales transactions it processes for the seller, except as set out in this section.

(b)  A seller that contracts with a Certified Service Provider is not liable to the state for sales or use tax due on transactions processed by the Certified Service Provider unless the seller misrepresented the type of items it sells or committed fraud.  In the absence of probable cause to believe that the seller has committed fraud or made a material misrepresentation, the seller is not subject to audit on the transactions processed by the Certified Service Provider.  A seller is subject to audit for transactions not processed by the Certified Service Provider.  The member states acting jointly may perform a system check of the seller and review the seller’s procedures to determine if the Certified Service Provider’s system is functioning properly, and the extent to which the seller’s transactions are being processed by the Certified Service Provider.

(c)  A person that provides a Certified Automated System is responsible for the proper functioning of that system, and is liable to the state for underpayments of tax attributable to errors in the functioning of the Certified Automated System.  A seller that uses a Certified Automated System remains responsible and is liable to the state for reporting and remitting tax. 

(d)  A seller that has a proprietary system for determining the amount of tax due on transactions and has signed an agreement establishing a performance standard for that system is liable for the failure of the system to meet the performance standard.

Sec. 12.  32 V.S.A. § 9741(45) is amended to read:

(45)  Each article, with a purchase price of $110.00 or less, of clothing intended to be worn or carried on or about the human body, including footwear but excluding special clothing or footwear designed primarily for athletic activity or protective use and not normally worn except when so used; except specially protective steel- or Kevlar-toed footwear labeled as American National Standards Institute-approved under standard Z41 shall be exempt, regardless of price.

Sec. 13.  32 V.S.A. § 9744 is amended to read:

§ 9744.  PROPERTY EXEMPT FROM USE TAX

(a)  The following uses of property are not subject to the compensating use tax imposed under this chapter:

* * *

(5)  Building materials and supplies stored in this state for 180 days or less, if purchased by a contractor for the construction, reconstruction, alteration, remodeling or repair of real property in a state which has no sales or use tax.

Sec. 14.  32 V.S.A. § 3111 is added to read:

§ 3111.  INTERNAL REVENUE SERVICE CHARGES

     Notwithstanding section 502 of this title, the commissioner may charge against any state tax liability a fee agreed to by the department and paid to the United States Treasury Department for participation in a debt setoff program.

Sec. 15.  32 V.S.A. § 6061(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:

* * *

(B)  with the addition of the following, to the extent not included in adjusted gross income:  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 and women, the gross amount of any pension or annuity (including the portion of Roth IRA distributions representing investment earnings and not included in adjusted gross income, railroad retirement benefits, all payments received under the federal Social Security Act, and all benefits under Veterans’ Acts), benefits under Veterans’ Acts, and federal pension and annuity benefits not included in adjusted gross income; 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 arrive at adjusted gross income or deducted on account of excess payment of employment taxes) on account of income included under this section, less any amounts paid as child support money if substantiated by receipts or other evidence that the commissioner may require; and

(C)  without the inclusion of 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 subdivision 8722(2) of Title 18.  If the commissioner determines, upon application by the claimant, that a person resides with a claimant who is disabled or was at least 62 years of age as of the end of the year preceding the claim, for the 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 to remain in his or her home or avoid institutionalization, the commissioner shall exclude that person’s modified adjusted gross income from the claimant’s household income.  The commissioner may require that a certificate in a form satisfactory to the commissioner be submitted which supports the claim.

Sec. 16.  32 V.S.A. § 6062(a) is amended to read:

     (a)  In the case of a renter credit claim based solely on rent constituting property taxes, the claimant shall have rented property during the entire taxable year; provided, however, that a claimant who owned a homestead which was sold in the taxable year and who does not own another homestead on December 31 of the taxable year prior to April 1 may file a renter credit claim.  If two or more individuals of a household are able to meet the qualifications for a claimant hereunder, they may determine among them who the claimant shall be.  Any disagreement under this subsection shall be referred to the commissioner and his or her decision shall be final. 

Sec. 17.  32 V.S.A. § 6066(a) and (b) are amended to read:

(a)  The property tax of an eligible claimant who owned the homestead on the last day of the taxable year shall be adjusted as follows:

(1)  the claimant’s statewide property tax liability shall be:

(A)  For claimants with household income of $75,000.00 or more, the lesser of 2.0 percent of household income for the taxable year plus the statewide property tax on the value of the homestead in excess of $160,000.00; or the amount of statewide property tax assessed on the homestead; and

(B)  For claimants with household income less than $75,000.00, the lesser of 2.0 percent of household income for the taxable year, or the amount of statewide property tax the municipality would have assessed on the homestead if its equalized value had been reduced by $15,000.00;

(2)  the claimant’s local share property tax liability shall be the local share percentage rate established under section 4027 of Title 16 for the municipality in which the homestead is located, multiplied by the statewide property tax liability determined under subdivision (1)  of this subsection; and

     An eligible claimant who owned the homestead on April 1 of the year in which the claim is filed shall be entitled to an adjustment amount equal to the amount determined under subdivision (1) of this subsection plus the amount in subdivision (2), as follows:

(1)  Statewide property tax adjustment:

(A)  For a claimant with household income of $75,000.00 or more:

(i)  the statewide property tax rate under section 5402 of this title, multiplied by the equalized value of the homestead in the taxable year;

(ii)  minus (if less) two percent of household income for the taxable year, plus the statewide property tax rate under section 5402 of this title, multiplied by the equalized value of the homestead in the taxable year in excess of $160,000.00.

(B)  For a claimant with household income of less than $75,000.00:

(i)  the statewide property tax rate under section 5402 of this title, multiplied by the equalized value of the homestead in the taxable year;

(ii)  minus the lesser of:

(I)  two percent of household income for the taxable year; or

(II)  the statewide property tax rate under section 5402 of this title, multiplied by the equalized value of the homestead in the taxable year reduced by $15,000.00.

(2)  Local share property tax adjustment.  The adjustment amount determined under subdivision (1) of this subsection shall be increased by:  the local share percentage rate established under Title 16 for the claim year for the municipality in which the homestead is located, multiplied by the adjustment amount determined under subdivision (1).

(3)  a claimant whose household income does not exceed $47,000.00 shall also be entitled to a credit against the claimant’s tax liability under chapter 151 of this title equal to the amount by which the property taxes for the municipal fiscal year which began in the taxable year upon the claimant’s homestead owned on December 31 of the taxable year, adjusted reduced by the adjustment amount determined under subdivisions (1) and (2) of this subsection, exceeds a percentage of the claimant’s household income for the taxable year as follows:

If household income (rounded to           then the taxpayer is entitled to

the nearest dollar)  is:                            credit for the reduced property tax paid in

            excess of this percent of that income:

                        $0 - 4,999.00                                          3.5

            $5,000.00 - 9,999.00                                          4.0

        $10,000.00 - 24,999.00                                          4.5

        $25,000.00 - 47,000.00                                          5.0

In no event shall the credit exceed the amount of the adjusted reduced property tax.

(b)  An eligible claimant who rented the homestead on the last day of the taxable year, whose household income does not exceed $47,000.00, and who submits a certificate of rent constituting property taxes shall be entitled to a credit against the claimant’s tax liability under chapter 151 of this title equal to the amount by which the rent constituting property taxes upon the claimant’s homestead exceeds a percentage of the claimant’s household income for the taxable year as follows:

If household income (rounded to           then the taxpayer is entitled to

the nearest dollar)  is:                          credit for rent constituting property

                                              tax paid in excess of this percent of that

                                              income:

                        $0 - 4,999.00                                          3.5

            $5,000.00 - 9,999.00                                          4.0

        $10,000.00 - 24,999.00                                          4.5

        $25,000.00 - 47,000.00                                          5.0

In no event shall the credit exceed the amount of the rent constituting property tax.

Sec. 18.  32 V.S.A. § 6066a is amended to read:

§ 6066a.  PAYMENT OF PROPERTY TAX ADJUSTMENTS

     Annually, the commissioner shall pay to each claimant the excess, if any, of the statewide and local share property tax on the homestead for the fiscal year beginning in the calendar year in which the claim is filed over the adjusted property tax of the claimant for the fiscal year, as property tax adjustment amount determined under section subdivisions 6066(a)(1) and (2) of this title.  The payment shall be made by the latest of:  August 1, for claims filed by April 15; 45 days after the claim is filed, for claims filed after April 15; or 30 days prior to the first education property tax installment date for the claimant’s municipality in the fiscal year which begins in the calendar year in which the claim is filed under section 6068 of this title; or 25 days after the grand list has been transmitted in accordance with section 5404 (b) of this title. 

Sec. 19.  32 V.S.A. § 6068(b) is amended to read:

     (b)  No benefit shall be allowed in the calendar year unless the claim is  filed with the commissioner on or before the due date for filing the Vermont income tax return, with extension December 1. 

Sec. 20.  32 V.S.A. § 6074 is added to read:

§ 6074.  AMENDMENT OF CERTAIN CLAIMS

At any time within three years after the date for filing claims under subsection 6068(b) of this chapter, a claimant who timely filed a claim may file to amend that claim, to correct the amount of household income reported on that claim.

Sec. 21.  32 V.S.A. § 5402(a) is amended to read:

(a)  A statewide education property tax is imposed on all nonresidential and homestead property at a rate of $1.10 per $100.00 of equalized education property value as most recently determined under section 5405 of this title; but the homestead property tax liability shall not exceed the adjusted liability for eligible claimants under chapter 154 of this title.

Sec. 22.  REPEAL

Sec. 163c of No. 63 of the Acts of 2001 (amending 32 V.S.A. § 6066(a)(3)) is repealed.

Sec. 23.  32 V.S.A. § 5824 is added to read:

§ 5824.  ADOPTION OF FEDERAL INCOME TAX LAWS

The statutes of the United States relating to the federal income tax, as in effect for taxable year 2001, but without regard to federal income tax rates under Section 1 of the Internal Revenue Code, are hereby adopted for the purpose of computing the tax liability under this chapter.     

Sec. 24.  32 V.S.A. § 5828c is added to read:

§ 5828c.  LOW‑INCOME CHILD AND DEPENDENT CARE CREDIT

A resident of this state with federal adjusted gross income less than $30,000.00 (or $40,000.00 for married, filing jointly) shall be eligible for a refundable credit against the tax imposed under section 5822 of this title.  The credit shall be equal to 50 percent of the federal child and dependent care credit allowed to the taxpayer for the taxable year for child or dependent care services provided in this state in a registered home or licensed facility certified by the agency of human services as meeting national accreditation or national credential standards endorsed by the agency.  A credit under this section shall be in lieu of any child and dependent care credit available under subsection 5811(4) of this title.

Sec. 25.  24 V.S.A. § 138(a) is amended to read:

§ 138.  LOCAL OPTION TAXES

(a)  Local option taxes are authorized under this section for the purpose of affording municipalities an alternative method of raising municipal revenues to facilitate the transition and reduce the dislocations in those municipalities that may be caused by reforms to the method of financing public education under the Equal Educational Opportunity Act of 1997. Accordingly,

(1)  the local option taxes authorized under this section may be imposed by a municipality only during calendar years 1999 through 2004 2006;

(2)  a municipality opting to impose a local option tax may do so prior to July 1, 1998 to be effective beginning January 1, 1999, and anytime after December 1, 1998 a local option tax shall be effective beginning on the next tax quarter following 30 days’ notice to the department of taxes of the imposition; and all authority to opt to impose a local option tax under this section shall terminate September 1, 2003 2005, and all authority to impose a local option tax shall terminate on December 31, 2004 2006; and

(3)  a local option tax may only be adopted by a municipality in which:

(A)  the education property tax rate in 1997 was less than $1.10 per $100.00 of equalized education property value; or

(B)  the equalized grand list value of personal property, business machinery, inventory, and equipment is at least ten percent of the equalized education grand list as reported in the 1998 Annual Report of the Division of Property Valuation and Review; or

(C)  the combined education tax rate of the municipality will increase by 20 percent or more in fiscal year 1999 or in fiscal year 2000 over the rate of the combined education property tax in the previous fiscal year.

Sec. 26.  32 V.S.A. § 5932(6) is amended to read:

(6)  “Refund” means any individual’s state income tax refund under chapter 151 of this title, and any refund or rebate of property tax relief authorized by chapter 153 payment due a claimant under chapter 154 of this title, and any refund or rebate from the sales and use tax authorized by section 5829 of this title.

Sec. 27.  HIGH-SPEED TELECOMMUNICATIONS FINANCING STUDY

     The Vermont Economic Development Authority and Departments of Economic Development and of Public Service shall study whether loan and assistance programs are needed in Vermont to accelerate availability of high‑speed telecommunications services in underserved areas of this state in order to attract and support growth in high-technology business, and shall report to the House Committees on Ways and Means and on Commerce and the Senate Committee on Finance by January 15, 2003 the results of the study and their recommendations, including cost estimates for the recommended actions and projected new business growth.

Sec. 28.  32 V.S.A. § 5811(15) is amended to read:

(15)  “Taxable corporation” means, for any taxable year, a corporation which, at any time during that taxable year:

(A)  Was incorporated under the laws of this state;

(B)  Possessed a certificate of authority to do business within this state; or

(C)  Received any income allocable or apportionable to this state under the provisions of section 5833 of this title, except that a corporation which is taxable would otherwise be taxable under this subdivision shall be exempt if the corporation’s activities in this state are limited to the performance of any activities which, without more, would not subject the corporation to taxation in this state, plus either:

(i)  fulfillment operations as follows:

(I)  maintenance of cash balances with banks or trust companies in this state;

(ii)(II)  the following actions by a person unrelated to the corporation, taken on behalf of the corporation:

(I)(aa)  sales order processing service;

(II)(bb)  credit card processing services;

(III)(cc)  receipt, storage and removal from storage of property of the corporation, in conjunction with the packaging or repackaging of such property for shipment to a customer of the corporation; and

(IV)(dd)  reproduction of property of the corporation contained in or on electromagnetic or optical media, such as computer discs, magnetic tapes, compact discs, laser discs and microprocessor chips, onto tangible media, and receipt, storage, and removal from storage, of property of the corporation for shipment to a customer of the corporation or to the corporation itself in conjunction with any such reproduced property; and

(iii)  the performance of only an activity that by itself would not subject the corporation to taxation in this state by virtue of federal law. or

(ii)  any or all of the following necessary to create or maintain a world wide web page or internet site for the corporation:

(I)  ownership of data or programming code in this state, or use of that data or programming code by a person other than the corporation or by a person not in this state;

(II)  ownership of, or receipt of services from, computer servers in this state;

(III)  receipt of computer processing or web hosting services from a computer service provider or web hosting service in this state.

 

Sec. 29.  32 V.S.A. § 5823(d) is added to read:

(d)  Vermont income shall not include any income of a nonresident from the activities listed in this subsection; and shall not include income of a nonresident through an entity such as a partnership, limited liability company or trust, if that entity’s activities in this state are limited to activities which, without more, would not constitute nexus, plus any or all of the following activities necessary to create or maintain a world wide web page or internet site for the nonresident or entity:

(1)  ownership of data or programming code in this state, or use of that data or programming code by a person other than the nonresident or entity or by a person not in this state;

(2)  ownership of, or receipt of services from, computer servers in this state;

(3)  receipt of computer processing or web hosting services from a computer service provider or web hosting service in this state.

Sec. 30.  32 V.S.A. § 9701(9) is amended to read:

(9)  Vendor:  includes

* * *

(H)  a A telecommunications service provider as defined in 30 V.S.A. § 7501, except that “vendor” shall not include a person whose activities in this state are limited to the performance of any activities which, without more, would not constitute nexus for sales tax collection purposes, plus any or all of the following necessary to create or maintain a world wide web page or internet site for the person:

(i)  ownership of data or programming code in this state, or use of that data or programming code by another person or by a person not in this state;

(ii)  ownership of, or receipt of services from, computer servers in this state; 

(iii)  receipt of computer processing or web hosting services from a computer service provider or web hosting service in this state.

Sec. 31.  32 V.S.A. § 8911(9) is amended to read:

(9)  motor vehicles on which a state sales or use tax has been paid by the person applying for a registration in Vermont, or paid by a person who, at the time of tax payment to another state, was the spouse of the person now applying for Vermont registration.  If the tax paid in another state is less than the Vermont tax the tax due shall be the difference.  An applicant for credit under this subdivision shall bear the burden of proving the amount of tax paid in the other state, and acceptable proof shall include a valid certificate of title from that state and a cancelled check to that department of motor vehicles in an amount at least equal to the total purchase and use tax due to that state;

 

Sec. 32.  32 V.S.A. § 8661 is amended to read

§ 8661.  Tax levy

(a)  There is hereby assessed upon electric generating plants constructed in the state by any electric utility subsequent to July 1, 1965, and having a name plate generating capacity of 200,000 kilowatts, or more, a state tax of 2.75 percent of the appraised value thereof, obtained and established as hereinafter provided.  For purposes of this section, “electric generating plant” shall not include real property on land which is not contiguous with any parcel upon which the generating structure is located.  The tax imposed by this section shall be paid to the commissioner in equal quarterly installments by the person or corporation then owning or operating such electric generating plant on or before the 25th day of March, June, September and December.

(b)  The commissioner shall appraise such electric generating plants acquired, constructed or used by an electric public utility and located within this state at its original cost less depreciation as required to be reported to the public service board for rate regulation purposes as of December 31, 2001.

(c)  A person or corporation failing to make returns or pay the tax imposed by this section within the time required shall be subject to and governed by the provisions of sections 3202, 3203, 5868, 5869, and 5873 and 5875 of this title.

Sec. 33.  32 V.S.A. § 9701(20) is amended to read:

(20)  Vermont service address:  means the location in Vermont of communications services equipment from which the telecommunications services are originated or at which communications services are received by a purchaser.  In the event this may not be a defined location, as in the case of mobile telephone service, maritime systems, air-to-ground systems and the like, Vermont service address shall mean the location in Vermont of a taxpayer’s primary use of the communications services equipment as defined by telephone number authorization code, or location in this state where bills are sent.  In the case of charges for mobile telecommunications services, Vermont service address shall mean the location in Vermont of the customer’s place of primary use.

Sec. 34.  32 V.S.A. § 9701(21) and (22) are added to read:

(21)  Mobile telecommunications service:  means mobile telecommunications service as defined in 4 U.S.C. § 124.

(22)  Place of primary use:  means place of primary use as defined in

4 U.S.C. § 124.

Sec. 35.  32 V.S.A. § 9782 is added to read:

§ 9782.  Mobile Telecommunications Sourcing

(a)  Mobile telecommunications services shall be sourced according to the provisions of the federal Mobile Telecommunications Sourcing Act, 4 U.S.C.

§§ 116-126.  The definitions and provisions of such Act are hereby incorporated into this section by reference.

(b)(1)  If charges for nontaxable mobile telecommunications service are aggregated with and not separately stated from charges for taxable service, then all charges are subject to taxation, unless the home service provider can reasonably identify nontaxable charges from its books and records kept in the regular course of business.  If the home service provider can reasonably identify from its books and records that are kept in the regular course of business the portion of the aggregated charge which is attributable to nontaxable service only the charges for taxable services are subject to taxation.

(2)  A customer may not rely upon the nontaxability of mobile telecommunications services unless the customer’s home service provider separately states the charges for nontaxable mobile telecommunications services, or the home service provider elects pursuant to 4 U.S.C. § 123(c) to provide verifiable data required to support the nontaxability.

Sec. 36.  30 V.S.A. § 7521(c) is added to read:

(c)  In the case of mobile telecommunications service, the universal service charge is imposed when the customer’s place of primary use is in Vermont.  The terms “customer,” “place of primary use,” and “mobile telecommunications service” have the meanings given in 4 U.S.C. § 124.  All

provisions of 32 V.S.A. § 9782 shall apply to the imposition of the universal service charge under this section.

Sec. 37.  INVALIDITY OF PROVISIONS

If a court of competent jurisdiction enters a final judgment on the merits that is based on federal law, is no longer subject to appeal, and substantially limits or impairs the essential elements of 4 U.S.C. §§ 116-126, then all provisions and applications of this act are declared to be invalid and have no legal effect as of the date of entry of such judgment, and all provisions of and amendments made by this act shall not apply to the taxation of mobile telecommunications service charges made after the date of entry of such judgment.

Sec. 38.  32 V.S.A. § 9701(4) is amended to read:

(4)  Receipt:  means the amount of the sales price of any property and the charge for any amusement taxable under this chapter valued in money, whether received as money or otherwise, without any deduction for expenses or early payment discount,; but excluding any amount for which credit is allowed by the vendor to the purchaser, ; and excluding any allowance, including core charges, made for a trade-in of like-kind property; and excluding any allowance in cash or by credit made upon the return of merchandise pursuant to warranty or the price of property returned by customers when the full price thereof is refunded either in cash or by credit,; and excluding the price received for labor or services used in installing or applying to repairing the property sold, if separately charged or stated, and the cost of transportation from the retailer's place of business or other point from which shipment is made directly to the purchaser provided those charges are separately stated and provided the transportation occurs by means of common carrier, contract carrier or the United States mails. Beverage container deposits required to be paid by chapter 53 of Title 10 on beverages subject to tax under this chapter shall constitute receipts for the purposes of this chapter.  Receipt shall also mean the charge for any telecommunications service excluding any amounts added to a purchaser's bill for federal excise taxes applicable to said services and excluding the surcharge imposed under 30 V.S.A. § 7521.

Sec. 39.  32 V.S.A. § 5830c(c) is amended to read:

(c)  Definitions.  For the purposes of this section:

* * *

(2)  “Bank prime loan rate” means the March average prime loan rate, as of March 31 each year, used by insured United States chartered commercial

banks to price short-term business loans, as published in the Federal Reserve Board’s statistical release.

(2)(3)  “Charitable investment” means a loan or deposit made to an eligible housing charity, on which the actual annual rate of return is at least two percentage points or below the charitable threshold rate.

(3)(4)  The “charitable threshold rate” means, for each year beginning July 1, a rate, determined and published at least annually by the commissioner of taxes, which is the greater of:  two percentage points below the one-year United States Treasury note most recent bank prime loan rate or one percent.

(4)(5)  “Eligible housing charity” means a governmental agency or private not-for-profit organization determined eligible by the commissioner of housing and community affairs according to subsection (d) of this section.

(5)(6)  “Net income” means interest income received or credited to the taxpayer.

Sec. 40.  32 V.S.A. § 5830c(d)(4) is amended to read:

(4)  At least 70 percent of all investments subject to this section are disbursed within 12 months either for the acquisition, rehabilitation or construction of affordable housing in Vermont by the eligible housing charity, or for loans for affordable housing in Vermont to other eligible housing charities or to individual borrowers in Vermont having no more than 80 percent of median income, at an average rate of interest at or below the one‑year United States Treasury note rate as published during the first week of each calendar quarter most recent bank prime loan rate.

Sec. 41.  EFFECTIVE DATE

Secs. 39 and 40 (charitable investment credit) of this act shall take effect upon passage, and shall apply to loans made on or after that date.

Sec. 42.  EFFECTIVE DATES

     This act shall take effect upon passage, except:

(1)  Secs. 1 and 2 (income tax exemption for military pay) shall apply to taxable years beginning on or after January 1, 2003.

(2)  Sec. 3 (ski lifts) shall apply to grand lists for 2003 and after, and to education property tax assessed for fiscal year 2005 and after.

(3)  Sec. 12 (footwear exemption) shall take effect January 1, 2003.

(4)  Sec. 13 of this act (use tax exemption for storage of building materials) shall apply to building materials and supplies not stored in this state before July 1, 2004.

(5)  Secs. 15 - 18 (property tax adjustments) shall take effect January 1, 2003 and apply to claims filed in 2003 and after.

(6)  Sec. 19 (filing due date for property tax adjustment) shall apply to claims filed in 2002 and after.

(7)  Sec. 23 (adoption of federal income tax laws) shall apply to taxable year 2001.

(8)  Sec. 24 (low‑income child and dependent care credit) shall apply to taxable years 2003 and after.

(9)  Secs. 28 - 30 (electronic commerce nexus) shall apply to taxable years beginning on or after January 1, 2002.

(10)  Sec. 32 (taxation of electric generating plants) shall apply to taxes due in calendar year 2003 under 32 V.S.A. § 8661 and to taxes due in fiscal year 2004 under 32 V.S.A. § 5402a; and Sec. 32 is repealed January 1, 2004.

(11)  Secs. 33 - 37 shall apply to customer bills issued after August 1, 2002.

Sec. 43.  FINANCE OF SCHOOL CONSTRUCTION

     (a)  Notwithstanding any provisions of Titles 16 and 32, a school district, or a Vermont participant in an interstate school district, may vote to remove spending, including capital debt service, for capital school construction costs certified by the commissioner as eligible for approval under 16 V.S.A.

§ 3448(a)(8), voted after July 1, 2002, and begun in fiscal years 2003, 2004 or 2005, from the calculation of its local education spending for any fiscal year.  A school district which has voted a capital school construction project after

February 2000, but before July 1, 2002, and which has begun construction before July 1, 2002, may vote to remove spending for capital debt service on costs which the commissioner certifies would be eligible for approval under 16 V.S.A. § 3448(a)(8), from its local education spending for any fiscal year beginning July 1, 2002 or after.  The legislative body in the municipality shall then assess each owner on the municipality’s education property tax grand list at the rate necessary to raise the capital construction spending amount removed from local education spending, and shall identify the amount of that tax separately with the tax bill.  “School district” under this subsection means a district which pays statewide property tax at the rate set under 32 V.S.A.

§ 5402.

     (b)  A school district other than a Vermont participant in an interstate school district, which votes to remove certified capital school construction spending from local education spending under this section shall not be entitled to state school construction aid under chapter 123 of Title 16 for that capital construction.  The education tax rate of a district that is a member of a union district, and that does not vote to remove capital construction spending from its local education spending under this section, shall remain at a rate unaffected by the removal of spending by any other district in the union; and the commissioner of education shall develop a methodology to implement this provision.

     (c)  For each member of a union district that votes as authorized under subsection (a), the state school construction aid of the union school district shall be reduced by the portion allocable to the excluded capital construction spending of that member; and the allocation of expenses under the union district agreement shall be adjusted accordingly.

     (d)  The Department of Education shall study school construction needs, funding equity and methodologies, and propose a school construction aid formula and budget for the fiscal year 2004 capital construction act that restores substantial equity to all Vermont’s children according to 16

V.S.A. § 1.

Sec. 44.  ANNOTATION OF SESSION LAW

     The legislative council shall direct that an annotation be included in the Vermont Statutes Annotated, in Titles 16 and 32, referencing Sec. 43 of this act.

Approved:  June 21, 2002