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NO. 14.  AN ACT RELATING TO TECHNICAL TAX AMENDMENTS.

(H.210)

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

Sec. 1.  32 V.S.A. § 5828b(a) is amended to read:

(a)  A resident individual or part-year resident individual who is entitled to an earned income tax credit granted under the laws of the United States shall be entitled to a credit against the tax imposed for each year by section 5822 of this title.  The credit shall be the greater of

(1)  the applicable percentage; or

(2)  32 percent

of the earned income tax credit granted to the individual under the laws of the United States, multiplied by the percentage which the individual’s earned income that is earned or received during the period of the individual’s residency in this state bears to the individual’s total earned income.  For purposes of this section, “applicable percentage” means the percentage of federal income tax liability specified in section 5822 of this title, as amended from time to time.

Sec. 2.  32 V.S.A. § 5823(a) and (b) are 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 individual for that taxable year, and the Vermont income of a resident estate or trust is its gross income for the taxable year, less:

* * *

(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 individual or the gross income of an estate or trust for that taxable year:

* * *

Sec. 3.  32 V.S.A. § 5914(c) is amended to read:

(c)  With respect to each of its nonresident shareholders, an S corporation shall for each taxable period be liable for all income taxes, together with related interest and penalties, imposed on the shareholder by Vermont with respect to the income of the S corporation.  An S corporation shall declare estimated tax, and shall pay estimated tax, including applicable interest and penalties, on such liability in the manner and at the times specified for individuals in subchapter 5 of this chapter; provided, however, that an S corporation with a single shareholder and a tax liability under this section of $250.00 or less in the prior year, and an S corporation with two or more shareholders and a tax liability under this section of $500.00 or less in the prior year, may file the entire estimated amount on or before the fourth payment date, January 15.  For purposes of this subsection, “estimated tax” means an amount equal to the highest federal marginal tax rate in effect for individuals multiplied by the rate prescribed under section 5822 of this title multiplied by the shareholder’s pro rata share of the income attributable to Vermont.

Sec. 4.  32 V.S.A. § 5920(c) is amended to read:

(c)  With respect to each of its nonresident partners or nonresident members, a partnership or limited liability company shall for each taxable period be liable for all income taxes, together with related interest and penalties, imposed on the partner or member by Vermont with respect to the income of the partnership or limited liability company.  A partnership or limited liability company shall declare estimated tax, and shall pay estimated tax, including applicable interest and penalties, on such liability in the manner and at the times specified in subchapter 5 of this chapter; provided, however, that a partnership or limited liability company with a single partner or member and a tax liability under this section of $250.00 or less in the prior year, and a partnership or limited liability company with two or more partners or members and a tax liability under this section of $500.00 or less in the prior year, may file the entire estimated amount on or before the fourth payment date, January 15.  For purposes of this subsection, “estimated tax” as used in subchapter 5 of this chapter shall mean an amount equal to the highest federal marginal tax rate in effect for individuals multiplied by the rate prescribed under section 5822 of this title, multiplied by the partner’s or member’s pro rata share of the income attributable to Vermont, reflected on the partnership’s or limited liability company’s declaration of estimated tax of the taxable period.

* * * Current Use * * *

Sec. 5.  32 V.S.A. § 3757(a) is amended to read:

(a)  Land which has been classified as agricultural land or managed forest land pursuant to this chapter shall be subject to a land use change tax upon the development of that land, as defined in section 3752 of this chapter.  Said tax shall be at the rate of 20 percent of the full fair market value of the changed land determined without regard to the use value appraisal; or the tax shall be at the rate of 10 percent if the owner demonstrates to the satisfaction of the director that the parcel has been enrolled continuously more than 10 years.  If changed land is a portion of a parcel, the fair market value of the changed land shall be the fair market value of the changed land prorated on the basis of acreage, divided by the common level of appraisal.  Such fair market value shall be determined as of the date the land is no longer eligible for use value appraisal.  This tax shall be in addition to the annual property tax imposed upon such property.  Nothing in this section shall be construed to require payment of an additional land use change tax upon the subsequent development of the same land, nor shall it be construed to require payment of a land use change tax merely because previously eligible land becomes ineligible, provided no development of the land has occurred.


Sec. 6.  REPEAL

24 V.S.A. § 1535(a)(7) (authorizing boards of abatement to abate land use changes tax in cases of sales to finance continued agricultural operations) is repealed.

Sec. 7.  REPEAL

24 V.S.A. § 1535(a)(8) (authorizing boards of abatement to abate land use change tax in cases of permanent physical incapacity or death of a farmer‑owner or farmer-operator) is repealed.

Sec. 8.  32 V.S.A. § 3757(g) is amended to read:

(g)  Upon application, the commissioner may abate a use change tax levy concerning agricultural land found eligible for use value appraisal under subdivision 3752(1)(A) of this title, in the following cases:

(1)  if a disposition of such property resulting in a change of use of it takes place within five years of the initial assessment at use value because of the permanent physical incapacity or death of the individual farmer-owner or farmer-operator of the property.

(2)  if a disposition of the  property was necessary in order to raise funds to continue the agriculture operation of the seller.  In this case, the commissioner shall consider the financial gain realized by the sale of the land and whether, in respect to that gain, payment of the use change tax would significantly reduce the ability of the seller to continue using the remaining property, or any part thereof, as agricultural land.

* * * Economic Incentives * * *

Sec. 9.  32 V.S.A. § 9819(d) is amended to read:

(d)  The owner or owner’s representative of a qualified project shall report all sales taxes paid on purchases of qualified construction materials to the treasurer of the municipality in which the project is located.  The treasurer of the municipality shall submit requests for allocation of revenues under this section to the downtown development board, and the board shall certify the qualified projects and sales taxes paid thereon to the commissioner of taxes, who shall allocate the appropriate amounts of sales tax revenues due under this section to the municipalities.  Revenues allocated to a municipality under this section shall be used by the municipality only for expenditures related to the support of the qualified project located in that municipality which generated those revenues.  The allocation shall be determined as follows:

(1)  The municipality and the owner of the qualified project shall submit to the board a joint application for a reallocation of the sales taxes generated by the qualified project.  The application shall describe the project to be constructed and shall include an estimate of the taxable cost of construction materials that will be used in the qualified project.  The estimate shall be based upon the successful bid documents.

(2)  The board shall review the joint application.  If the project meets the requirements of this section and the requested allocation does not exceed the statutory limit set by this section, the board shall approve the application and forward it to the commissioner of taxes who may authorize an allocation up to the approved amount.  Fifty percent of the authorized allocation shall be paid to the municipality upon commencement of construction, and the balance shall be paid after completion of the project.

(3)  Tax revenues allocated to a municipality under this section shall be used by the municipality only for expenditures related to the support of the qualified project that generated those revenues.

* * * Administrative Provisions * * *

Sec. 10.  32 V.S.A. § 3101(b) is amended to read:

(b)  The commissioner shall:

* * *

(12)  submit annually on June 1 January 15 to the joint fiscal office a report on the tax credits authorized by sections 5930n, 5930p, 5930q, or 5930r of this title.  The report must include the number of taxpayers applying for the credits, the number of taxpayers granted the credits, and the amount of the credits granted.


Sec. 11.  32 V.S.A. § 3114(c) is amended to read:

(c)  Notwithstanding any appeal to the commissioner or to the courts, no person shall operate any trade or business with respect to which a bond has been demanded during any period for which such bond is not in effect.  In case of operation in violation of this section, the commissioner may cause to be posted, at every public entrance of the vendor’s premises, a notice identifying the person and the location and informing the public that the person has not filed a bond, and that no business may be conducted at that location.  No person shall cover or deface the posted notice, and the posted notice may not be removed until the bond is posted or removal is otherwise authorized by the commissioner or a court.

Sec. 12.  32 V.S.A. § 5939(b) is amended to read:

(b)  The information obtained by a claimant agency from the department in accordance with the exemption allowed by this section shall only be used by a claimant agency in the pursuit of its debt collection duties and practices and any person employed by, or formerly employed by, a claimant agency who discloses any such information for any other purpose, except as otherwise allowed by law, shall be penalized in accordance with the terms of section 5815 3102 of this title as if that person were an agent of the commissioner.  The claimant agency to which information is disclosed shall provide for the protection and security of the information as required by the commissioner.

Sec. 13.  32 V.S.A. § 5824 is amended 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 2003 2004, 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. 14.  32 V.S.A. § 7475 is amended to read:

§ 7475.  ADOPTION OF FEDERAL ESTATE AND GIFT TAX LAWS

The laws of the United States, relating to the federal estate and gift taxes as in effect on January 1, 2004 2005, are hereby adopted for the purpose of computing the tax liability under this chapter, except with the credit for state death taxes under Sections 2011 and 2604 as in effect on January 1, 2001, of the Internal Revenue Code, and without any deduction for state death taxes under Section 2058 of the Internal Revenue Code.

Sec. 15.  EFFECTIVE DATES

(a)  Secs. 1 (EITC rate terminology update), 2 (terminology correction for income of an estate or trust), and 3 and 4 (marginal rate terminology update for pass-through entities) shall take effect upon passage.

(b)  Sec. 5 (use change tax 10-year requirement amended to 10 continuous years) shall take effect July 1, 2006.

(c)  Secs. 6, 7, and 8 (conforming amendments to state administration of use change tax) shall take effect upon passage.

(d)  Sec. 9 (simplification of designated downtown sales tax allocation formula) shall take effect with respect to applications submitted after July 1, 2005.

(e)  Sec. 10 (date of commissioner’s report on certain tax credits) shall take effect July 1, 2005.

(f)  Sec. 11 (extension of commissioner’s ability to post a sign for noncompliance with tax bond requirement) shall take effect upon passage.

(g)  Sec. 12 (update of reference to confidentiality statute) shall take effect upon passage.

(h)  Sec. 13 (update of link to federal income tax laws) shall apply to taxable years beginning on and after January 1, 2004.

(i)  Sec. 14 (update of link to federal estate and gift tax laws) shall apply to estates of decedents with a date of death on or after, and gifts made on or after, January 1, 2005.

Approved:  May 3, 2005



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont


www.leg.state.vt.us