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SUMMARY OF THE 2005 ACTS AND RESOLVES

ACT NO. 14

(H.210)

Technical tax amendments

This act makes various technical amendments to Vermont tax laws.

Sec. 1. Updates statutory wording.

When Vermont income tax was "piggybacked" to a percentage of federal income tax, the Vermont earned income tax credit was "piggybacked" to that same percentage of the Federal EIT credit. This section removes that outdated reference to the "applicable percentage."

Sec. 2. Corrects statutory wording.

Federal income tax on estates and trusts does not include the concept of "adjusted gross income." Since Vermont tax law follows the Federal rules, the Vermont statutory reference to "adjusted gross income" for estates and trusts is corrected to refer to "gross income."

Sec. 3. Updates statutory wording.

Vermont income tax law requires that when an S corporation has nonresident shareholders, the S corporation must make estimated payments on their behalf to Vermont. This ensures that Vermont receives income tax from these nonresidents. Since Vermont is no longer piggybacked to Federal tax rates, this section changes the law to refer to Vermont rates.

Sec. 4. Updates statutory wording.

Same as Sec. 3, but for partnerships and limited liability companies.

Sec. 5. The current use program provides that the land use change tax will be limited to 10 percent of the value of the changed land (instead of a 20 percent use change tax) if the changed land has been enrolled for more than ten years.

This section would provide than the ten years must be continuous. Intermittent enrollment is difficult to track and does not seem to achieve the desired end.

Secs. 6, 7, 8. Update statutory language.

In the original current use program, the state administered the use change tax. For a short period, towns were allowed to keep the use change tax and were given administration over the tax. When the use change tax revenues and administration reverted to the state, these local abatement rules should have been repealed. These sections repeal the outdated rules, leaving abatement at the state level again. Sec. 8 gives the commissioner the same authority as the board of abatement had under the repealed statutes in Sec. 6 and 7.

Sec. 9. Simplifies the formula for allocating sales tax revenues to a town which is hosting designated downtown development. Instead of allocating based on actual sales and receipts, the town and developer estimate the total sales. The town then receives half of its allocation at the beginning of the project and the other half at the end. Estimates are based on successful bid documents.

Sec. 10. Changes the due date from June 1 to January 15 for the Tax Department's annual report to the Joint Fiscal Office on certain tax credits. June 1 does not coincide with either a fiscal or calendar year.

Sec. 11. Under current law, the tax commissioner may post a sign on a business which, after repeated notices and a department hearing, continues to fail to collect and remit sales tax or meals and rooms tax. This section extends that law to allow the Commissioner to post a business which, as a result of its bad record for tax payment, has been required to obtain a bond but has failed to obtain that bond.

Sec. 12. Updates statutory wording.

In the debt setoff section of income tax law, under which state agencies may claim a taxpayer's refund if the taxpayer owes money to the agency (e.g., Office of Child Support), receiving agencies are subject to certain confidentiality laws. This section updates the reference to the confidentiality laws.

Sec. 13. Annual update to federal income tax laws. Every year the legislature must ratify the fact that the state based its prior-year income tax system on federal tax laws which were in effect in that prior year.

Sec. 14. Annual update to federal estate and gift tax laws. Every year the legislature must ratify the fact that the state based its prior-year estate and gift tax system on Federal tax laws which were in effect in that prior year.

Effective Date: May 3, 2005



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont


www.leg.state.vt.us