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H.600

Introduced by   Representatives Marron of Stowe and Obuchowski of Rockingham

Referred to Committee on

Date:

Subject:  Taxation; income tax; pass-through entities; payment of estimated tax

Statement of purpose:  This bill proposes to provide a safe harbor for payment of estimated tax of a member of a pass-through entity.

AN ACT RELATING TO ESTIMATED TAX SAFE HARBOR FOR PASS-THROUGH ENTITIES

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

Sec. 1.  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:

(1)  the estimated tax due with respect to the partner’s or member’s partnership or limited liability company income for the period, as shown on the partner’s or member’s quarterly estimated tax return, as required under subchapter 5 of this chapter, and which return and tax payment are submitted by the partnership or limited liability company to the commissioner at the time specified in subchapter 5; and

(2)  zero, for any partner or member with no estimated tax due for the period, if the partnership or limited liability company submits to the commissioner at the time specified in subchapter 5 a statement by the partner or member, signed under penalties of perjury on the form provided by the commissioner, that no tax is due for the period; or

(3)  for each partner or member for whom no return or statement is submitted under subdivision (1) or (2) of this subsection, the highest marginal tax 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.

Sec. 2.  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:

(1)  the estimated tax due with respect to the shareholder’s S corporation income for the period, as shown on the shareholder’s quarterly estimated tax return, as required under subchapter 5 of this chapter, and which return and tax payment are submitted by the S corporation to the commissioner at the time specified in subchapter 5; and

(2)  zero, for any shareholder with no estimated tax due for the period, if the S corporation submits to the commissioner at the time specified in subchapter 5 a statement by the shareholder, signed under penalties of perjury on the form provided by the commissioner, that no tax is due for the period; or

(3)  for each shareholder for whom no return or statement is submitted under subdivision (1) or (2) of this subsection, the highest marginal tax rate prescribed under section 5822 of this title multiplied by the shareholder’s pro rata share of the income attributable to Vermont.

Sec. 3.  EFFECTIVE DATE

This act shall apply to taxable years 2006 and after.



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont


www.leg.state.vt.us