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H.843

Introduced by   Committee on Ways and Means

Date:

Subject:  Taxation; miscellaneous tax policy amendments

Statement of purpose:  This bill proposes to make miscellaneous policy amendments to Vermont tax law.

AN ACT RELATING TO MISCELLANEOUS TAX POLICY AMENDMENTS

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

* * * Nonresident estimated tax payments by pass-through entities * * *

Sec. 1.  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 next-to-lowest 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. 2.  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

next-to-lowest 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.

* * * Cigarette tax on unstamped cigarettes * * *

Sec. 3.  32 V.S.A. § 7771 is amended to read:

§ 7771.  Imposition and rate of tax

(a)  A tax is imposed on all cigarettes held in this state by any person for sale or by any person in possession of more than 10,000 cigarettes, unless such cigarettes shall be:

(1)  in the possession of a licensed wholesale dealer;       

(2)  in the course of transit and consigned to a licensed wholesale dealer or retail dealer; or

(3)  in the possession of a retail dealer who has held the cigarettes for 24 hours or less.  Such tax shall be at the rate of 59.5 mills for each cigarette and the payment thereof to Payment of the tax under this subsection shall be evidenced by the affixing of stamps to the packages containing the cigarettes, as hereinafter provided.  Any cigarette on which the tax imposed by this chapter subsection has been paid, such payment being evidenced by the affixing of such stamp, shall not be subject to a further tax under this chapter. Nothing contained in this chapter shall be construed to impose a tax on any transaction the taxation of which by this state is prohibited by the constitution of the United States.  The amount of taxes advanced and paid by a licensed wholesale dealer or a retail dealer as herein provided shall be added to and collected as part of the retail sale price on the cigarettes.  All taxes upon cigarettes under this chapter are declared to be a direct tax upon the consumer at retail and shall conclusively be presumed to be precollected for the purpose of convenience and facility only.

(b)  A tax is also imposed on all cigarettes possessed in this state by any person for any purpose other than sale, as follows:

(1)  This tax shall not apply to:

(A)  cigarettes bearing a stamp affixed pursuant to this chapter; or

(B)  cigarettes bearing a cigarette tax stamp affixed pursuant to the laws of another jurisdiction with a cigarette tax rate equal to or greater than the rate set forth in subsection (c) of this section; or

(C)  cigarettes purchased outside the state by an individual in quantities of 400 or less and brought into the state for that individual’s own use or consumption.  Cigarettes that are ordered from a source outside the state and delivered into this state are not “purchased outside the state” within the meaning of this subsection.

(2)  There is allowed a credit against the tax under this subsection for cigarette tax paid to another jurisdiction and evidenced by cigarette tax stamps affixed to the subject cigarettes pursuant to the laws of that jurisdiction.

(3)  A person taxable under this subsection shall, within 30 days of first possessing the cigarettes in this state, file a return with the commissioner, showing the quantity of cigarettes brought into the state.  The return must be made in the form and manner prescribed by the commissioner and be accompanied by remittance of the tax due.

(c)  The tax imposed under this section shall be at the rate of 59.5 mills per cigarette.  The interest and penalty provisions of section 3202 of this title shall apply to liabilities under this section.

* * * Sales tax on electronic transfer of software * * *

Sec. 4.  32 V.S.A. § 9701(7) is amended to read:

 (7)  Tangible personal property:  means personal property which may be seen, weighed, measured, felt, touched, or in any other manner perceived by the senses and shall include fuel and electricity and prewritten computer software, but shall not include rights and credits, insurance policies, bills of exchange, stocks and bonds, and similar evidences of indebtedness or ownership.   


* * * Streamlined sales tax conforming language * * *

Sec. 5.  32 V.S.A. § 9775 is amended to read:

§ 9775.  RETURNS

(a)  Every Except as otherwise provided in this section, every person required to collect or pay tax under this chapter shall, where the sales and use tax liability under this chapter for the immediately preceding calendar year has been (or would have been in cases when the business was not operating for the entire year) $500.00 or less, pay the tax imposed by this chapter in one annual payment on or before the 25th day of January of each year.  Every person required to collect or pay tax under this chapter shall, where the sales and use tax liability under this chapter for the immediately preceding calendar year has been (or would have been in cases when the business was not operating for the entire year) more than $500.00 but less than $2,500.00, pay the tax imposed by this chapter in quarterly installments on or before the 25th day of the calendar month succeeding the quarter ending on the last day of March, June, September, and December of each year.  In all other cases, except as provided in subsection (e) of this section, the tax imposed by this chapter shall be due and payable monthly on or before the 25th (23rd of February) day of the month following the month for which the tax is due.  Payment by electronic funds transfer does not affect the requirement to file returns.  The return of a vendor of tangible personal property shall show such information as the commissioner may require.

* * *

(f)  A person registered under the Multistate Streamlined Sales and Use Tax Agreement that does not have a legal requirement to register in this state and is not a Model 1, 2, or 3 seller may file a return within one year of the month of initial registration and may file annual returns in the same month for succeeding years; provided, however, for any month in which such person collected state and local taxes in the amount of $1,000.00 or more, the person must file a return, which is due on or before the 25th day of the month following the month for which the tax is due.

* * * Effective dates * * *

Sec. 6.  EFFECTIVE DATES

This act shall take effect upon passage, except:

(1)  Secs. 1 and 2 (estimated tax for pass-through entities) shall apply to taxable years beginning on or after January 1, 2006.

(2)  Sec. 3 (cigarette tax) shall apply to sales on and after July 1, 2006.

(3)  Sec. 4 (sales tax on electronically transferred software) shall apply to sales and uses on and after September 1, 2006.

(4)  Sec. 5 (streamlined sales tax agreement conforming language) shall take effect on the first day of the second quarter following the date of Vermont’s membership in the Multistate Streamlined Sales and Use Tax Agreement.



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont


www.leg.state.vt.us