Introduced by Senator Dunne of Windsor District
Subject: Taxation; meals tax; tips
Statement of purpose: This bill proposes to prevent taxation of automatic tips up to 20 percent of the bill.
AN ACT RELATING TO MEALS TAX ON TIPS
It is hereby enacted by the General Assembly of the State of Vermont:
Sec. 1. 32 V.S.A. § 9241(d) is added to read:
(d) “Total charge” for a taxable meal for purposes of this section does not include any sum of money gratuitously and voluntarily left by a customer for service, or any sum of money indicated on the bill or charge statement as a tip to the extent such sum is separately accounted for and distributed to service employees in addition to normal salary and wages and does not exceed 20 percent of the stated charge for the taxable meal.
Sec. 2. EFFECTIVE DATE AND APPLICATION OF PROVISION
The provisions of this act supersede Tax Department Regulation 1.9202(10)-3(b) retroactively and apply to meals taxes as of January 1, 2002.
The Vermont General Assembly
115 State Street