Title 32: Taxation and Finance
Chapter 233: SALES AND USE TAX
Sub-Chapter 001: General Provisions
32 V.S.A. § 9701. Definitions
§ 9701. Definitions
Unless the context in which they occur requires otherwise, the following terms when used in this chapter mean:
(1) "Person" means an individual, partnership, society, association, joint stock company, corporation, public corporation or public authority, estate, receiver, trustee, assignee, referee, and any other person acting in a fiduciary or representative capacity, whether appointed by a court or otherwise, and any combination of the foregoing.
(2) "Commissioner" means the State Commissioner of Taxes or any officer or employee of the Department duly authorized by the Commissioner (directly or indirectly by one or more redelegations of authority) to perform the functions herein mentioned or described.
(3) "Purchaser" means a person who purchases property or who receives services taxable under this chapter.
(4)(A) "Sales price" means the total amount of consideration, including cash, credit, property, and services, for which personal property or services are sold, leased, or rented, valued in money, whether received in money or otherwise, without deduction for the following:
(i) The seller's cost of the property sold;
(ii) The cost of materials used, labor or service cost, interest, losses, all costs of transportation to the seller, all taxes imposed on the seller, and any other expenses of the seller;
(iii) Charges by the seller for any services necessary to complete the sale, other than installation charges;
(iv) Delivery charges;
and including consideration received by the seller from third parties if:
(I) The seller actually receives consideration from a party other than the purchaser and the consideration is directly related to a price reduction or discount on the sale;
(II) The seller has an obligation to pass the price reduction or discount through to the purchaser;
(III) The amount of the consideration attributable to the sale is fixed and determinable by the seller at the time of the sale of the item to the purchaser; and
(IV) One of the following criteria is met: (aa) The purchaser presents a coupon, certificate, or other documentation to the seller to claim a price reduction or discount where the coupon, certificate, or documentation is authorized, distributed, or granted by a third party with the understanding that the third party will reimburse any seller to whom the coupon, certificate, or documentation is presented; (bb) The purchaser identifies himself or herself to the seller as a member of a group or organization entitled to a price reduction or discount (a "preferred customer" card that is available to any patron does not constitute membership in such a group); or (cc) The price reduction or discount is identified as a third party price reduction or discount on the invoice received by the purchaser or on a coupon, certificate, or other documentation presented by the purchaser.
(B) Sales price shall not include:
(i) discounts, including cash, term, or coupons that are not reimbursed by a third party that are allowed by a seller and taken by a purchaser on a sale;
(ii) interest, financing, and carrying charges from credit extended on the sale of personal property or services, if the amount is separately stated on the invoice, bill of sale, or similar document given to the purchaser;
(iii) any taxes legally imposed directly on the consumer that are separately stated on the invoice, bill of sale, or similar document given to the purchaser;
(iv) installation charges;
(v) credit for any trade-in; and
(vi) telecommunications nonrecurring charges.
(5) "Retail sale" or "sold at retail" means any sale, lease, or rental for any purpose other than for resale, sublease, or subrent, including sales to contractors, subcontractors, or repair persons of materials and supplies for use by them in erecting structures or otherwise improving, altering, or repairing real property.
(6) "Purchase price" means the measure subject to use tax and has the same meaning as sales price.
(7) "Tangible personal property" means personal property which may be seen, weighed, measured, felt, touched, or in any other manner perceived by the senses. "Tangible personal property" includes electricity, water, gas, steam, and prewritten computer software.
(8) "In this State" or "in the State" means within the exterior limits of the State of Vermont and includes all territory within these limits owned by or ceded to the United States of America.
(9) "Vendor" means
(A) A person making sales of tangible personal property or services, the receipts from which are taxed by this chapter;
(B) A person maintaining a place of business in the State and making sales, whether at that place of business or elsewhere, to persons within the State of tangible personal property or services, the use of which is taxed by this chapter;
(C) A person who:
(i) solicits sales of tangible personal property either by employees, independent contractors, agents or other representatives;
(ii) owns or controls a person engaged in the same manner or similar line of business in this State; or
(iii) maintains or has a franchisee or licensee operating under such person's name in this State if the franchisee or licensee is required to collect the sales tax imposed by this chapter; and by reason thereof makes sales to persons within the State of tangible personal property or services, the use of which is taxed by this chapter;
(D) Any other person making sales to persons within the State of tangible personal property or services, the use of which is taxed by this chapter, who may be authorized by the Commissioner to collect the tax imposed by this chapter;
(E) The State of Vermont or any of its agencies, instrumentalities, public authorities, public corporations (including a public corporation created pursuant to agreement or compact with another state), or political subdivision when that entity sells services or property of a kind ordinarily sold by private persons;
(F) A person making sales of tangible personal property from outside this State to a destination within this State and not maintaining a place of business in this State who engages in regular, systematic, or seasonal solicitation of sales of tangible personal property in this State:
(i) by the display of advertisements in this State;
(ii) by the distribution of catalogs, periodicals, advertising flyers, or other advertising by means of print, radio, or television media; or
(iii) by mail, telegraphy, telephone, computer database, cable, optic, microwave, or other communication systems, for the purpose of effecting sales of tangible personal property; provided such person has made sales from outside this State to destinations within this State of at least $50,000.00 during any 12-month period preceding the monthly or quarterly period with respect to which such person's liability for tax under this chapter is determined;
(G) A person who has any other contact with this State that would allow this State to require the seller to collect and remit use tax under the provisions of the Constitution and laws of the United States;
(H) A person who provides telecommunications service as defined in subdivision (19) of this section, except that "vendor" shall not include a person whose activities in this State are limited to the performance of any activities which, without more, would not constitute nexus for sales tax collection purposes, plus any or all of the following necessary to create or maintain a Worldwide Web page or Internet site for the person:
(i) ownership of data or programming code in this State, or use of that data or programming code by another person or by a person not in this State;
(ii) ownership of, or receipt of services from, computer servers in this State;
(iii) receipt of computer processing or web hosting services from a computer service provider or web hosting service in this State.
Subdivision (9)(I) effective upon determination of attorney general; see note set out in the main volume.
(I) For purposes of subdivision (C) of this subdivision (9), a person making sales that are taxable under this chapter shall be presumed to be soliciting business through an independent contractor, agent, or other representative if the person enters into an agreement with a resident of this State under which the resident, for a commission or other consideration, directly or indirectly refers potential customers, whether by a link on an Internet website or otherwise, to the person if the cumulative gross receipts from sales by the person to customers in the State who are referred to the person by all residents with this type of an agreement with the person are in excess of $10,000.00 during the preceding tax year. For purposes of subdivision (C) of this subdivision (9), the presumption may be rebutted by proof that the resident with whom the person has an agreement did not engage in any solicitation in the State on behalf of the person that would satisfy the nexus requirements of the United States Constitution during the tax year in question.
(10) "Trade-in" means an allowance, including any core charges, made for like-kind property given to a vendor.
(11) "Place of entertainment" means any place where any facilities for entertainment, recreation, amusement, or sports are provided.
(12)(A) "Casual sale" means an isolated or occasional sale of an item of tangible personal property by a person who is not regularly engaged in the business of making sales of that general type of property at retail where the property was obtained by the person making the sale, through purchase or otherwise, for his or her own use.
(B) Aircraft as defined in 5 V.S.A. § 202(6), snowmobiles as defined in 23 V.S.A. § 3201(5), motorboats as defined in 23 V.S.A. § 3302(4) and vessels as defined in 23 V.S.A. § 3302(11) which are 16 feet or more in length, are hereby specifically excluded from the definition of casual sale.
(13) "Use" means the exercise of any right or power over tangible personal property by the purchaser thereof and includes the receiving, storage or any keeping or retention for any length of time, withdrawal from storage, any installation, any affixation to real or personal property, or any consumption of that property.
(14) "Persons required to collect tax" or "persons required to collect any tax imposed by this chapter" means every vendor of taxable tangible personal property or services, every recipient of amusement charges. These terms shall also include any officer or employee of a corporation or other entity or of a dissolved entity who as that officer or employee is under a duty to act for the corporation or entity in complying with any requirement of this chapter.
(15) "Property and services the use of which is subject to tax" means all property sold to a person within the State, whether or not the sale is made within the State, the use of which property is subject to tax under section 9773 of this title or will become subject to tax when such property is received by or comes into the possession or control of such person within the State.
(16) "Advertising agency" means a business 80 percent or more of whose gross receipts in the previous taxable year were, or in the first taxable year are reasonably projected to be, from charges for advertising services. As used in this definition, the term "gross receipts" does not include charges for printing, imprinting, reproduction, publishing of tangible personal property or photography to the extent that:
(A) the activity was not performed by the business itself but was contracted out to another business; and
(B) the charges therefor were passed through the business to its client.
(17) "Advertising materials" means tangible personal property that promotes a product, service, idea, concept, issue or the image of a person, but not copies or reproductions of such property, or property on which printing or imprinting service has been performed.
(18) "Advertising services" means services rendered to promote a product, service, idea, concept, issue or the image of a person, including services rendered to design and produce advertising materials prior to the acceptance of the advertising materials for reproduction or publication, including research; design; layout; preliminary and final art preparation; creative consultation, coordination, direction and supervision; script and copywriting; editing; and account management services. Advertising services do not include printing, imprinting, reproduction, publishing of tangible personal property or photography.
(19) "Telecommunications service" means the electronic transmission, conveyance, or routing of voice, data, audio, video, or any other information or signals to a point, or between or among points. The term "telecommunications service" includes such transmission, conveyance, or routing in which computer processing applications are used to act on the form, code, or protocol of the content for purposes of transmission, conveyance, or routing without regard to whether such service is referred to as voice-over internet protocol services or is classified by the Federal Communications Commission as enhanced or value added. Telecommunications service does not include:
(A) Data processing and information services that allow data to be generated, acquired, stored, processed, or retrieved and delivered by an electronic transmission to a purchaser where such purchaser's primary purpose for the underlying transaction is the processed data or information.
(B) Installation or maintenance of wiring or equipment on a customer's premises.
(C) Tangible personal property.
(D) Advertising, including directory advertising.
(E) Billing and collection services provided to third parties.
(F) Internet access service.
(G) Radio and television audio and video programming services, regardless of the medium, including the furnishing of transmission, conveyance, and routing of such services by the programming service provider. Radio and television audio and video programming services shall include cable service as defined in 47 U.S.C. § 522(6) and audio and video programming services delivered by commercial mobile radio service providers, as defined in 47 C.F.R. § 20.3.
(H) Ancillary services.
(I) Digital products delivered electronically, including software, music, video, reading materials, or ring tones.
(21) "Mobile telecommunications service" means mobile telecommunications service as defined in 4 U.S.C. § 124.
(23) "Alcoholic beverages" means beverages that are suitable for human consumption and contain one-half of one percent or more of alcohol by volume.
(24) "Clothing" means all human wearing apparel suitable for general use. The following list contains examples and is not intended to be an all-inclusive list.
(A) "Clothing" shall include:
(i) aprons, household and shop;
(ii) athletic supporters;
(iii) baby receiving blankets;
(iv) bathing suits and caps;
(v) beach capes and coats;
(vi) belts and suspenders;
(viii) coats and jackets;
(x) diapers, child and adult, including disposable diapers;
(xiii) formal wear;
(xiv) garters and garter belts;
(xvi) gloves and mittens for general use;
(xvii) hats and caps;
(xix) insoles for shoes;
(xx) lab coats;
(xxv) rubber pants;
(xxviii) shoes and shoelaces;
(xxxi) socks and stockings;
(xxxii) steel-toed shoes;
(xxxiv) uniforms, athletic and nonathletic; and
(xxxv) wedding apparel.
(B) "Clothing" shall not include:
(i) belt buckles sold separately;
(ii) costume masks sold separately;
(iii) patches and emblems sold separately;
(iv) sewing equipment and supplies, including knitting needles, patterns, pins, scissors, sewing machines, sewing needles, tape measures, and thimbles; and
(v) sewing materials that become part of "clothing," including buttons, fabric, lace, thread, yarn, and zippers.
(25) "Clothing accessories" or "equipment" means incidental items worn on the person or in conjunction with "clothing." "Clothing accessories or equipment" are mutually exclusive of and may be taxed differently than apparel within the definition of "clothing," "sport or recreational equipment," and "protective equipment." The following list contains examples and is not intended to be an all-inclusive list. "Clothing accessories or equipment" shall include:
(C) hair notions, including barrettes, hair bows, and hair nets;
(G) sunglasses, nonprescription;
(J) watches; and
(K) wigs and hairpieces.
(26) "Delivery charges" means charges by the seller of personal property or services for preparations and delivery to a location designated by the purchaser of personal property or services including transportation, shipping, postage, handling, crating, and packing. Direct mail charges that are separately stated on an invoice or similar billing document given to the purchaser are excluded from the definition of "delivery charges."
(27) "Dietary supplement" means any product, other than tobacco, intended to supplement the diet that:
(A) contains one or more of the following dietary ingredients:
(i) a vitamin;
(ii) a mineral;
(iii) an herb or other botanical;
(iv) an amino acid;
(v) a dietary substance for use by humans to supplement the diet by increasing the total dietary intake; or
(vi) a concentrate, metabolite, constituent, extract, or combination of any ingredients described in subdivisions (i) through (v) of this subdivision (27)(A);
(B) is intended for ingestion in tablet, capsule, powder, softgel, gelcap, or liquid form, or if not intended for ingestion in such form, is not represented as conventional food and is not represented for use as a sole item of a meal or of the diet; and
(C) is required to be labeled as a dietary supplement, identifiable by the "supplemental facts" box found on the label and as required pursuant to 21 C.F.R. § 101.36.
(28) "Direct mail" means printed material delivered or distributed by United States mail or other delivery service to a mass audience or addresses on a mailing list provided by the purchaser or at the direction of the purchaser when the cost of the items is not billed directly to the recipients. "Direct mail" includes tangible personal property supplied directly or indirectly by the purchaser to the direct mail seller for inclusion in the package containing the printed material. "Direct mail" does not include multiple items of printed material delivered to a single address.
(29) "Drug" means a compound, substance, or preparation, and any component of a compound, substance, or preparation, but not including food and food ingredients, dietary supplements, alcoholic beverages, or grooming and hygiene products, that is:
(A) recognized in the official United States Pharmacopeia, official Homeopathic Pharmacopeia of the United States, official National Formulary, or in supplements to any of them; or
(B) Intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease; or
(C) intended to affect the structure or any function of the body.
(30) "Durable medical equipment" means equipment including repair and replacement parts for such equipment, but does not include "mobility-enhancing equipment," which:
(A) can withstand repeated use; and
(B) is primarily and customarily used to serve a medical purpose;
(C) generally is not useful to a person in the absence of illness or injury; and
(D) is not worn on the body.
(31) "Food and food ingredients" means substances, whether in liquid, concentrated, solid, frozen, dried, or dehydrated form, that are sold for ingestion or chewing by humans and are consumed for their taste or nutritional value. "Food and food ingredients" does not include alcoholic beverages or tobacco.
(32) "Grooming and hygiene products" means soaps and cleaning solutions, shampoo, toothpaste, mouthwash, antiperspirants, and suntan lotions and screens.
(33) "Lease or rental" means any transfer of possession or control of tangible personal property for a fixed or indeterminate term for consideration. A lease or rental may include future options to purchase or extend.
(A) "Lease or rental" does not include:
(1) A transfer of possession or control of property under a security agreement or deferred payment plan that requires the transfer of title upon completion of the required payments.
(2) A transfer of possession or control of property under an agreement that requires the transfer of title upon completion of required payments and payment of an option price does not exceed the greater of $100.00 or one percent of the total required payments.
(3) Providing tangible personal property along with an operator for a fixed or indeterminate period of time. A condition of this exclusion is that the operator is necessary for the equipment to perform as designed. For the purpose of this subdivision, an operator must do more than maintain, inspect, or set up the tangible personal property.
(B) Lease or rental does include agreements covering motor vehicles and trailers where the amount of consideration may be increased or decreased by reference to the amount realized upon sale or disposition of the property as defined in 26 U.S.C. § 7701(h)(1).
(34) "Mobility-enhancing equipment" means equipment including repair and replacement parts of such equipment, but does not include "durable medical equipment," which
(A) is primarily and customarily used to provide or increase the ability to move from one place to another and which is appropriate for use either in a home or a motor vehicle;
(B) is not generally used by persons with normal mobility; and
(C) does not include any motor vehicle or equipment on a motor vehicle normally provided by a motor vehicle manufacturer.
(35) "Prosthetic device" means a replacement, corrective, or supportive device, including repair and replacement parts for such device worn on or in the body to:
(A) artificially replace a missing portion of the body;
(B) prevent or correct a physical deformity or malfunction; or
(C) support a weak or deformed portion of the body.
(36) "Protective equipment" means items for human wear and designed as protection of the wearer against injury or disease or as protection against damage or injury of other persons or property but not suitable for general use. "Protective equipment" is mutually exclusive of and may be taxed differently from apparel within the definition of "clothing," "clothing accessories or equipment," and "sport or recreational equipment." The following list contains examples and is not intended to be an all-inclusive list. "Protective equipment" shall include:
(A) breathing masks;
(B) clean room apparel and equipment;
(C) ear and hearing protectors;
(D) face shields;
(G) paint or dust respirators;
(H) protective gloves;
(I) safety belts;
(J) safety glasses and goggles;
(K) tool belts; and
(L) welders' gloves and masks.
(37) "Sport or recreational equipment" means items designed for human use and worn in conjunction with an athletic or recreational activity that are not suitable for general use. "Sport or recreational equipment" is mutually exclusive of and may be taxed differently than apparel within the definition of "clothing," "clothing accessories or equipment," and "protective equipment." The following list contains examples and is not intended to be an all-inclusive list. "Sport or recreational equipment" shall include:
(A) ballet and tap shoes;
(B) cleated or spiked athletic shoes;
(C) gloves, including baseball, bowling, boxing, hockey, and golf;
(E) hand and elbow guards;
(F) life preservers and vests;
(G) mouth guards;
(H) roller and ice skates;
(I) shin guards;
(J) shoulder pads;
(K) ski boots;
(L) waders; and
(M) wetsuits and fins.
(38) "Paging service" means a telecommunications service that provides transmission of coded radio signals for the purpose of activating specific pagers; such transmissions may include messages, or sounds, or both.
(39) "Private communications service" means a telecommunications service that entitles the customer to exclusive or priority use of a communications channel or group of channels between or among termination points, regardless of the manner in which such channel or channels are connected, and includes switching capacity, extension lines, stations, and any other associated services that are provided in connection with the use of such channel or channels.
(40) "Value-added non-voice data service" means a service that otherwise meets the definition of telecommunications service in which computer processing applications are used to act on the form, content, code, or protocol of the information or data primarily for a purpose other than transmission, conveyance, or routing.
(41) "Coin-operated telephone service" means a telecommunications service paid for by inserting money into a telephone accepting direct deposits of money to operate.
(42) "Ancillary services" means services that are associated with or incidental to the provision of telecommunications services, including detailed telecommunications billing, directory assistance, vertical service, and voice mail services.
(43) "Telecommunication nonrecurring charges" means an amount billed for the installation, connection, change or initiation of telecommunications service received by the customer.
(44) "Directory assistance" means an ancillary service of providing telephone number information or address information, or both.
(45) "Transferred electronically" means obtained by the purchaser by means other than tangible storage media.
(46) "Specified digital products" means digital audio-visual works, digital audio works, digital books, or ringtones that are transferred electronically.
(A) Digital audio-visual works: means a series of related images which, when shown in succession, impart an impression of motion, together with accompanying sounds, if any.
(B) Digital audio works: means works that result from the fixation of a series of musical, spoken, or other sounds, including ringtones.
(C) Digital books: means works that are generally recognized in the ordinary and usual sense as "books."
(D) Ringtones: means digitized sound files that are downloaded onto a device and that may be used to alert the customer with respect to a communication.
(47) "End user" means any person other than a person who received by contract a product transferred electronically for further commercial broadcast, rebroadcast, transmission, retransmission, licensing, relicensing, distribution, redistribution, or exhibition of the product, in whole or in part, to another person or persons.
(48) "Compost" means a stable humus-like material produced by the controlled biological decomposition of organic matter through active management, but does not mean sewage, septage, or materials derived from sewage or septage.
(49) "Manipulated animal manure" means manure that is ground, pelletized, mechanically dried, or consists of separated solids.
(50) "Perlite" means a lightweight granular material made of volcanic material expanded by heat treatment for use in growing media.
(51) "Planting mix" means material that is:
(A) used in the production of plants; and
(B) made substantially from compost, peat moss, or coir and other ingredients that contribute to fertility and porosity, including perlite, vermiculite, and other similar materials.
(52) "Vermiculite" means a lightweight mica product expanded by heat treatment for use in growing media. (Added 1969, No. 144, § 1, eff. June 1, 1969; amended 1975, No. 243 (Adj. Sess.), § 7, eff. May 1, 1976; 1977, No. 86, §§ 1, 6; 1979, No. 105 (Adj. Sess.), § 39, eff. date, see note below; 1983, No. 212 (Adj. Sess.), § 6; 1987, No. 251 (Adj. Sess.), § 3; 1989, No. 119, § 16, eff. June 22, 1989; 1989, No. 210 (Adj. Sess.), § 131b; 1989, No. 222 (Adj. Sess.), § 24; 1991, No. 32, § 40, eff. June 1, 1991; 1991, No. 186 (Adj. Sess.), § 28, eff. May 7, 1992; 1995, No. 86 (Adj. Sess.), §§ 1, 2, eff. March 28, 1996; 1997, No. 60, §§ 76, 77, eff. Sept. 1, 1997; 1999, No. 49, § 62, eff. June 2, 1999; 2001, No. 144 (Adj. Sess.), §§ 30, 33, 34, 38, eff. June 21, 2002; 2003, No. 68, §§ 51-56, eff. date, see note below; 2003, No. 152 (Adj. Sess.), § 16, eff. date, see note below; 2005, No. 75, §§ 21, 24, eff. July 1, 2005; 2005, No. 207 (Adj. Sess.), § 13, eff. May 31, 2006; 2009, No. 1 (Sp. Sess.), § H.40; 2009, No. 160 (Adj. Sess.), § 38, eff. April 1, 2011; 2011, No. 160 (Adj. Sess.), § 39; 2011, No. 45, § 36a, eff. date, see note below; 2013, No. 174 (Adj. Sess.), §§ 41, 44.)