Coronavirus has impacted how and when the Department collects taxes. As the crisis continues to evolve, so does the Department's response. We have been working closely with the legislature and office of Gov. Phil Scott to the lessen the economic impact to Vermont's businesses and individual taxpayers. Our Coronavirus page contains up-to-date information to guide Vermont taxpayers as the situation changes. We encourage taxpayers to check that page and the associated FAQs page for updates before contacting us with questions.
Personal Income Tax
Federal and state taxes originally due April 15, 2020, are automatically extended to July 15. The Vermont taxes extended are:
Personal income tax
Homestead Declaration and Property Tax Credit Claims
Corporate income tax
Fiduciary income tax.
Anyone ready to file before July 15 is encouraged to do so.
Stimulus Payment Scams
While many Americans are waiting to receive the federal Economic Impact (Stimulus) Payments, scammers are hard at work targeting individuals and preparers to get to the money first. We caution everyone to be alert to attempts by scammers to get bank account information. Government agencies of any kind, such as the IRS, the Vermont Department of Taxes, and the Social Security Administration, never contact people for their account numbers. If you receive a phone call like this, hang up. Email? Delete. Do not engage or respond in any way. The
IRS has information on these newest scams
Taxability of Face Coverings
Because of heightened awareness about the use of face coverings, below is a quick summary of Sales and Use Tax as it relates to the various types of coverings.
N95 respirators and surgical masks are exempt from sales and use tax under 32 V.S.A. § 9741(2) because these items are therapeutic in nature, not normally used by people who aren't ill or injured, and are not capable of repeated usage. Although in these unusual times these items are becoming more routinely used by the general population, they are still exempt from tax.
Scarves are exempt because they qualify as clothing under the law.
Breathing masks and face shields are taxable under 32 V.S.A. § 9741(45). Although clothing is exempt from sales tax, protective equipment is taxable, because it is typically used in nonmedical settings, such as manufacturing and cleaning.
Handkerchiefs are also taxable because they qualify as taxable "clothing accessories or equipment" under Vermont law.
See our fact sheet, General Guidelines on Sales Tax: What is Taxable and Exempt?
Seasonal Reminders
Purchasing Ice
Food, when purchased from a retail store, is exempt from Vermont Sales and Use Tax. However, ice has no taste nor nutritional value, therefore it isn't food. Purchased ice is always taxable, even when the ice is intended to keep food cold or will be incorporated into beverages for sale. A business buying ice to be sold in beverages is the actual end user, and must pay sales tax. Similarly, the business pays sales tax for napkins, cups, and straws, even when Vermont Meals tax will be be charged to the consumer. See Reg. § 1.9741(13) of the Vermont Sales and Use Tax Regulations.
Camprounds
Campground operators are reminded of their obligations to collect and remit Vermont Meals and Rooms Tax, and if applicable, Sales and Use Tax. Technical Bulletin 50 (TB-50) addresses the unique tax situations that campground operators may encounter in their day-to-day operations.
Day Camp Expenses
It remains to to be seen whether many day camps will be open this summer. For parents and legal guardians claiming the Child and Dependent Care Credit, the cost of sending a child under 13 years of age to a day camp may be deductible as a work-related child care expense. The purpose of the care must be to enable a parent or legal guardian to work or look for work. Taxpayers should save tuition receipts as proof if asked. See IRS Publication 503.
Proposed Regulation Updates
Comments Requested
The Department has drafted updated Property Transfer Tax Regulations and Meals and Rooms Tax Regulations. The regulations, short descriptions, and a place to send comments is located at tax.vermont.gov/public-comments
Taking Care of Business
The Compliance Corner
The
Compliance Corner on the Department's website is intended to help businesses and individuals avoid making errors that can cost them time and money. The guidance in the "Tips & News" section is compiled from data gathered during audits. There have been several updates in recent months on Sales and Use Tax exemptions for the agriculture industry. Check the Current Work section to see what initiatives we are working on now.
Pay attention to Local Option Tax
During the Governor's Stay Home, Stay Safe order, many Vermont businesses have been making deliveries for the first time or have extended their usual delivery service areas. Businesses are reminded to check the Local Option Tax municipalities' page to see whether there is a Local Option Tax in municipalities where they deliver goods or meals.
New Webpage
New page focuses on young workers
A new
Tax Learning Center page on the Department website gives background information and links to resources for anyone who pays taxes. It includes a new resource, "First Job? First Taxes!" centered around young workers. While designed for classroom teachers, parents and high-schoolers may also find it helpful.
IRS Ruling: Paycheck Protection Program
Businesses may not deduct wages from PPP money
The IRS has ruled that a company that receives Paycheck Protection Program relief money cannot also deduct wages paid with those funds. The IRS and the Treasury Department both note that the payment is not taxable income, so also taking a deduction for the wages paid directly with federal funds would amount to a double tax benefit.
See more about the Payment Protection Program at the
IRS website.
Education Property Tax Estimator
New online tool
The Department has created an Education Property Tax Estimator tool for the 2020-2021 property tax year. The tool is designed to help taxpayers and school district officials understand the relationship and impact of school budgets to property taxes. The tool requires Microsoft Excel.
To Be Perfectly Clear
Further clarification: fuel deliveries
In the January VTax News, we wrote that the Legislature had clarified the tax on fuel deliveries in Vermont to state that deliveries to nonprofits are not exempt from the "2% Fuel Tax." The percentage as stated is incorrect. The Fuel Tax is $0.02 per gallon of fuel sold at retail, not two percent of the sale amount.
We are adding that the Fuel Tax also applies to deliveries to governmental entities.
We're on Social Media
Looking for the latest Vermont tax news?
Follow the Vermont Department of Taxes on Facebook and Twitter!
Contact Us When You Have a Question
Tax professionals with questions can reach the Department of Taxes at the 802-828-6815, or by emailing [email protected]. This special phone number for professional preparers is answered Monday-Friday, 7:45AM-4:30PM.
Would Your Colleagues Benefit from Our Newsletter?
If you have colleagues who would be interested in the content of Department newsletters, please let them know how to sign up by sharing this link.
