Vermont – Proposed Bill Similar to California’s Bill Regarding Online Retailers

SALT Report 1387 – Legislation was introduced in the Vermont House of Representatives that adopts language similar to California’s recently enacted A.B. 155, the taxation of online retailers. If enacted, Vermont’s bill would change the definition of “vendor” by removing the click-through nexus provision enacted in Act 45 (H.B. 436), and adding click-through nexus and affiliate nexus provisions, similar to those enacted in California.  In addition, the remote-seller notice requirements enacted in Act 45 would be repealed effective July 1, 2012.

Provisions That Would Take Effect on July 1, 2012

  • Any person maintaining, occupying, or using, permanently or temporarily, directly or indirectly, or through a subsidiary or agent, an office, place of distribution, sales or sample room or place, warehouse or storage place, or other place of business;
  • Any person having any representative, agent, salesperson, canvasser, independent contractor, or solicitor operating in Vermont under the authority of the retailer or its subsidiary for the purpose of selling, delivering, installing, assembling, or the taking of orders for any tangible personal property;
  • Any person deriving rentals from a lease of tangible personal property situated in this state; and
  • Any person soliciting orders for tangible personal property by mail if the solicitations are substantial and recurring and if the retailer benefits from any banking, financing, debt collection, telecommunication, or marketing activities occurring in Vermont or benefits from the location in Vermont of authorized installation, servicing, or repair facilities. This shall become operative upon the enactment of any congressional act that authorizes states to impose the collection of state sales and use taxes by out-of-state retailers.
Provisions That Would Take Effect in 2013
  • The definition of “vendor” would be amended in 2013 to include any person that has substantial nexus with Vermont and a retailer, upon whom federal law permits to impose a use tax collection duty, and any of the following:
  • Any person maintaining, occupying, or using, permanently or temporarily, directly or indirectly, or through a subsidiary or agent, an office, place of distribution, sales or sample room or place, warehouse or storage place, or other place of business;
  • Any person having any representative, agent, salesperson, canvasser, independent contractor, or solicitor operating in Vermont for the purpose of selling, delivering, installing, assembling, or the taking of orders for any tangible personal property;
  • Any person deriving rentals from a lease of tangible personal property in Vermont;
  • Any person that is a member of a commonly controlled group that includes another member of the retailer’s commonly controlled group that, has an agreement with the retailer, performs services in Vermont in connection with tangible personal property to be sold by the retailer, including design and development of tangible personal property sold by the retailer, or the solicitation of sales of tangible personal property on behalf of the retailer; and
  • Any person entering into an agreement or agreements under which another person or persons in Vermont, for a commission or other consideration, directly or indirectly refers potential purchasers to the retailer, whether by an Internet-based link or an Internet website, or otherwise, provided that both of the following conditions are met:
(1) The total cumulative sales price from all of the vendor’s sales within the preceding 12 months and sold to purchasers in Vermont is in excess of $10,000, and
(2) The vendor, within the preceding 12 months, has total cumulative sales to purchasers in Vermont in excess of $1 million.
This provision would not apply if the vendor can demonstrate that the person in Vermont with whom the vendor has an agreement did not engage in referrals in the state on behalf of the retailer. Also, certain agreements related to advertising would not qualify a person as a “vendor” under this provision.
If enacted, these provisions would become effective as follows:
If federal law authorizing the states to require a seller to collect taxes on sales of goods to in-state purchasers without regard to the location of the seller is not enacted on or before July 31, 2012, the above provisions would become operative on January 1, 2013, and the definition of “vendor” effective July 1, 2012, would be repealed on January 1, 2013; or
If federal law authorizing the states to require a seller to collect taxes on sales of goods to in-state purchasers without regard to the location of the seller is enacted on or before July 31, 2012, these provisions would become operative on September 1, 2013, and the definition of “vendor” effective July 1, 2012, would be repealed on September 1, 2013.
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