Vermont – VT tax commissioner reminds Vermonters of use tax obligations

MARCH 1, 2017

Vermont shoppers are familiar with the Vermont sales tax of 6 percent on most retail purchases. However, many Vermonters are less familiar with the corresponding use tax. Use tax is due if a shopper has not already paid sales tax at the time of purchase (except on exempt items such as food or clothing), according to the Vermont Department of Taxes.

If a taxpayer purchases a taxable item and the seller does not collect the Vermont sales tax due (as can occur online or in a tax-free state like New Hampshire), use tax is due on that purchase. Buying online or in a tax-free state does not mean a taxpayer can legally avoid the tax — it just means the tax gets paid differently, according to a news release Feb. 27.

Tax Commissioner Kaj Samsom reminds Vermonters to report their taxable purchases on form IN-111, the Vermont Income Tax Return, this tax season.

“This is not a new tax or policy, but my department has an obligation to collect the taxes required by Vermont law so it’s important to increase awareness for Vermonters. With the increasing ease of online and out-of-state shopping, ensuring compliance with the Vermont use tax is an essential tool in keeping the playing field level for Vermont-based retailers,” Samson said.

Samsom explained that businesses in Vermont are required to collect the tax at the point of sale, but many retailers outside the state do not. Because of this, the use tax has become increasingly relevant, and the department is exploring options to increase compliance. Vermont is not alone in this type of taxing method – all states with a sales tax enforce some type of compensating use tax when the seller does not collect at the time of sale.

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