RATE OF SALES TAX:
6.00%
LOCAL & COUNTY MAXIMUM RATES:
1.00%
What are the taxable goods and services?
The first step in sales tax compliance is determining if the items or services your firm offers are taxable in Vermont.
Traditional Products and Services
Physical property, such as furniture, household appliances, and automobiles, is subject to sales tax in Vermont.
Prescription and non-prescription medication, food, fuel, and apparel are all tax-free.
Digital Products and Services
A digital item or service is anything that is supplied electronically, such as a music downloaded from iTunes or a movie bought from Amazon.
Businesses in Vermont are not required to collect sales tax on the sale of digital products or services.
Vermont, however, has one exemption to this prohibition. Businesses are required to collect sales tax on pre-written computer software offered online.
How to Apply for Vermont Sales Tax
If you have concluded that you must charge sales tax on part or all of the products and services that your company sells, the next step is to apply for a seller’s licence.
This enables your company to collect sales tax on behalf of the municipal and state governments.
You will need the following information to register:
All firms must have a federal EIN number as well as a North American Industrial Classification System (NAICS) code. You may do an NAICS Code Lookup to locate the NAICS Code for LLC that corresponds to your industry.
Business Information Owner Information Estimated Tax Liabilities
A Resale Certificate might help you save money.
When acquiring items for resale, your firm does not have to pay sales tax if you obtain a resale certificate, also known as a reseller’s permit.
Sales Tax Collection
After obtaining your seller’s licence and starting your company, you’ll need to figure out how much sales tax to charge various consumers. It is critical for company owners to collect the right rate of sales tax to avoid penalties and the danger of expensive audits.
When computing sales tax, consider the following types of transactions:
Store Sales Shipping Within-State Sales Outside-State Sales
Retail Sales
For conventional company owners who sell products or services on-site, calculating sales tax is simple: all sales are taxed at the rate determined by the store’s location.
Here’s an illustration of how this situation may look:
Mary runs a bookshop in South Burlington, Vermont. Because books are taxed in the state of Vermont, Mary charges a flat 7.000% sales tax on all purchases. This includes Vermont’s 6.000% state sales tax and South Burlington’s 1.000% sales tax.
Sales inside the state
Vermont has a sales tax regime known as a destination-based sales tax. This implies that long-distance purchases inside Vermont are taxed based on the buyer’s address. This regulation applies to sales taxes levied by the state, county, and city.
Consider the following scenario:
Steve operates his own eBay electronics company from his home in Montpelier, Vermont. A buyer from Brattleboro discovers Steve’s eBay website and buys a $350 set of headphones. Steve only applies the Vermont state tax rate of 6.000% when computing the sales tax for this transaction. The total price is $371.00 (plus $21.00 in sales tax).
Out-of-State Purchases
Vermont firms must only pay sales tax on out-of-state transactions if they have a presence in other states.
Nexus indicates that the company has a physical presence in another state.
Common nexus types include:
A physical place, such as an office, retail shop, or warehouse.
An employee who works from home or as a roaming sales representative.
An affiliate marketer
Dropshipping from a third-party vendor.
A temporary physical site, such as a festival or fair booth.
Submit Your Sales Tax Return
You’re ready to submit your sales tax return now that you’ve obtained your Vermont seller’s permit and understand how to charge the correct amount of sales tax to all of your customers. You avoid penalties and fines, be sure to meet all filing dates.
How to File a Claim
Businesses in Vermont are required to file sales tax forms and make sales tax payments online.
How Frequently Should You File?
The frequency with which you must submit is determined by the total amount of sales tax collected by your firm.
Quarterly filing: If your company receives $500.00 or less in sales tax each year, you should choose to submit quarterly returns.
Monthly filing: If your firm collects more than $500.00 in sales tax per year, you must submit monthly returns.
Deadlines for Filing
The deadline for all Vermont sales tax returns is the 25th of the month, unless it is a weekend or federal holiday, in which case the deadline is postponed to the following working day.
Check out the 2020 Tax Filing Calendar from the Vermont Department of Taxes for a comprehensive list of deadlines.
Penalties for Filing Late
Vermont has a late filing penalty of 5.000% each month, with a maximum penalty of 25% of the tax stated on the tax return. Returns submitted more than 60 days after the initial due date incur a $50.00 late filing penalty.