Vermont — Sales & Use Tax

Vermont imposes a sales tax on retail sales in the state at a rate of 6 percent of the sales price.

Source: 32 V.S.A. § 9771

The tax applies to retail sales of tangible personal property unless specifically exempted by statute. Tangible personal property is defined as personal property that may be seen, weighed, measured, felt, touched, or in any other manner perceived by the senses. This definition includes electricity, water, gas, steam, and prewritten computer software.

Source: 32 V.S.A. § 9701(7)

The sales tax also applies to:

• Producing, fabricating, printing, or imprinting of tangible personal property for consumers who furnish the materials (either directly or indirectly)
• Rentals of tangible personal property
• Amusement charges
• Fabrication charges
• Specified digital products transferred electronically to an end user, regardless of whether for permanent use or less than permanent use

Source: 32 V.S.A. § 9771

Source: Vermont Dept. of Taxes, Sales and Use Tax

## Local option tax

Certain municipalities in Vermont may impose an additional local option sales tax of up to 1 percent on top of the 6 percent state rate, resulting in a combined rate of up to 7 percent in those jurisdictions. Local option tax applies only to sales tax, not use tax.

Source: Vermont Dept. of Taxes, Getting Started with Sales and Use Tax

## Use tax

Vermont imposes a complementary use tax at the same 6 percent rate on the use, storage, or consumption of tangible personal property in Vermont when sales tax has not been paid. Use tax is due when a purchaser acquires taxable property from an out-of-state vendor who does not collect Vermont sales tax, or when property purchased tax-free for resale is later used by the purchaser.

Source: 32 V.S.A. § 9773

Source: Vermont Dept. of Taxes, Use Tax for Individuals

Vermont applies destination-based sourcing for sales and use tax. The applicable tax rate is determined by the location where the purchaser takes possession of the property or where the property is delivered.

Source: Vermont Dept. of Taxes, Use Tax for Individuals

Vermont requires remote sellers to register and collect sales tax if they had $100,000 or more in sales delivered into Vermont, or 200 or more separate transactions delivered into Vermont, during the preceding twelve-month period. Both taxable and nontaxable sales count toward the threshold. Sellers must determine whether they met the threshold at the end of each calendar quarter; if the threshold is met, they must register and begin collecting tax on the first day of the next calendar month. This rule took effect July 1, 2018.

Source: Vermont Department of Taxes, Sales Tax and Wayfair FAQs

Vermont exempts purchases for resale from sales tax. A "retail sale" is defined as any sale for any purpose other than for resale, sublease, or subrent; accordingly, sales for resale are not subject to tax.

To claim the exemption, the buyer must provide the seller with a completed Form S-3 (Vermont Sales Tax Exemption Certificate) at or before the time of purchase. The seller has 90 days after the sale to obtain a fully executed certificate if it was not available at the time of sale. A seller's failure to possess an exemption certificate at the time of sale is presumptive evidence that the sale is taxable. Sellers must retain exemption certificates for at least three years from the date of the last sale covered by the certificate and must produce the certificate when requested by the Department.

Form S-3 may be used for a single purchase or as a blanket certificate for multiple purchases. The buyer must hold a valid Vermont Sales and Use Tax account to claim the exemption.

Source: 32 V.S.A. § 9701(5) Source: 32 V.S.A. § 9745 Source: Vermont Department of Taxes, Form S-3 Instructions

Vermont assigns filing frequency based on sales and use tax liability in the immediately preceding calendar year. Taxpayers with $500 or less in liability file annually by January 25. Those with more than $500 but less than $2,500 file quarterly by the 25th day of the month following each calendar quarter (April 25, July 25, October 25, January 25). All others file monthly by the 25th of the following month, except February filings are due on the 23rd.

Source: 32 V.S.A. § 9775 Source: Vermont Department of Taxes, Sales and Use Tax FAQs

Vermont requires marketplace facilitators to collect and remit sales tax on retail sales made by marketplace sellers through a marketplace. This obligation took effect June 1, 2019.

## Threshold for marketplace facilitators

A marketplace facilitator who has facilitated sales by marketplace sellers to destinations within Vermont of at least $100,000, or totaling at least 200 individual sales transactions, during the twelve-month period preceding the monthly period with respect to which that person's liability for tax is determined must collect and remit sales tax. The threshold calculation includes both taxable and nontaxable sales.

Source: 32 V.S.A. § 9701(9)(J)

## Definition of marketplace facilitator

A "marketplace facilitator" is defined under 32 V.S.A. § 9701(56) as a person who contracts with marketplace sellers to facilitate, for consideration (regardless of whether deducted as fees from the transaction), the sale of the marketplace seller's products through a physical or electronic marketplace operated by that person and engages in both:

(A) Directly or indirectly through one or more affiliated persons, one or more of the following:

• Transmitting or otherwise communicating the offer or acceptance between purchasers and marketplace sellers
• Owning or operating the infrastructure, electronic or physical, or technology that brings purchasers and marketplace sellers together
• Providing a virtual currency that purchasers are allowed or required to use to purchase products from marketplace sellers
• Software development or research and development activities related to any of the subdivision (B) activities, if such activities are directly related to a physical or electronic marketplace

(B) One or more of the following with respect to the marketplace sellers' products:

• Setting the price of the product
• Providing customer service or return and exchange service
• Advertising or promoting the product
• Branding sales as those of the marketplace facilitator
• Taking orders
• Collecting payment from the purchaser and transmitting that payment to the marketplace seller, regardless of whether the marketplace facilitator receives compensation or other consideration in exchange for that service

The definition requires activities from both prongs (A) and (B).

Source: 32 V.S.A. § 9701(56)

## Collection and remittance obligation

Under 32 V.S.A. § 9713(a), marketplace facilitators shall collect and remit the sales tax on retail sales by marketplace sellers through a marketplace. Marketplace sellers shall collect and remit the sales tax on any retail sales within Vermont that are not made through a marketplace.

Marketplace facilitators are included in the definition of "persons required to collect tax" under the sales and use tax chapter with respect to retail sales made on behalf of a marketplace seller.

Source: 32 V.S.A. § 9713(a) Source: 32 V.S.A. § 9701(14)

## Certification and exclusion from seller's collection obligation

A marketplace facilitator shall certify to its marketplace sellers that it will collect and remit the sales tax on the sale of taxable items made through its marketplace. A marketplace seller that accepts a certification from a marketplace facilitator in good faith shall exclude sales made through the marketplace from its obligation as a vendor under the sales and use tax chapter.

Source: 32 V.S.A. § 9713(b)

## Threshold for marketplace sellers

A marketplace seller who has combined sales to a destination within Vermont and sales through a marketplace to a destination within Vermont of at least $100,000, or totaling at least 200 individual sales transactions, during the twelve-month period preceding the monthly period with respect to which that person's liability for tax is determined has a collection obligation. However, sales made through a marketplace may be excluded from the seller's collection obligation if the marketplace facilitator has certified that it is collecting tax on those marketplace sales.

Source: 32 V.S.A. § 9701(9)(K) Source: 32 V.S.A. § 9713(b)

## Liability relief for facilitators

A marketplace facilitator is relieved from liability under the sales and use tax chapter if it can demonstrate to the Commissioner that its failure to collect the correct amount of tax was due to incorrect information given to the facilitator by the marketplace seller.

Source: 32 V.S.A. § 9713(c)

Vermont exempts sales of food, food products, and beverages sold for human consumption off the premises where sold from sales and use tax. This exemption is codified at 32 V.S.A. § 9741(13) and applies to retail sales and use of these items.

## Statutory definition of food and food ingredients

Vermont statute defines "food and food ingredients" as "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." This definition is product-based: the exemption applies regardless of who purchases the food or the purchaser's intended use. A business purchasing food for employee meals receives the same exemption as an individual purchasing groceries for home consumption, provided the food qualifies under the definition and is sold for off-premises consumption.

The exemption covers most grocery staples—fruits, vegetables, meats, dairy products, bread, cereals, frozen foods, packaged goods, candy, and dietary supplements—when sold in a form indicating they are intended for consumption off the seller's premises.

## Four statutory exclusions from the food exemption

Under 32 V.S.A. § 9701(31), "food and food ingredients" does not include the following four categories, which remain subject to Vermont sales and use tax or other taxes:

1. Soft drinks — Effective July 1, 2015, Vermont subjects soft drinks to the 6% sales and use tax. The statute defines soft drinks by reference to 32 V.S.A. § 9701(31) and (54). The Department of Taxes describes soft drinks as nonalcoholic beverages that contain natural or artificial sweeteners. This category includes carbonated sodas, sweetened iced teas, energy drinks, sports drinks, and similar sweetened beverages. By contrast, beverages such as milk, 100% fruit juice, coffee beans, bottled water, and unsweetened beverages remain exempt as food and food ingredients.

2. Alcoholic beverages — Alcoholic beverages sold at retail in sealed containers for off-premises consumption are subject to the 6% sales and use tax and are excluded from the food exemption. This exclusion applies to bottles or cans of beer, wine, and spirits purchased at liquor stores, grocery stores, or convenience stores for consumption elsewhere. (Alcoholic beverages sold for immediate consumption at restaurants or bars are subject to a separate 10% alcoholic beverages tax under Vermont's meals and rooms tax chapter, not the sales tax.)

3. Tobacco — Tobacco products are excluded from the food exemption and are subject to separate excise taxation.

4. Cannabis and cannabis products — Cannabis and cannabis products as defined under 7 V.S.A. § 831 are excluded from the food and food ingredients exemption.

## Off-premises consumption requirement

The exemption in § 9741(13) applies only to food "sold for human consumption off the premises where sold." Food sold for immediate consumption on or near the seller's premises does not qualify for the sales tax exemption and instead may be subject to Vermont's meals and rooms tax under 32 V.S.A. Chapter 225.

Prepared meals sold by restaurants, hot food items, sandwiches from a deli (except frozen sandwiches), heated beverages, items from salad bars, and party platters are generally treated as sales for immediate consumption and fall outside the sales tax exemption. By contrast, grocery-type items sold for take-out—such as whole pies or cakes, loaves of bread, whole uncooked pizzas, pint or larger containers of ice cream, and quart or larger containers of milk or cider—are treated as food sold for off-premises consumption and remain exempt from sales tax.

The characterization depends on the form, packaging, and circumstances of sale. A grocery store selling a cold, unheated sandwich in a sealed package for the customer to take home is selling food exempt from sales tax; a deli counter preparing and serving a hot sandwich for immediate consumption is selling a meal potentially subject to meals tax. Vermont regulation and Department guidance (including Publication FS-1028) provide examples to help sellers distinguish exempt groceries from taxable meals.

## Interaction with local option tax

Vermont permits municipalities to impose a local option sales tax of up to 1% on sales subject to the state's 6% sales tax. Because food and groceries are exempt from state sales tax under § 9741(13), they are also exempt from any local option sales tax. Only items subject to state sales tax (such as soft drinks and sealed alcoholic beverages) can be subject to the local option tax.

Source: 32 V.S.A. § 9741(13) Source: 32 V.S.A. § 9701(31) Source: Vermont Department of Taxes, General Guidelines on Sales Tax: What is Taxable and Exempt (Publication FS-1028)