Sales Tax Guide for Vermont

What Is Taxable in Vermont?

In Vermont, most tangible personal property is subject to sales tax. However, some items are exempt, including prescription drugs, most grocery items, clothing and footwear, certain medical devices, and manufacturing machinery.

If your business sells taxable goods or services, you need to collect and remit sales tax appropriately. It is also essential to consider use taxes on out-of-state purchases brought into Vermont.

Who Needs to Collect Sales Tax?

Businesses required to collect sales tax in Vermont include:

• Retailers with a physical presence in Vermont
• Remote sellers exceeding the state’s economic nexus threshold
• Certain service providers

Vermont’s economic nexus threshold is $100,000 in sales or 200 separate transactions annually. If you surpass this threshold, even without a physical presence in Vermont, you must register for and collect sales tax. Failure to do so can lead to penalties and back taxes, so doola’s Bookkeeping service can help you stay compliant and avoid potential legal issues.

How to Register for a Sales Tax Permit in Vermont

Registering for a sales tax permit in Vermont is a straightforward process:

1. Collect necessary information: EIN, business license, and details about your business.
2. Visit the Vermont Department of Taxes website.
3. Complete the online registration for a sales tax account.
4. Receive your Sales Tax Account Number and start collecting tax.

Collecting tax without a permit is illegal, so ensure you register before making taxable sales. Turn to doola’s Bookkeeping service to simplify this process and ensure compliance as your business grows.

How to Calculate Sales Tax in Vermont

Follow these steps to calculate sales tax correctly:

Step 1:
Identify the correct sales tax rate based on both your business location and the buyer’s location in Vermont.

Step 2:
Collect the appropriate sales tax at the point of sale.

Step 3:
Maintain thorough records of all sales and transactions.

Vermont requires regular filing of sales tax returns, which could be monthly, quarterly, or annually, depending on sales volume. Be sure to check specific deadlines to avoid late fees. Different municipalities may impose additional local taxes, so consider local rates in your calculations.

Common Sales Tax Exemptions in Vermont

Certain transactions are exempt from sales tax in Vermont, such as:

• Purchases intended for resale (requiring a valid resale certificate)
• Sales to qualifying nonprofit organizations
• Certain manufacturing purchases

Use proper exemption certificates and keep precise records to claim exemptions. Misusing exemptions can result in audits and penalties.

Remote Seller and Marketplace Facilitator Sales Tax Rules in Vermont

Vermont imposes sales tax collection duties on remote sellers and marketplace facilitators like Amazon, eBay, Shopify, and Etsy.

The state enforces an economic nexus threshold of $100,000 in sales or 200 separate transactions, demanding compliance from those meeting or exceeding these figures.

What Triggers a Sales Tax Audit?

The Vermont Department of Taxes may audit businesses for reasons such as missing or erroneous sales tax filings, habitual late payments, discrepancies between reported and actual sales, and misuse of exemption certificates.

Minimize your audit risk by keeping detailed transaction records, tax payments, and exemption certificates. It’s beneficial to conduct internal audits occasionally to validate the accuracy of your filings.

FAQs About Sales Tax in Vermont

Here are some commonly asked questions regarding Vermont sales tax:

Are digital goods taxable in Vermont?

Some digital goods are taxable, whereas others may not be. Check Vermont state guidelines for details.

Do businesses outside Vermont need to collect Vermont sales tax?

Yes, if sales surpass the $100,000 or 200-transaction threshold.

What if incorrect sales tax is charged?

You may need to issue refunds or pay the state the correct amount. Accurate record-keeping helps avoid these problems.

Are services taxable in Vermont?

Most services are not taxed, although there are specific exceptions.

Stay Compliant With doola

Ensuring sales tax compliance need not be daunting. Staying informed and utilizing the right assistance can help evade penalties, keeping your business on the right track.

doola offers guidance and tools to guarantee compliance, providing businesses with financial solutions, tax advice, and comprehensive bookkeeping.