September 26, 2017

State pushes for online sales tax collections

Tax Commissioner Kaj Samsom. File photo by Erin Mansfield/VTDigger

Tax Commissioner Kaj Samsom. File photo by Erin Mansfield/VTDigger

By Morgan True

For VTDigger

The Vermont Tax Department is sending close to 20,000 letters to Vermonters telling them they may owe sales tax for online and other purchases. The letters say residents have until Oct. 31 to pay without interest or penalties.

When a seller doesn’t charge Vermont’s 6 percent sales tax, buyers are responsible for paying what’s known as use tax at the same rate. The tax applies to online, phone or mail-order purchases as well as purchases made outside Vermont where the item is brought back and used in the state.

The use tax does not apply to food and most clothing. A list of taxable and nontaxable items can be found at tax.vermont.gov.

The letters are part of an effort to “change the culture around use tax,” said Kaj Samsom, director of the Tax Department. Many Vermonters believe that purchases in New Hampshire, which has no sales tax, or those made online are tax-free, he said.

Use taxes in states across the country don’t have a great track record of compliance, Samsom said. Although Vermont does relatively well, “there’s a lot of room for improvement,” he said.

Now the state is alerting taxpayers to their obligation with a gently worded but firm letter suggesting they pay up.

A copy of one of the letters provided to VTDigger notes that Act 73, a law passed earlier this year, requires vendors to report transactions where the use tax wasn’t paid. “Included in these reports is buyer information that will be used in compliance efforts,” the letter states.

Samsom was reluctant to say specifically how his department selected the 20,000 residents who will receive the letters, saying only that officials considered “individual payment history of the use tax” and targeted “people who may have misunderstood the tax.”

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