Vermont to require remote sellers to collect sales tax starting July 1, 2018

Remote sellers that do a certain amount of business in Vermont must register with the state and collect and remit sales and use tax starting July 1, 2018.

Vermont’s economic nexus law (H. 873/Act No. 134) was set to take effect on “the later of July 1, 2017, or beginning on the first day of the first quarter after a controlling court decision or federal legislation abrogates the physical presence requirement of Quill v. North Dakota, 504 U.S. 298 (1992).” July 1, 2017, came and went without enforcement, but on June 21, 2018, the Supreme Court overruled Quill’s physical presence requirement. This grants Vermont the authority to tax businesses that don’t have a physical presence in the state but do have substantial “economic and virtual contacts” with Vermont.

That doesn’t give businesses much time to determine whether they’re required to register with the state and collect and remit tax under Vermont’s law.

According to Act 134, a remote vendor is required to collect and remit tax on Vermont sales if that remote vendor engages in the regular, systematic, or seasonal solicitation of sales of tangible personal property in Vermont, and meets one of the following criteria during a preceding 12-month period:

• Sales of at least $100,000 from outside Vermont to destinations within Vermont; or
• At least 200 individual sales transactions to destinations in Vermont

The law defines engaging in regular, systematic, or seasonal solicitation of sales of tangible personal property in Vermont as:

• Displaying advertisements in this State;
• Distributing catalogues, periodicals, advertising flyers, or other advertising by means of print, radio, or television media; or
• Communicating by mail, internet, telephone, computer database, cable, optic, cellular, or other communication systems, for the purpose of effecting sales of tangible personal property

The Vermont Department of Taxes provides additional information.

Vermont is not the only state looking to enforce economic nexus now that the Supreme Court has overruled the physical presence requirement. Learn more about South Dakota v. Wayfair, Inc. and its potential impact on your business here.