Code of Vermont Rules › Agency 10 - AGENCY OF ADMINISTRATION › Sub-Agency 060 - DEPARTMENT OF TAXES › Chapter 033 - SALES AND USE TAX REGULATIONS › Section 10 060 033 - SALES AND USE TAX REGULATIONS

Current through June, 2024
Section 1.9701
				GENERAL PROVISIONS
Reg.§ 1.9701(4) -
				  1 Sales
				  Price.
Except as noted below, "sales price" for purposes of
				  calculating tax means the total amount of consideration, including cash,
				  credit, property, and services for which personal property or services are
				  sold, leased or rented.
Where the seller receives credit, property (other than a
				  like-kind trade-in), a service, or other nonmonetary considerations in exchange
				  for personal property or services, the sales price includes the monetary value
				  of such consideration. If the value of the consideration cannot be determined,
				  it is presumed to equal the price at which the seller normally offers the
				  product for sale.
Even where stated as a charge separate from the charge for
				  the property or service, the sales price includes charges for labor to create
				  the product sold, charges for services necessary to complete the sale, and
				  delivery charges.
"Delivery charges" means charges by the seller of personal
				  property or services for preparation and delivery to a location designated by
				  the purchaser of personal property or services including, but not limited to,
				  transportation, shipping, postage, handling, crating, and packing. Direct mail
				  delivery charges that are separately stated on an invoice or similar billing
				  document given to the purchaser are excluded from the definition of "delivery
				  charges." 32 V. S.A. § 9701(26).
If a shipment includes exempt property and taxable property,
				  the seller may allocate the delivery charge by using:
1. a percentage based on the total sales
				prices of the taxable property compared to the sales prices of all property in
				shipment; or
2. a percentage based
				on the total weight of the taxable property compared to the total weight of all
				property in the shipment.
If the seller elects not to allocate the delivery charge, the
				  entire charge is subject to the tax.
Reg.§ 1.9701(4) -
				  2 Exclusions
				  from Sales Price.
The following are excluded from the sales price when they are
				  separately stated on the invoice, bill of sale, or similar document given to
				  the purchaser:
1. Any discounts,
				including cash, term, or coupons not reimbursed by a third party that are
				allowed by the seller and taken by the purchaser on the sale;
2. Interest, financing and carrying charges
				on credit extended on the sale;
3.
				Any tax (such as the Vermont sales tax) that is legally imposed directly on the
				purchaser that the seller collects and remits;
4. Charges for the installation of the
				property sold;
5. A credit given
				for trade-in of like-kind property. A trade-in of like-kind property occurs
				where the seller is in the business of selling such property and accepts as
				part of the consideration property of the buyer that serves the same function
				as the property sold. The fact that the property taken in trade can no longer
				serve the same function because it is worn, damaged, or obsolete does not
				disqualify the property from being a like-kind trade-in; and
6. Telecommunications nonrecurring charges.
A. "Distinct and identifiable
				products" does not include:
1. Packaging -
				such as containers, boxes, sacks, bags, and bottles - or other materials - such
				as wrapping, labels, tags, and instruction guides - that accompany the retail
				sale of the products and are incidental or immaterial to the retail sale
				thereof. Examples of packaging that are incidental or immaterial include
				grocery sacks, shoeboxes, dry cleaning garment bags and express delivery
				envelopes and boxes.
2. A product
				provided free of charge with the required purchase of another product. A
				product is "provided free of charge" if the sales price of the product
				purchased does not vary depending on the inclusion of the product provided free
				of charge.
3. Items included in the
				definition of "sales price." See Reg. § 1.9701(4) -
				1.
B. The term "one non-itemized
				price" does not include a price that is separately identified by product on
				binding sales or other supporting sales-related documentation made available to
				the customer in paper or electronic form including, but not limited to an
				invoice, bill of sale, receipt, contract, service agreement, lease agreement,
				periodic notice of rates and services, rate card, or price list.
C. A transaction that otherwise meets the
				definition of a bundled transaction as defined above is not a bundled
				transaction if it is:
1. The retail sale of
				tangible personal property and a service where the tangible personal property
				is essential to the use of the service, and is provided exclusively in
				connection with the service, and the true object of the transaction is the
				service; or
2. The retail sale of
				services where one service is provided that is essential to the use or receipt
				of a second service and the first service is provided exclusively in connection
				with the second service and the true object of the transaction is the second
				service; or
3. A transaction that
				includes taxable products and nontaxable products and the purchase price or
				sales price of the taxable products is de minimis.
(a) "De minimi" means the seller's purchase
				price or sales price of the taxable products is ten percent or less of the
				total purchase price or sales price of the bundled products.
(b) Sellers shall use either the purchase
				price or the sales price of the products to determine if the price of the
				taxable products is de minimis. Sellers may not use a combination of the
				purchase price and sales price of the products to determine if the price of the
				taxable products is de minimis.
(c)
				Sellers shall use the full term of a service contract to determine if the
				taxable products are de minimis; or
4. The retail sale of exempt tangible
				personal property and taxable tangible personal property where:
(a) the single-price transaction includes
				food and food ingredients; drugs, durable medical equipment, mobility enhancing
				equipment, over-the-counter drugs, prosthetic devices or medical supplies;
				and
(b) where the seller's purchase
				price or sales price of the taxable tangible personal property is fifty percent
				or less of the total purchase price or sales price of the bundled tangible
				personal property. Sellers may not use a combination of the purchase price and
				sales price of the tangible personal property when making the fifty percent
				determination for a transaction.
Transactions meeting the conditions outlined in subsections
				  (C)(3) and (4) above are not taxable.
D. In the case of a bundled transaction that
				includes telecommunication service, ancillary service, internet access, or
				audio or video programming service:
1. If the
				price is attributable to products that are taxable and products that are
				nontaxable, the portion of the price attributable to the nontaxable products
				may be subject to tax unless the provider can identify by reasonable and
				verifiable standards such portion from its books and records that are kept in
				the regular course of business for other purposes, including, but not limited
				to, non-tax purposes.
2. The
				provisions of this section shall apply unless otherwise provided by federal
				law.
E. The seller is
				the user of a product transferred to a purchaser if the product is:
1. Packaging described in subsection
				(A)(1);
2. A product that is
				promotional in nature and/or is provided free of charge, as described in
				subsection (A)(2); or
3. Property
				transferred with a service and not taxed pursuant to subsection (C)(1).
The seller pays sales or use tax when such property is
				  acquired or removed from inventory unless another exemption applies.
F. Except as indicated
				in subsection (E), above, the seller is not the user of a product that
				qualifies as de minimis under subsection (C)(3) of this section, or of a
				product transferred in a single-price transaction meeting the requirements of
				subsection (C)(4) of this section. The seller is not required to pay a sales or
				use tax on such transactions.
G. If
				an optional computer software maintenance contract is a bundled transaction in
				which both taxable and nontaxable or exempt products are not separately
				itemized on the invoice or similar billing document, the contract shall be
				characterized as all taxable unless the vendor can demonstrate, using a
				reasonable method at the time of sale, the portion of the contract that is
				nontaxable or exempt products. See Reg. § 1.9701(7) -
				2(C)(3)
				("Prewritten Computer Software").
H. Examples:
1. A seller offers to its customers a package
				containing maple syrup, maple candy, and a ceramic pitcher. Each item has a
				retail price of $ 10, and the package is sold for a single price of $ 30.
				Pursuant to subsection (C)(4), the entire charge is not taxable because the
				value of the taxable item (the pitcher) is fifty percent or less of the total
				sales price and it is bundled with food items. The seller is not considered the
				user of the pitcher and may purchase the item tax- exempt for resale.
2. A raincoat has a retail price of $ 100 and
				umbrella a retail price of $ 20. A seller offers the two items to its customers
				for the single price of $ 120. Pursuant to subsection (C)(3), the entire charge
				is taxable - notwithstanding that clothing is exempt from the tax - because the
				products are sold for a single charge and the value of the umbrella is not de
				minimis because it exceeds ten percent of the total purchase price.
3. A ski resort sells a ski pass valued at $
				70. Each purchaser also receives a bumper sticker valued at $ 2. The seller is
				required to collect the sales tax on the $ 70 ski pass, but because the bumper
				sticker is promotional in nature and does not qualify as a purchase for resale,
				see subsection (A)(2), the seller is required to pay sales or use tax on the
				promotional item pursuant to subsection (E)(2).
See also Reg. § 1.9701(7) ("Tangible Personal
				  Property").
Reg.§ 1.9701(5) -
				  1 Retail
				  Sale.
The term "retail sale" means a sale for any purpose other
				  than for resale, sublease, or subrent. The term "sale" includes any transfer of
				  title or possession or both, exchange or barter, rental, lease or license to
				  use or consume, conditional or otherwise, in any manner or by any means
				  whatsoever for a consideration, or any agreement therefor.
Sales to contractors, subcontractors or repair persons (other
				  than retailers or manufacturers making an election under
				  32 V.S.A. §
											9711 ), of materials and supplies for use by
				  them in erecting structures or otherwise improving, altering, or repairing real
				  property are retail sales. Once the tangible personal property is incorporated
				  into the real property, the sale of the real property is not subject to sales
				  and use tax, regardless of whether the incorporated tangible personal property
				  is itemized by the seller.
A sale of tangible personal property for use by the purchaser
				  in performing a service is a retail sale and not a purchase for resale.
Reg.§ 1.9701(5) -
				  2 Lease or
				  Rental.
"Lease or rental" means any transfer of possession or control
				  of tangible personal property for a fixed or indeterminate term for
				  consideration. A lease or rental may include future options to purchase or
				  extend.
A purchaser of tangible personal property who purchases the
				  property primarily for the purpose of leasing or renting the property to others
				  is entitled to purchase such tangible personal property free of sales and use
				  tax. The purchaser may similarly obtain repair parts for the rental or lease
				  property free of the tax. The purchase of equipment or supplies used in
				  conjunction with the service or care of rental property, however, is subject to
				  tax because the materials are not considered to be purchased for resale.
A purchaser of tangible personal property not primarily
				  intended for lease or rental must pay the sales and use tax at the time of
				  purchase, and should not collect any tax upon the receipts from the isolated or
				  occasional rental or lease to others. Conversely, the isolated and occasional
				  use by the purchaser of rental or lease property is permissible without
				  triggering payment of the sales and use tax on the purchase price of the
				  property. For a use to qualify as "isolated and occasional," it shall not
				  exceed four percent of total use.
A.
				Lease or rental does not include:
1. A
				transfer of possession or control of property under a security agreement or
				deferred payment plan that requires the transfer of title upon completion of
				the required payments;
2. A
				transfer of possession or control of property under an agreement that requires
				the transfer of title upon completion of required payments and payment of an
				option price that does not exceed the greater of one hundred dollars or one
				percent of the total required payments; or
3. Providing tangible personal property along
				with an operator for a fixed or indeterminate period of time. A condition of
				this exclusion is that the operator is necessary for the equipment to perform
				as designed. For the purpose of this subsection, an operator must do more than
				maintain, inspect, or set-up the tangible personal property.
B. This definition shall be used
				for sales and use tax purposes regardless of whether a transaction is
				characterized as a lease or rental under generally accepted accounting
				principles, the Internal Revenue Code, Title 9A of the Vermont Statutes
				Annotated, or other provisions of federal, state or local law.
Reg.§ 1.9701(5) -
				  3
				  Drop Shipment.
In the case of drop shipment sales, the seller (drop shipper)
				  may claim a resale exemption based on an exemption certificate provided by its
				  customer/reseller or any other information available to it that demonstrates to
				  the Commissioner that the customer is purchasing for resale, regardless of
				  whether the customer/reseller is registered to collect and remit sales and use
				  tax in Vermont.
Reg.§ 1.9701(7) -
				  1 Tangible
				  Personal Property.
"Tangible personal property" means personal property which
				  may be seen, weighed, measured, felt, touched or in any other manner perceived
				  by the senses. The statutory definition specifically includes electricity,
				  water, gas, steam, and prewritten computer software, even if the software is
				  delivered electronically. "Delivered electronically" means delivered to the
				  purchaser by means other than tangible storage media.
For tax purposes, the following definitions apply:
1. "Computer" means an electronic device that
				accepts information in digital or similar form and manipulates it for a result
				based on a sequence of instructions.
2. "Electronic" means relating to technology
				having electrical, digital, magnetic, wireless, optical, electromagnetic, or
				similar capabilities.
3. "Computer
				software" means a set of coded instructions designed to cause a computer or
				automatic data processing equipment to perform a task.
4. "Load and leave" means delivery to the
				purchaser by use of a tangible storage media where the tangible storage media
				is not physically transferred to the purchaser.
A. Tangible personal property includes, but
				is not limited to:
1. raw materials, such as
				wood, metal, rubber and minerals;
2. manufactured items such as jewelry,
				furniture, machinery, clothing, lighting fixtures, appliances, and building
				materials;
3. artistic items such
				as sketches, paintings, photographs, moving picture films, tapes and DVDs, and
				recordings when on a tangible medium;
4. stamps and other philatelic items when
				purchased other than for use as postage; coins and other numismatic items when
				purchased other than for use as a medium of exchange;
5. precious metals such as bullion, ingots,
				and wafers.
B. Tangible
				personal property does not include:
1. real
				property;
2. items such as books,
				movies, or music delivered electronically (except prewritten software as
				provided by statute);
3. stamps
				when purchased for use as postage; coins and other numismatic items when
				purchased as a medium of exchange;
4. intangible personal property such as
				rights and credits, insurance policies, bills of exchange, stocks and bonds and
				similar evidences of indebtedness or ownership, unless they are sold for
				historical display or collection purposes.
5. charges for the right to access remotely
				prewritten computer software provided that the software is not
				downloaded.
Reg.§ 1.9701(7) -
				  2 Prewritten
				  Computer Software.
A. "Prewritten
				computer software" means computer software, including prewritten upgrades,
				which is not designed and developed by the author or other creator to the
				specifications of a specific purchaser. The combining of two or more prewritten
				computer software programs or prewritten portions thereof does not cause the
				combination to be other than prewritten computer software. Prewritten computer
				software includes software designed and developed by the author or other
				creator to the specifications of a specific purchaser when it is sold to a
				person other than the specific purchaser. Where a person modifies or enhances
				computer software of which the person is not the author or creator, the person
				shall be deemed to be the author or creator only of such person's modifications
				or enhancements. Prewritten computer software or a prewritten portion thereof
				that is modified or enhanced to any degree, where such modification or
				enhancement is designed and developed to the specifications of a specific
				purchaser, remains prewritten computer software; provided, however, that where
				there is a reasonable, separately stated charge or an invoice or other
				statement of the price given to the purchaser for such modification or
				enhancement, such modification or enhancement shall not constitute prewritten
				computer software.
B. A "computer
				software maintenance contract" is a contract that obligates a vendor of
				computer software to provide a customer with future updates or upgrades to
				computer software, support services with respect to computer software or both.
1. A "mandatory computer software maintenance
				contract" is a computer software maintenance contract that the customer is
				obligated by contract to purchase as a condition to the retail sale of computer
				software, and is subject to the tax.
2. An "optional computer software maintenance
				contract" is a computer software maintenance contract that a customer is not
				obligated to purchase as a condition to the retail sale of computer
				software.
C. In the case
				of a transaction that includes an "optional computer software maintenance
				contract" for prewritten computer software:
1. If an optional computer software
				maintenance contract only obligates the vendor to provide upgrades and updates,
				it will be characterized as a sale of prewritten computer software, and is
				subject to tax.
2. If an optional
				computer software maintenance contract only obligates the vendor to provide
				support services, it will be characterized as a sale of services and is
				exempt.
3. If an optional computer
				software maintenance contract is a bundled transaction in which both taxable
				and nontaxable or exempt products that are not separately itemized on the
				invoice or similar billing document, the contract shall be characterized as all
				taxable unless the vendor can demonstrate, using a reasonable method as of the
				time of sale, the portion of the contract that is nontaxable or exempt
				products. See Reg. § 1.9701(4) -
				3
				("Bundled Transaction").
D. The method used by the vendor shall be
				binding on the purchaser.
Reg.§ 1.9701(8) -! Sales Sourced to Vermont.
A sale is located "in this state" or "in the state" if it is
				  sourced to a location in Vermont under the terms of the General Sourcing Rules,
				  Reg. § 1.9701(8) -
				  3.
Reg.§ 1.9701(8) -
				  2 General
				  Sourcing Definitions.
For the purpose of subsection (A) of the General Sourcing
				  Rules, Reg. § 1.9701(8) -
				  3,
				  the terms "receive" and "receipt" mean:
1. taking possession of tangible personal
				property, or
2. making first use of
				services, or
3. taking possession
				or making first use of digital goods, whichever comes first.
The terms "receive" and "receipt" do not include possession
				  by a shipping company on behalf of the purchaser.
Reg.§ 1.9701(8) -
				  3
				  General Sourcing Rules.
A. The retail
				sale, excluding lease or rental, of a product shall be sourced as follows:
1. When the product is received by the
				purchaser at a business location of the seller, the sale is sourced to that
				business location.
2. When the
				product is not received by the purchaser at a business location of the seller,
				the sale is sourced to the location where receipt by the purchaser (or the
				purchaser's donee, designated as such by the purchaser) occurs, including the
				location indicated by instructions for delivery to the purchaser (or donee)
				known to the seller.
3. When
				subsections (A)(1) and (A)(2) do not apply, the sale is sourced to the location
				indicated by an address for the purchaser that is available from the business
				records of the seller that are maintained in the ordinary course of the
				seller's business when use of this address does not constitute bad
				faith.
4. When subsections (A)(1),
				(A)(2), and (A)(3) do not apply, the sale is sourced to the location indicated
				by an address for the purchaser obtained during the consummation of the sale,
				including the address of a purchaser's payment instrument, if no other address
				is available, when use of this address does not constitute bad faith.
5. When none of the previous subsections
				(A)(1), (A)(2), (A)(3), or (A)(4) apply, including the circumstance in which
				the seller is without sufficient information to apply the previous rules, then
				the location will be determined by the address from which tangible personal
				property was shipped, from which the digital good or the computer software
				delivered electronically was first available for transmission by the seller, or
				from which the service was provided (disregarding for these purposes any
				location that merely provided the digital transfer of the product
				sold).
B. The lease or
				rental of tangible personal property, other than property identified in
				subsection (C) or subsection (D), shall be sourced as follows:
1. For a lease or rental that requires
				recurring periodic payments, the first periodic payment is sourced the same as
				a retail sale in accordance with the provisions of subsection (A). Periodic
				payments made subsequent to the first payment are sourced to the primary
				property location for each period covered by the payment. The primary property
				location shall be as indicated by an address for the property provided by the
				lessee that is available to the lessor from its records maintained in the
				ordinary course of business, when use of this address does not constitute bad
				faith. The property location shall not be altered by intermittent use at
				different locations, such as use of business property that accompanies
				employees on business trips and service calls.
2. For a lease or rental that does not
				require recurring periodic payments, the payment is sourced the same as a
				retail sale in accordance with the provisions of subsection (A).
3. This subsection does not affect the
				imposition or computation of sales or use tax on leases or rentals based on a
				lump sum or accelerated basis, or on the acquisition of property for
				lease.
C. The retail
				sale, including lease or rental, of transportation equipment not subject to the
				purchase and use tax administered by the Department of Motor Vehicles shall be
				sourced the same as a retail sale in accordance with the provisions of
				subsection (A), notwithstanding the exclusion of lease or rental in subsection
				(A). "Transportation equipment" means any of the following:
1. Locomotives and railcars that are utilized
				for the carriage of persons or property in interstate commerce.
2. Trucks and truck-tractors with a Gross
				Vehicle Weight Rating (GVWR) of 10,001 pounds or greater, trailers,
				semi-trailers, or passenger buses that are:
(a) Registered through the International
				Registration Plan; and
(b) Operated
				under authority of a carrier authorized and certificated by the U.S. Department
				of Transportation or another federal authority to engage in the carriage of
				persons or property in interstate commerce.
3. Aircraft except those exempted by
				32 V.S.A.
				§
												9741(29) as aircraft
				sold for use in air commerce.
4.
				Containers designed for use on and component parts attached or secured on the
				items set forth in subsections (D)(1) through (D)(3).
Reg.§ 1.9701(8) - 4 Direct Mail Sourcing.
A. Notwithstanding the general sourcing rules
				stated herein, the following provisions apply to sales of "advertising and
				promotional direct mail":
1. A purchaser of
				"advertising and promotional direct mail" may provide the seller with either:
(a) A direct pay permit;
(b) An Agreement certificate of exemption
				claiming "direct mail"; or
(c)
				Information showing the jurisdictions to which the "advertising and promotional
				direct mail" is to be delivered to recipients.
2. If the purchaser provides the permit,
				certificate or statement referred to in subparagraph a or b of subsection A of
				this section, the seller, in the absence of bad faith, is relieved of all
				obligations to collect, pay, or remit any tax on any transaction involving
				"advertising and promotional direct mail" to which the permit, certificate or
				statement applies. The purchaser shall source the sale to the jurisdictions to
				which the "advertising and promotional direct mail" is to be delivered to the
				recipients and shall report and pay any applicable tax due.
3. If the purchaser provides the seller
				information showing the jurisdictions to which the "advertising and promotional
				direct mail" is to be delivered to recipients, the seller shall source the sale
				to the jurisdictions to which the "advertising and promotional direct mail" is
				to be delivered and shall collect and remit the applicable tax. In the absence
				of bad faith, the seller is relieved of any further obligation to collect any
				additional tax on the sale of "advertising and promotional direct mail" where
				the seller has sourced the sale according to the delivery information provided
				by the purchaser.
4. If the
				purchaser does not provide the seller with any of the items listed in
				subparagraphs a, b or c of paragraph 1 of subsection A of this section, the
				sale shall be sourced according to Reg. § 1.9701(8) -
				3(A)(5).
				The state to which the "advertising and promotional direct mail" is delivered
				may disallow credit for tax paid on sales sourced under this
				paragraph.
B.
				Notwithstanding Reg. § 1.9701(8) -
				3,
				the following provisions apply to sales of "other direct mail."
1. Except as otherwise provided in this
				paragraph, sales of "other direct mail" are sourced in accordance with Reg.
				§ 1.9701(8) -
				3(A)(3).
2. A purchaser of "other direct mail" may
				provide the seller with either:
(a) A direct
				pay permit; or
(b) An agreement
				certificate of exemption claiming "direct mail."
3. If the purchaser provides the permit,
				certificate or statement referred to in subparagraph a or b of paragraph 2 of
				subsection B of this section, the seller, in the absence of bad faith, is
				relieved of all obligations to collect, pay or remit any tax on any transaction
				involving "other direct mail" to which the permit, certificate or statement
				apply. Notwithstanding paragraph 1 sub section B, the sale shall be sourced to
				the jurisdictions to which the "other direct mail" is to be delivered to the
				recipients and the purchaser shall report and pay applicable tax due.
C. For purposes of this section:
1. "Advertising and promotional direct mail"
				means:
(a) Printed material that meets the
				definition of "direct mail," in
				32 V.S.A. §
													9701(28);
(b) The primary purpose of which is to
				attract public attention to a product, person, business or organization, or to
				attempt to sell, popularize or secure financial support for a product, person,
				business or organization. As used in this subsection, the word "product" means
				tangible personal property, a product transferred electronically or a
				service.
2. "Other
				direct mail" means any direct mail that is not "advertising and promotional
				direct mail" regardless of whether "advertising and promotional direct mail" is
				included in the same mailing. The term includes, but is not limited to:
(a) Transactional direct mail that contains
				personal information specific to the addressee including, but not limited to,
				invoices, bills, statements of account, payroll advices;
(b) Any legally required mailings including,
				but not limited to, privacy notices, tax reports and stockholder reports;
				and
(c) Other non-promotional
				direct mail delivered to existing or former shareholders, customers, employees,
				or agents including, but not limited to, newsletters and informational pieces.
Other direct mail does not include the development of billing
				  information or the provision of any data processing service that is more than
				  incidental.
D.
1.
(a) This section applies to a transaction
				characterized under state law as the sale of services only if the service is an
				integral part of the production and distribution of printed material that meets
				the definition of "direct mail."
(b) This section does not apply to any
				transaction that includes the development of billing information or the
				provision of any data processing service that is more than incidental
				regardless of whether "advertising and promotional direct mail" is included in
				the same mailing.
2. If
				a transaction is a "bundled transaction" that includes "advertising and
				promotional direct mail," this section applies only if the primary purpose of
				the transaction is the sale of products or services that meet the definition of
				"advertising and promotional direct mail."
3. Nothing in this section shall limit any
				purchaser's:
(a) Obligation for sales or use
				tax to any state to which the direct mail is delivered,
(b) Right under local, state, federal or
				constitutional law, to a credit for sales or use taxes legally due and paid to
				other jurisdictions, or
(c) Right
				to a refund of sales or use taxes overpaid to any jurisdiction.
Reg.§ 1.9701(8) - 5 Telecommunication Sourcing
				  Definitions.
For the purpose of the Telecommunication Sourcing Rule, Reg.
				  § 1.9701(8) -
				  7,
				  the following definitions apply:
A.
				"Air-to-Ground Radiotelephone Service" means a radio service, as that term is
				defined in 4 7 CFR 22.99, in which common carriers are authorized to offer and
				provide radio telecommunications service for hire to subscribers in
				aircraft.
B. "Ancillary services"
				means services that are associated with or incidental to the provision of
				telecommunications services including but not limited to detailed
				telecommunications billing, directory assistance, vertical service, and voice
				mail services.
				32 V.S.A. §
											9701(42).
C. "Call-by-call Basis" means any method of
				charging for telecommunications services where the price is measured by
				individual calls.
D.
				"Communications Channel" means a physical or virtual path of communications
				over which signals are transmitted between or among customer channel
				termination points.
E. "Customer"
				means the person or entity that contracts with the seller of telecommunications
				services. If the end user of telecommunications services is not the contracting
				party, the end user of the telecommunications service is the customer of the
				telecommunication service, but this sentence only applies for the purpose of
				sourcing sales of telecommunications services under Reg. § 1.9701(8) -
				7.
				"Customer" does not include a reseller of telecommunications service or for
				mobile telecommunications service of a serving carrier under an agreement to
				serve the customer outside the home service provider's licensed service
				area.
F. "Customer Channel
				Termination Point" means the location where the customer either inputs or
				receives the communications.
G.
				"End user" means the person who utilizes the telecommunication service. In the
				case of an entity, "end user" means the individual who utilizes the service on
				behalf of the entity.
H. "Home
				service provider" means the same as that term is defined in the federal Mobile
				Telecommunications Sourcing Act, 4 U.S.C. §
										124(5).
I. "Mobile telecommunications service" means
				the same as that term is defined in the federal Mobile Telecommunications
				Sourcing Act, 4 U.S.C. §
										124(7).
J. "Place of primary use" means the street
				address representative of where the customer's use of the telecommunications
				service primarily occurs, which must be the residential street address or the
				primary business street address of the customer. In the case of mobile
				telecommunications services, "place of primary use" must be within the licensed
				service area of the home service provider.
K. "Post-paid calling service" means the
				telecommunications service obtained by making a payment on a call-by-call basis
				either through the use of a credit card or payment mechanism such as a bank
				card, travel card, credit card, or debit card, or by charge made to a telephone
				number that is not associated with the origination or termination of the
				telecommunications service. A post-paid calling service includes a
				telecommunications service, except a prepaid wireless calling service, that
				would be a prepaid calling service except it is not exclusively a
				telecommunications service.
L.
				"Prepaid calling service" means the right to access exclusively
				telecommunications services, which must be paid for in advance and which
				enables the origination of calls using an access number or authorization code,
				whether manually or electronically dialed, and that is sold in predetermined
				units or dollars of which the number declines with use in a known
				amount.
M. "Prepaid wireless
				calling service" means a telecommunications service that provides the right to
				utilize a mobile wireless service as well as other non-telecommunications
				services including the download of digital products delivered electronically,
				content, and ancillary services, which must be paid for in advance, that is
				sold in predetermined units of dollars of which the number declines with use in
				a known amount. See also Reg. § 1.9771(5) -q(A)(6).
N. "Private communication service" means a
				telecommunications service that entitles the customer to exclusive or priority
				use of a communications channel or group of channels between or among
				termination points, regardless of the manner in which such channel or channels
				are connected, and includes switching capacity, extension lines, stations, and
				other associated services that are provided in connection with the use of such
				channel or channels.
				32 V.S.A. §
											9701(39); see also Reg.
				§ 1.9771(5) -
				1(B)(2).
O. "Service address" means:
1. The location of the telecommunications
				equipment to which a customer's call is charged and from which the call
				originates or terminates, regardless of where the call is billed or
				paid.
2. If the location in
				subsection (L)(l) is not known, service address means the origination point of
				the signal of the telecommunications services first identified by either the
				seller's telecommunications system or in information received by the seller
				from its service provider, where the system used to transport such signals is
				not that of the seller.
3. If the
				locations in subsection (L)(l) and subsection (L)(2) are not known, the service
				address means the location of the customer's place of primary use.
See also
				  32 V.S.A. §
													9701(19) (definition of
				  "Telecommunications service");
				  32 V.S.A. §
													9701(42) (definition of
				  "Ancillary services"); Reg. § 1.9771(5) (Imposition of tax on
				  telecommunications service and ancillary services).
Reg.§ 1.9701(8) - 6 Telecommunication Sourcing Rule.
A. Except for the defined
				telecommunication services enumerated in subsection (C), the sale of
				telecommunication service sold on a call-by-call basis shall be sourced to (i)
				each level of taxing jurisdiction where the call originates and terminates in
				that jurisdiction, or (ii) each level of taxing jurisdiction where the call
				either originates or terminates and in which the service address is also
				located.
B. Except for the defined
				telecommunication services enumerated in subsection (C), a sale of
				telecommunications services sold on a basis other than a call-by-call basis is
				sourced to the customer's place of primary use.
C. The sale of the following
				telecommunication services shall be sourced to each level of taxing
				jurisdiction as follows:
1. A sale of mobile
				telecommunications services other than air-to-ground radiotelephone service and
				prepaid calling service is sourced to the customer's place of primary use as
				required by the Mobile Telecommunications Sourcing Act, 4 U.S.C. §§
				116-126. See
				32 V.S.A. §
												9782.
2. A sale of post-paid calling service is
				sourced to the origination point of the telecommunications signal as first
				identified by either (i) the seller's telecommunications system, or (ii)
				information received by the seller from its service provider, where the system
				used to transport such signals is not that of the seller.
3. A sale of prepaid calling service or a
				sale of a prepaid wireless calling service is sourced in accordance with Reg.
				§ 1.9701(8) -
				3.
				Provided-however, in the case of a sale of a prepaid wireless calling service,
				the rule provided in Reg. § 1.9701(8) -
				3(A)(5)
				shall include as an option the location associated with the mobile telephone
				number.
D. The sale of
				internet access service is sourced to the customer's place of primary
				use.
E. The sale of directory
				assistance service (a taxable ancillary service) is sourced to the customer's
				place of primary use. See Reg. § 1.9771(5) -
				2 (Tax not
				imposed on ancillary services, with the exception of directory assistance
				service; definitions of ancillary services).
Reg.§ 1.9701(8) -
				  7
				  Admissions to Places of Amusement Sourcing Rule.
The charges for admission to places of amusement is
				  destination-based. The sale of admission tickets or charges is sourced to the
				  location of the entertainment or recreation facility.
Reg.§ 1.9701(8) -
				  8
				  Access to Programming Sourcing Rule.
The charges for access to cable television systems, other
				  programming systems, and game or gaming machines under
				  32 V.S.A. §
												9771(4) is sourced to the
				  customer's residential street address or primary business street
				  address.
Reg.§ 1.9701(8) -
				  9 Specified Digital Products
				  Sourcing Rule.
The charges for sales of specified digital products in
				  32 V.S.A. §
												9771(8) are sourced to the
				  location of the customer's residential street address or primary business
				  street address.
Reg.§ 1.9701(19) Telecommunications Service.
See Reg. § 1.9771(5) -
				  1 (imposition
				  of tax on telecommunications service, with definitions); Reg. § 1.9701(8)
				  - 6 (Telecommunication Sourcing Definitions); Reg. § 1.9701(8) -
				  7
				  (Telecommunication Sourcing Rule).
Reg.§ 1.9701(42) Ancillary Services.
See Reg. § 1.9771(5) -
				  2 (tax not
				  imposed on ancillary services, with the exception of directory assistance
				  service; definitions of ancillary services).
Reg.§ 1.9701(45) Transferred Electronically.
"Transferred electronically" means obtained by the purchaser
				  by means other than tangible storage media. The term "transferred
				  electronically" does not include "ancillary services," "computer software," and
				  "telecommunications services." See
				  32 V.S.A. §
												9701(42) (definition of
				  ancillary services);
				  32 V.S.A. §
												9701(19) (definition of
				  telecommunications services).
Reg.§ 1.9701(47) End User.
A person that purchases products "transferred electronically"
				  or the code for "specified digital products" for the purpose of giving away
				  such products or code shall not be considered to have engaged in the
				  distribution or redistribution of such products or code and shall be treated as
				  an end user and the transaction is subject to the tax. See
				  32 V.S.A. §
												9701(45) (definition of
				  "transferred electronically");
				  32 V.S.A. §
												9701(46) (definition of
				  "specified digital products").
Reg.§ 1.9701(51) Planting Mix.
"Planting mix" means material that:
(A) is used in the production of plants, and
(B) consists of 66% or more of
				compost, peat moss, or coir and other ingredients that contribute to fertility
				and porosity, including perlite, vermiculite, and other similar
				materials.
Reg.§ 1.9707 -
				  1
				  Registration of Sellers.
A. The
				following persons must register to collect Vermont sales or use tax:
1. Every person making sales of tangible
				personal property, services or specified digital products transferred
				electronically to an end user, the receipts from which are subject to tax in
				Vermont.
2. Every person
				maintaining a place of business in the state and making sales, whether at that
				place of business or elsewhere, to persons within the state of tangible
				personal property, services or specified digital products transferred
				electronically to an end user, the use of which is subject to tax.
3. Every person who solicits business in this
				state either by employees, independent contractors, agents or other
				representatives or by distribution of catalogs or other advertising matter and
				by. reason thereof makes sales to persons within the state of tangible personal
				property, services or specified digital products transferred electronically to
				an end user, the use of which is subject to tax.
4. The State of Vermont or any of its
				agencies, instrumentalities, public authorities, public corporations (including
				public corporations created pursuant to agreement or compact with another state
				or states) or political subdivision when that entity sells services or property
				of a kind ordinarily sold by private persons.
5. Every person purchasing tangible personal
				property for resale.
6. Every
				person receiving receipts from admission charges (including any subsidiary,
				service or cover charge), charges incident to, or any charges for the use of
				any place of recreation or amusement. See
				32 V.S.A. §
												9771(4); Reg. §
				1.9771(4).
7. A person not
				otherwise required to collect Vermont tax who voluntarily collects the
				tax.
B. Sellers
				Registering Under the Streamlined Sales Tax Agreement
1. A seller registering online under the
				Agreement shall be registered in each of the Streamlined Sales Tax member
				states.
2. A model 2, model 3, or
				model 4 seller may elect to be registered in one or more states as a seller
				which anticipates making no sales into such state(s) if it has not had sales
				into such state (s) for the preceding 12 months. Such election does not relieve
				the seller of its agreement to collect taxes on all sales into such states or
				its liability for remitting to the proper states any taxes collected.
				Withdrawal or revocation of a member state shall not relieve a seller of its
				responsibility to remit taxes previously or subsequently collected on behalf of
				the state.
3. A seller is not
				required to pay any registration fees or other charges to register in Vermont
				if the seller has no legal requirement to register in this state.
4. A seller may cancel its registration under
				the system at any time in accordance with uniform procedures adopted by the
				Streamlined Sales Tax Governing Board. Cancellation does not relieve the seller
				of its liability for remitting to the proper states any tax
				collected.
C. Licenses
1. Sellers may register and obtain a sales
				tax license online by accessing the online registration system and completing
				the appropriate registration form, or may submit to the Commissioner a paper
				registration form. In the case of online registration, a written signature from
				the seller is not required. Upon registration, the Commissioner shall provide
				the seller with a license. Registrants under the Streamlined Sales Tax
				Agreement shall register using the Agreement's online Central Registration
				System. See Reg. § 1.9707 -
				1(B),
				above.
2. A seller must obtain a
				separate license for each place of business in Vermont, and the license must be
				prominently displayed therein. In the case of a mobile seller that sells from
				one or more vehicles, each vehicle shall constitute a place of business for
				which a license must be obtained.
3. Where a seller has no regular place of
				business in Vermont, the application for license shall set forth the place to
				which any notice or other communication authorized by Chapter 233 of title 32
				shall be mailed.
4. No license
				shall be assignable or transferable, but it may be used by the legal
				representative of a deceased, incompetent, bankrupt or insolvent
				registrant.
5. A seller may be
				registered by an agent.
C. Cancellation of a License
The original license is void and must be immediately
				  surrendered to the Commissioner in the following situations:
1. The business is discontinued.
2. The business is transferred to new owners.
				A transfer includes a lease.
3.
				When the form of business ownership is changed: for example, when an
				unincorporated business incorporates, or a corporation dissolves and one or
				more members continue the business in a new form of ownership; or when an
				individual doing business changes to a partnership, or when a partnership
				changes its members.
D.
				Amendment of a License
In the following situations the original license will remain
				  effective, but the license holder must notify the Department:
1. A change of business or trade name without
				a change in ownership.
2. A change
				of business location or mailing address.
In such instances the Department will provide the licensee a
				  corrected license.
E. Amnesty for Registration
Pursuant to the following rules, amnesty is available to
				  businesses registering under the Streamlined Sales and Use Tax Agreement
				  (Agreement). To qualify, the business must register via the Agreement's Central
				  Registration System in all jurisdictions that are members to the
				  Agreement.
Subject to the limitations in this section:
1. A seller who registers to pay or to-
				collect and remit applicable sales or use tax on sales made to purchasers in
				the state in accordance with the terms of the Agreement, which seller was not
				so registered in the state in the twelve-month period preceding January 1,
				2007, shall not be liable for uncollected sales or use tax.
2. Provided a seller registers within twelve
				months of January 1, 2007, the Commissioner shall not assess against the seller
				uncollected sales or unpaid use tax together with penalty or interest for sales
				made during the period the seller was not registered in the state.
3. The Commissioner shall not provide amnesty
				to a seller with respect to any matter or matters for which the seller received
				notice of the commencement of an audit and which audit is not yet finally
				resolved including any related administrative and judicial processes.
4. The Commissioner shall not provide amnesty
				for sales or use taxes already paid or remitted to the state or for taxes
				collected by the seller.
5. The
				amnesty is fully effective, absent the seller's fraud or intentional
				misrepresentation of a material fact, as long as the seller continues
				registration and continues payment or collection and remittance of applicable
				sales or use taxes for a period of at least thirty-six months. There is no
				statute of limitations for unfiled returns. See
				32 V.S.A. §
												9815.
6. The amnesty is applicable only to sales or
				use taxes due from a seller in its capacity as a seller and not to sales or use
				taxes due from a seller in its capacity as a buyer.
F. The Commissioner will not use registration
				with the Central Registration System and collection of. taxes in member states
				in determining whether seller has nexus with the State of Vermont for any tax
				at any time.
Reg.§ 1.9707 -
				  2
				  Registration of Businesses Other than Sellers.
In addition to those taxpayers required to register under
				  Reg. § 1.9707(1) -
				  1, the
				  following entities must register with the Commissioner:
A. An entity that qualifies for exempt status
				under
				32 V.S.A. §
											9743(3) even though sales,
				services or amusements charged by or to the organization, or used by the
				organization, are not subject to sales and use tax. See Reg. §
				1.9743(C).
B. Taxpayers who make
				recurring purchases of tangible personal property or withdraw from inventory
				for taxable uses tangible personal property upon which no sales tax was paid.
				Such taxpayers shall register and report use tax liabilities on returns in
				accordance with the filing requirements of
				32 V.S.A. §
											9775.
Reg.§ 1.9707 -
				  3
				  Streamlined Sales Tax Agreement Confidentiality and Privacy Protections for
				  Model 1 Sellers.
A. The purpose of
				this section is to set forth the policy for the protection of the
				confidentiality rights of all participants in the system and of the privacy
				interests of consumers who deal with Model 1 sellers, as defined in Reg. §
				1.9775(E)(3).
B. As used in this
				section, the term "confidential taxpayer information" means all information
				that is protected under Vermont's laws, regulations, and privileges; the term
				"personally identifiable information" means information that identifies a
				person; and the term "anonymous data" means information that does not identify
				a person.
C. With very limited
				exceptions, a CSP shall perform its tax calculation, remittance, and reporting
				functions without retaining the personally identifiable information of
				consumers.
D. When any personally
				identifiable information that has been collected and retained is no longer
				required to ensure the validity of exemptions from taxation that are claimed by
				reason of a consumer's status or the intended use of the goods or services
				purchased and for documentation of the correct assignment of taxing
				jurisdictions, such information shall no longer be retained by the
				Commissioner.
E. When personally
				identifiable information regarding an individual is retained by or on behalf of
				the Commissioner pursuant to the Agreement, the Commissioner shall provide
				reasonable access by such individual to his or her own information in the
				state's possession and a right to correct any inaccurately recorded
				information.
F. If anyone seeks to
				discover personally identifiable information other than a member state to the
				Agreement or a person authorized by that state's law or the Agreement, the
				Commissioner shall make a reasonable and timely effort to notify the individual
				of such request.
Reg.§ 1.9709 -
				  1 Records to
				  Be Kept; General Requirements.
A.
				Every person required to collect and every purchaser required to pay the sales
				or use tax shall maintain all records that are necessary for a determination of
				the correct tax liability. Such records must show the total and individual
				sales prices of taxable and nontaxable items.
Such records shall include, but not necessarily be limited
				  to, the normal books of account ordinarily maintained by the average prudent
				  business person engaged in the activity in question, together with all bills,
				  receipts, invoices, cash register tapes, sales slips, or other documents of
				  original entry supporting the entries in the books of account, as well as all
				  schedules or working papers used in conjunction with the preparation of tax
				  returns.
B. All required
				records must be made available on request by the Commissioner or the
				Commissioner's duly authorized agent or employee.
C. If a taxpayer retains records required to
				be retained under this regulation in both electronic and hard-copy formats, the
				taxpayer shall make the records available to the Commissioner in the form
				requested by the Commissioner.
D.
				Nothing in this regulation shall be construed to prohibit a taxpayer from
				demonstrating tax compliance with traditional hard-copy documents or
				reproductions thereof, in whole or in part, whether or not such taxpayer also
				has retained or has the capability to retain records on electronic or other
				storage media in accordance with this regulation. The taxpayer is not relieved
				of its obligation under the preceding paragraph, however, to provide electronic
				records when so requested by the Commissioner.
Reg.§ 1.9709 -
				  2 Electronic
				  Records.
A. Electronic records used to
				establish tax compliance shall contain sufficient transaction-level detail
				information so that the details underlying the electronic records can be
				identified and made available to the Commissioner upon request. A taxpayer has
				discretion to discard duplicated records and redundant information provided its
				responsibilities under this regulation are met.
B. At the time of an examination, the
				retained records must be capable of being retrieved and converted to a standard
				record format.
C. Taxpayers are not
				required to construct electronic records other than those created in the
				ordinary course of business. A taxpayer who does not create the electronic
				equivalent of a traditional paper document in the ordinary course of business
				is not required to construct such a record for tax purposes.
D. Electronic records must contain a level of
				record detail that is equivalent to that which is contained in an acceptable
				paper record. For example, the retained records should contain such information
				as customer name, seller name, invoice number, date, product description,
				quantity purchased, price, amount of tax, indication of tax status, shipping
				detail, etc. Codes may be used to identify some or all of the data elements,
				provided that the taxpayer provides a method that allows the Commissioner to
				interpret the coded information.
E.
				Business Process Information
Upon the request of the Commissioner, the taxpayer shall
				  provide a description of the business process that created the retained
				  records. Such description shall include the relationship between the records
				  and the tax documents prepared by the taxpayer and the measures employed to
				  ensure the integrity of the records.
The taxpayer shall be capable of demonstrating:
1. the functions being performed as they
				relate to the flow of data through the system,
2. the internal controls used to ensure
				accurate and reliable processing; and
3. the internal controls used to prevent
				unauthorized addition, alteration, or deletion of retained records.
F. Access to Electronic Records
The manner in which the Commissioner is provided access to
				  electronic records as required in this regulation may be satisfied through a
				  variety of means that shall take into account a taxpayer's facts and
				  circumstances through consultation with the taxpayer:
1. The taxpayer may arrange to provide the
				Commissioner with the hardware, software and personnel resources to access the
				records.
2. The taxpayer may
				arrange for a third party to provide the hardware, software and personnel
				resources necessary to access the records.
3. The taxpayer may convert the electronic
				records to a standard record format that is agreed to and specified by the
				Commissioner.
4. The taxpayer and
				the Commissioner may agree on other means of providing access to the
				records.
Reg.§ 1.9709 -
				  3
				  Alternative Storage Media.
A. For
				purposes of storage and retention, taxpayers may convert hard-copy documents
				received or produced in the normal course of business and required to be
				retained under this regulation to microfilm, microfiche or other storage-only
				imaging systems and may discard the original hard-copy documents, provided the
				conditions of this regulation are met. The documents must exhibit a high degree
				of legibility and readability. Documents that may be stored on these media
				include, but are not limited to general books of account, journals, voucher
				registers, general and subsidiary ledgers, and supporting records of details,
				such as sales invoices, purchase invoices, exemption certificates, and credit
				memoranda.
B. Upon request by the
				Commissioner, a taxpayer must provide facilities and equipment for reading,
				locating, and reproducing any documents maintained on microfilm, microfiche or
				other storage-only imaging system.
Reg.§ 1.9701(4) -
				  3
				  Bundled Transaction.
A bundled transaction is the retail sale of two or more
				  products, except real property and services to real property, where (1) the
				  products are otherwise distinct and identifiable; and (2) the products are sold
				  for one non-itemized price. A bundled transaction does not include the sale of
				  any products in which the sales price varies, or is negotiable, based on the
				  selection by the purchaser of the products included in the transaction.
Except as otherwise provided by this regulation, sales tax
				  must be collected on the selling price of a bundled transaction if any product
				  included in the bundled transaction would be taxable if sold separately.
Reg.§ 1.9709 - 4 Records Retention-Time Period.
Records required to be retained under this regulation shall
				  be preserved for a period of three years in accordance with
				  32 V.S.A. §
											9709 unless the Commissioner or the
				  Commissioner's duly authorized representative has approved in writing an
				  earlier date of destruction. The time for retention shall begin to run from the
				  date on which the taxpayer files the return. In light of
				  32 V.S.A. §
											9815 which allows the Commissioner to assess
				  tax beyond the three-year period, and
				  32 V.S.A. §
											9813 which places the burden of proving tax
				  exemptions on the person required to collect the tax, a prudent taxpayer may
				  choose to retain such records for a longer period of time.
Reg.§ 1.9711 Election by Manufacturer or Retailer.
A person primarily engaged in the business of manufacturing
				  or the business of making retail sales of tangible personal property may make
				  an election under Section 9711 to be treated as a retailer when purchasing
				  materials and supplies to be used in improving, altering or repairing real
				  property. "Primarily" means more than 50 percent of the business's gross
				  receipts in the prior calendar year were from manufacturing or retail sales,
				  respectively.