Most businesses starting in Vermont selling a product or offering certain services will need to register for a sales tax permit. This is commonly referred to as a seller’s permit, sales tax license, sales tax number, or sales tax registration.
The sales tax permit is obtained through the Vermont Department of Taxes as a part of applying for a Vermont Business Tax Account. In addition to registering for a sales tax permit, you can also register for meals and rooms tax and the employer withholding tax.
Check out the rest of this guide to determine who needs a sales tax permit, what products and services are taxable, how to register for a permit, and reporting requirements.
Who needs a sales tax permit in Vermont?
A business must register for a sales tax permit in the state of Vermont when:
- A business has an “economic nexus” (physical presence in the state) when they have a physical location like a retail store or office or uses a warehouse or fulfillment center to store inventory.
- Selling products and taxable services in Vermont (includes occasionally selling items at craft shows, fairs, seminars, shows, etc.)
- Employees (including sales representatives or agents) are working in Vermont
- An online business located in Vermont is selling taxable products to Vermont residents
- A remote seller meets one of the following scenarios:
- Making total annual sales of tangible personal property to Vermont residents of $100,000 or more; or
- Shipping 200 or more transactions with Vermont residents annually.
What products and services are taxable in Vermont?
There are a few exceptions, but almost all physical products are taxable when sold at retail in Vermont. Common examples include:
- General merchandise like furniture, appliances, and clothing
- Titled or registered items like vehicles
Certain agricultural manufacturing equipment, machinery used in forestry, and some clothing are tax-exempt in Vermont.
Labor, in most cases, isn’t taxable in Vermont. For instance, let’s say you broke the screen to your cell phone and take it to a cell phone repair shop to have it fixed. Sales tax would be added to the selling price of the new screen and any additional parts to fix the phone. The labor to replace the screen isn’t taxable. However, a business that makes furniture will indirectly have sales tax on labor. In this instance, let’s say this business is building a dining room table for a customer. Through labor, the pieces of wood are shaped, sanded, and painted to build this piece of furniture. While the labor isn’t directly taxable, sales tax is charged to the final selling price of the table.
Digital products are taxable in Vermont.
Most services aren’t taxable in Vermont, however, there are a few exceptions, some of which include:
- Short-term lodging
- Admissions to places of amusement (fitness club memberships, movie theaters, golf courses, ski areas, etc.)
- Fabrication charges – defined as any charges for producing fabricating, printing, or imprinting property for customers who furnish the materials used in the product. Examples include job printing, engraving (jewelers included), taxidermy, etc.
How to register for a sales tax permit in Vermont
Information needed to register includes:
- Type of business entity – Sole Proprietorship, Partnership, Corporation, or Limited Liability Company (LLC)
- Federal Employer Identification Number (FEIN) from the IRS, or SSN if a sole proprietorship with no employees
- Business name
- Doing Business As name (if applicable)
- North American Industry Classification System (NAICS) code
- Business mailing address, physical address, phone number, and email address.
- Name, SSN, title, and address of owners/officers/members
- Expected start date
- Estimated quarterly tax liability
How much does a sales tax permit cost?
There is no cost for a sales tax permit in Vermont.
How long does it take to get a sales tax permit?
Expect 3-5 business days to receive a sales tax permit when registering online or 2-3 weeks when applying by mail.
Do you have to renew your Vermont sales tax permit?
The sales tax permit is a one-time registration, and no renewals are needed. Be mindful that if any information about the business changes, such as the mailing address, additional locations, or change in ownership, those changes need to be updated with the Department of Taxes.
Sales tax reporting
How is sales tax collected?
When a business sells a taxable product or service, the business charges the appropriate sales tax rate to the customer. This tax is collected by the business who then sends it to the Vermont Department of Taxes.
How much sales tax is charged?
The sales tax rate that is charged varies depending on the address of the business if the purchase is made in the store. When shipping in-state, the sales tax is based on the address of the purchaser.
In addition to the statewide tax, there are additional local option sales taxes that may be added by cities and municipalities. To find sales tax rates, see the sales tax rates from the Vermont Department of Taxes.
When are Vermont sales tax returns due?
The Department of Taxes will determine a filing frequency based on the expected volume of sales, which will be monthly, quarterly, or annually. Generally, a business collecting over $2,500 in sales taxes annually will file monthly.
The due dates for filings are the 25th day of the month following the reporting period unless the 25th falls on a weekend or federal holiday, which would move to the next business day.
Even if the business had no sales during the reporting period, a filing is still required indicating no sales.
Sales tax on purchases for resale
A business can purchase items to resell without paying state sales tax. The tax liability is passed from the wholesaler or distributor to the retailer, who will then charge sales tax to the end-user of the item.
Wholesalers and distributors will require a sales tax number and a completed Vermont Certificate of Exemption (also referred to as a resale certificate or sales tax exemption certificate) to document the items being purchased are for resale.
In addition to registering for a sales tax permit, there may be other business licenses needed before starting a business in Vermont. Learn what business licenses are needed in Vermont.
If you have questions about the sales tax permit, the Vermont Department of Taxes has a sales and use tax FAQ page, or they can be contacted by 802-828-2551, option 3, or email firstname.lastname@example.org.