Most businesses starting in Vermont that are 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 find out 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 Vermont when:
- A business has “nexus” (significant presence in the state) such as a retail store, office or warehouse where products are produced, stored and/or delivered
- 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
- An out-of-state business selling to Vermont residents and one of the
- Total annual sales of tangible personal property to Vermont residents is $100,000 or more; or
- Having 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 is 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 work. 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, LLC)
- Federal Employer Identification Number (FEIN), 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
- Estimate of quarterly tax liability
How much does a sales tax permit cost in Vermont?
There is no cost for a sales tax permit in Vermont.
How long does it take to get a Vermont 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 makes a sale of 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.
Filings are due the 25th day of the month following the reporting period, unless the 25th falls on a weekend or federal holiday, in which case 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 occurred.
Sales tax on purchases for resale
A business is able to 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 to document the items being purchased are for resale.
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 email@example.com.