Country / Language

Vermont Click Through Nexus Law Takes Effect


11/24/15

Synopsis

In 2011, Vermont enacted a “click-through” nexus law which set forth rules for when out-of-state vendors would be required to collect and remit Vermont sales tax. This law was delayed until the Vermont Attorney General determined that 15 or more states had similar provisions. On October 13, 2015, the Attorney General issued such a determination and Vermont’s “click-through” nexus law will be effective on December 1, 2015. 

Issue

In 2011, Vermont passed a “click–through” nexus law which provides that an out-of-state vendor is presumed to have Vermont sales tax nexus if the out-of-state vendor has agreements with Vermont residents, who are paid a commission or other consideration, for referring customers to the vendor leading to sales in excess of $10,000 in the preceding tax year. This law was delayed until such time as the Vermont Attorney General determined that 15 or more states had nexus rules that were comparable to the Vermont remote seller nexus provision described above. 

The Vermont Attorney General determined, as of October 13, 2015, that sixteen other states had adopted similar laws.  The Vermont Department of Taxes issued guidance stating that retailers subject to the click-through nexus law are required to start collecting and remitting Vermont sales tax on December 1, 2015. 

Accordingly, all taxpayers entering into agreements with residents of Vermont, whereby the resident, for a commission or other consideration, directly or indirectly refers potential customers (e.g., by a link on an Internet website or by other methods) to the out-of-state vendor resulting in Vermont sales in excess of $10,000 during the preceding tax year arising from such relationships are required to collect and remit Vermont sales tax.  

Note that the nexus presumption may be rebutted by proof that the Vermont resident did not engage in any solicitation in Vermont on behalf of the out-of-state vendor that would, during the tax year in question, satisfy the nexus requirements of the U.S. Constitution.

Affected taxpayers must obtain a Vermont business tax account and license to collect and remit Vermont sales tax.  An online application is available at www.myvtax.vermont.gov

What Does CohnReznick Think?
Vermont’s “click-through” nexus law continues the trend of states pursuing additional methods of generating tax revenue. We recommend that any business selling into Vermont review Vermont’s nexus rules to determine whether such business is required to collect and remit Vermont sales tax.

Contact

For more information, please contact Scott Smith, Director, State and Local Tax Services, at scott.smith@cohnreznick.com or 973-364-7720; Andrew Ebneter, Director, State and Local Tax Services, at andrew.ebneter@cohnreznick.com or 862-245-5028; or Patrick Duffany, Partner and State and Local Tax Services Practice Leader, at patrick.duffany@cohnreznick.com or 959-200-7270.


Any advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues. Nor is it sufficient to avoid tax-related penalties. This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

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