Vermont taxpayers will find a new line on their tax forms this year. Its part of a stepped up effort to collect the use tax due on out of state and online purchases.
In years past the forms have included a line for the taxpayer to enter what they owe on qualified purchases made outside of Vermont – mostly online.
As far as the state is concerned too many people simply leave the use tax line blank and move on.
Now a second line has been added to the 2013 individual tax return form. It says: “Check here to certify that no Use Tax is due.”
Vermont Tax Commissioner Mary Peterson hopes those ten words and the check-off box after them will serve to underscore the fact that the tax, which is the equivalent of a sales tax, is due on online and out of state purchases.
“This reminder right there at that box attracts people’s attention to that particular liability. They otherwise might skip right over that line,” says Peterson.
Peterson says the check off box has been used elsewhere with good results.
There may be bit of psychology involved.
If someone owes use taxes, actually having to check a box that says ‘No, I don’t owe anything’, might be more difficult than simply leaving a line blank.
Peterson says Vermont has one of the nation’s highest compliance rates among states that levy a use tax. But still, the state estimates $39 million in these taxes go unpaid annually.
The state is also taking steps to bring more small businesses into compliance.
They owe the use tax when purchasing supplies and other taxable items online or out of state.
Peterson says under a program called Know What You Owe, the state is allowing businesses to report use taxes that have been unpaid over the past three years.
“We’re allowing businesses to come forward and basically on a self-assessment basis, they go back through their records and declare how much use tax they believe is due, and as long as it’s credible we’ll accept that,” she explains.
The program waives all penalties for overdue taxes and 50 percent of the interest owed. The deadline to enter the program is May 1.
