Vermont Legislature SmartTranscripts:

[Sen. Richard Westman — Chair, Senate Transportation Committee]: You're lying. I was in Florida. Excuse me. This is Thursday, March 12. This is the Senate Transportation Committee, and we are starting with the tax department, and we are talking about local option taxes again and we should have some information about what Townsend is. Absolutely, if you're all ready.

[Unidentified Member (Senate Transportation Committee)]: Hello.

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: For the record, I'm Rebecca Sameroff, deputy commissioner of the Vermont Department of Taxes. And just before coming over here, we sent a table that holds the summary voting results from Unpound Meeting Day, which I have printed out here. I don't know if it's been posted yet, but happy to just talk through those too. It has been. Great, awesome. We can review those and then I understand there were questions about the department's next steps on administering this. I think the ability to do no more than five at a time, and but you know, but you've never used that, so there's whole questions about what's your capacity, because I think not looking at the list, but I think we're aware there's no words in it. Yeah. Yeah. So if you could start in and start. Yeah. So so, yeah, more than 10 of the the grand total this time meeting date was 14. That also includes the kinda more unique STOW vote at a percentage of their local option tax. And it's really good timing for this testimony because we actually spent a lot of time over the last week just discussing internally what the strategy will be here. And it certainly is a lot to administer all at once, but over the course of their implementation discussions the last week, you know, we we decided as a team to go forward with implementing them all at once for a 07/01/2026 effective date for the towns. This is this is just what what works best for us this year. You know, it's it'll be a learning experience for us for sure. But, you know, mostly, it's just about the work that we have ahead of us this year. It's it's a bit of a unique one for us because we are gonna be doing a major update to our integrated tax system, the VTACS tax system, which is kind of, like, you know, equivalent from, you know, like, going from Windows 11 to Windows well, I've had done a Windows update in a while. But, you know, it's like yeah. Yeah. So, you know, something that, like, seem will seem kind of, you know, from the user's perspective, like, might not have as as many visible changes, although there are actually gonna be some great improvements with this upgrade. But with part of this upgrade is fully replacing the programming code that underlies the whole system. So it's actually a really, really big deal. And when we do updates like this or any any kind of development work in the system, it requires a ton of testing from our staff. So, like, part of so just, you know, to give a little flavor of the discussion, like, part of the decision here is we have this major, you know, implementation in our system that'll be happening this calendar year. So, like, getting all these launched for July 1 and really, like, letting the teams focus on, you know, the work that I discussed with this committee last month, you know, like, all the, know, handholding for businesses that are, like, struggling to figure things out at first, all the corrections that often happen in the first couple months, and then, you know, all the prework, like the communication, the program, the form design, the development work in the system, just kind of like getting that all tackled at once, like a bit of like a ripping strategy will will allow the team to shift focus to the rest of our upgrade and other legislative implementations for the for the rest of the calendar year.

[Sen. Rebecca "Becca" White — Vice Chair, Senate Transportation Committee]: And I just have one question. Bill, take it. Thank you, Mr. Chair. So one of the things that we talked about

[Unidentified Member (Senate Transportation Committee)]: the last time you were

[Sen. Rebecca "Becca" White — Vice Chair, Senate Transportation Committee]: here was that geo fencing with online purchases and if they have with the Wayfair decision, kind of where businesses fall or where the purchases are. What is the combination for local option tax that they would have had to have passed to fall into the Wayfair? If they just did rooms, they're not a part of it. If they did sales, they are. And if they did alcohol, I guess it could go I I guess I'm just wondering, of the towns that you have on your list, which ones are now also capturing online sales? And is it just the sales or could technically like I don't know. We have some alcohol distributors, I think.

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: I don't know how that works. Right. Yeah. So great. So, yeah. So like, know, the weaker decision and, you know, we're kind of talking about like the large e commerce platforms and also e commerce marketplaces specifically with that one. So that, like, is real like, the real nexus with local option tax there is when a town votes to enact a sales local option tax, which means that, you know, all of them. Yes. But, if you are, in Airbnb or a Vrbo, there are for example, the town of Fletcher, which is right next to us, that has mailing addresses there at Cambridge. Half of the town of Fletcher has a mailing address that's Cambridge. If they enacted a local option tax, it would I would think that if the house sits in Fletcher, that you would pay, and there are because you're they're close enough to a skier. What happens with those community? Yeah. Yeah. So we're talking about just, like, broader ecommerce issues for sure. Yeah. Wayfair was more about the sales tax space and, like, marketplace platforms. But, like, I think, you know, this you know, broadly speaking, I think, like, the biggest there's probably about, like, three times as much work being done at the department on local option tax administration as there was just, like, when I started ten years ago, and ecommerce is, like, certainly the cause. You know? It's just new ecommerce vendors are coming online all the time, and then we have, like, you know, the big short term rental platforms, the big online marketplaces who are always gonna be navigating this very imperfect system that we, you know, we choose in this country for identifying, like, where a place is in the space. So, you know, this is you're you're just, like, touching on exactly, like, where, like, the heft of our compliance efforts But there are you know, as as we talked about in committee, like, you know, it is absolutely those vendors' responsibility to be collecting and remitting tax appropriately based on the location, the address location of where a purchase is being made. For the case of short term rental platform, that's like, you know, where is the the host renting that room? You know? And they don't get always get it right the first time. So that's like in the first, you know, the first month of a new local option tax. We're doing a ton of work with the vendor to clean that up. You know? And they have you know, we make the tools available for them, and they you know, many of these, especially, especially, like, like, big big ecommerce platforms or, like, the big short term rental platforms, you know, I assume have, like, this third party software integrated where, you know, it's kind of handling the tax stuff for them. So often we're, you know, working with a company and then going on to work with their contractor to make sure they're doing it right. You know, flagging issues and holding them accountable for it, you know, through our compliance tools when it's, you know, not meeting expectations, just be, you know, flagging and letting them know when there's issues. That's really a big asset of the work that we do in this space. And you're absolutely right. It's in rooms space for the big online short term rental platforms, it's in the sales space for the big and small e commerce vendors.

[Sen. Rebecca "Becca" White — Vice Chair, Senate Transportation Committee]: It's interesting. The only community was in my district in West Windsor where they voted no on the sales, but yes on meals in percentage. I was surprised by that. It's an intriguing I don't know, maybe there's a lot of online businesses and that was a motivation, but I also think they have a small general store that they didn't want to see have taxes placed on them. So that so it seems like with every new one of these towns, except for the non applicable ones, you basically are going to have to do a ton of back end work to properly connect them. So yeah, you're describing it.

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: I mean, it's ton of work, but it's work that we're very familiar with and feel confident in. That's good.

[Unidentified Member (Senate Transportation Committee)]: I think you said this, you think you can do all of this. Yeah. Even though you can limit it to whatever, three years?

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: Yeah. I mean, that limit you know, it's not just, like, you know, at at a whim. It really has to you know, I think the statute's written pretty clearly that it has to, like, really pose an administrative challenge for us. And, you know, our our internal conversations, you know, we determined it would actually be more of an administrative challenge to try to phase it out. Like, we really just wanna, you know, focus on this.

[Unidentified Member (Senate Transportation Committee)]: This is the most ever that have been a

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: Yeah. About twice as many as last year, which I think had been a record How many total? So now total, I think there were 39 before. There's almost like

[Unidentified Member (Senate Transportation Committee)]: a 50% increase or 30 increase?

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: Yeah. There are three municipalities that have already enacted and then, an additional, you know, 13 to 14 depending on, you know, what the general assembly decides to do with the STOW vote. Right. So that, you know, that's, know, we're getting up to about 20% of Vermont municipalities that have a local option tax of some sort. Interesting.

[Unidentified Member (Senate Transportation Committee)]: So on the alcohol, we can get alcohol shipped in Vermont or can we not?

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: I can't remember the rule on that. I remember when

[Unidentified Member (Senate Transportation Committee)]: we were studying alcohol. A great question

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: for Wendy's night. This meals and alcohol- Just

[Unidentified Member (Senate Transportation Committee)]: like on premise.

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: Exactly. This is like, you know, what you're having with your meal at a bar, consuming on prem. I mean, it's not always that, you know, in a a formal restaurant or bar setting. Know? It's, yeah, on premises.

[Sen. Rebecca "Becca" White — Vice Chair, Senate Transportation Committee]: So it's not a brewery. Like, it's Long Trail in Bridgewater. Like, it's

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: pretty It can be a brewery.

[Unidentified Member (Senate Transportation Committee)]: Yeah. Yeah. Definitely.

[Sen. Rebecca "Becca" White — Vice Chair, Senate Transportation Committee]: Oh, okay. Yeah. Yeah. So shipping their beer to Canada. Right. Another another It's

[Unidentified Member (Senate Transportation Committee)]: more like if you not you.

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: If I was If you were to ask.

[Unidentified Member (Senate Transportation Committee)]: If I was gonna get a bottle of wine purchased online and shipped to my address, I wouldn't pay an extra No.

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: There'd be sales tax on that, and then there would be yeah. There'd sales tax on that.

[Unidentified Member (Senate Transportation Committee)]: No. No. So it's Yeah. But if I bought a bottle of wine at the two store there, I would pay the

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: You would pay sales tax on that too. So it's like the way yeah. Sorry. Should back up a little bit. Is there

[Unidentified Member (Senate Transportation Committee)]: an excess tax and then and the extra excess tax involved?

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: Yeah. So like when you go to the liquor store, there is a there's you know, the the tax that, you know, I know about from my tax department chair is there's a sales tax on everything you buy there. There's also, like, a spirits tax that's administered by DLL. Right. So that's also charged on that.

[Unidentified Member (Senate Transportation Committee)]: But I would pay that if I got it through the mail?

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: I'm not sure about that, honestly.

[Unidentified Member (Senate Transportation Committee)]: I can

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: ask Wendy. Yeah. When you buy a drink in the in in the restaurant, on top of that, there's the rooms and meals tax.

[Sen. Rebecca "Becca" White — Vice Chair, Senate Transportation Committee]: Well, that's what we're trying to figure.

[Unidentified Member (Senate Transportation Committee)]: Yeah. Well that's yeah. We went around with Wendy, turned the commissioner on that in appropriations, you pay it twice because the bar when the bar buys that call, they're off to paying the tax.

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: Yeah. Well that's like the malt and vinous beverage tax is a gallon inch tax Yeah. That's paid at the distributor level. So that's like, you know, it's like a little upstream from the consumer, but that that's costing you. Right. When you're billed They go. To drink. But the time the time you get your drink, it's it's around 45%, 46%

[Unidentified Member (Senate Transportation Committee)]: of tax. But we don't need to so but I just wondered about the mail. And then also, would it be the same for tobacco products that you can get through the mail? Because there's a tax. We have a state tax on tobacco products. I assume that they would, the online would have to make sure they're adding that.

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: I wish my personal consumption practices were like serving me better here. I can't get that through the mail. Yeah. So I mean, anything that the sales tax is applied to, which, you know, would include, like, ordering wine through the mail or something. You know, if your town has a a local option sales tax, you're gonna get an extra 1% on those. Right.

[Unidentified Member (Senate Transportation Committee)]: Yeah. No. I was wondering about the spirits the specialty tax that we have for alcohol.

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: Yeah, so where sales tax is applicable, it wouldn't matter, but there's, you know, these local option taxes are focused on either like the state sales and use tax, state of meals, rooms, and alcohol tax.

[Unidentified Member (Senate Transportation Committee)]: It doesn't really deal with what we're talking about today. I'll talk to the commissioner at liquor moderates.

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: That's just should I should learn more about these things too. It'll be great. Good coffee conversation with Wendy Harrison. Ask the department on any ment on what all of this would raise? Yeah. That's actually ongoing, like, as we speak between our analysts and yours and JFO, I think they're coming to consensus figures of what, you know, the estimate is When do we think that those figures we might be able to expect? I assume shortly, like if not by the end of this week, early next week, but I think JFO would be a great resource to ask about when you guys will have those handy. Just one the the two towns that are one that's is is just referred to kind of my area. Yeah. Stowe and then Morristown Morristown. Jack Carr did an estimate for them ahead of time, and so theirs was 1,200,000, and so is three and a half. So it would be interesting to see what's going on. And do we expect all of them online from July 1? Right. So that'll be like a full year of enactment, but eleven months of revenue generation because you miss some Businesses file on the twenty fifth day of the month after the tax period closes. A full year of implementation will be eleven months of of revenue. So we will get 11 payments within Fiscal twenty seventh. Yeah. Fiscal twenty seventh. Right. That includes the new local option tax. That's great. And, yeah, that our we often have towns using our publicly available online statistics about sales meals rooms by town to kind of do their own estimates when they're considering these things. The department helps towns often you know, really hone those in, reviews them with them. I think JFO and tax analysts are kind of just doing that exercise en masse for for the new local option tax towns right now. This is helpful. Thank you. Yeah. Are there any other questions I can help with? The Are we done?

[Sen. Rebecca "Becca" White — Vice Chair, Senate Transportation Committee]: I mean, I guess I could Go ahead. I totally did. You got Ben Warner. Okay. I'll ahead bring local option tax question.

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: Sure. Sure.

[Sen. Rebecca "Becca" White — Vice Chair, Senate Transportation Committee]: So there has been a conversation on the house transportation side about potentially having a global gas tax rather than so different realm. Mhmm. But I'm wondering, I haven't actually I don't think we heard testimony. I think you did go to the house. Maybe you talked about or someone from the tax department provided

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: I did.

[Sen. Rebecca "Becca" White — Vice Chair, Senate Transportation Committee]: Information. Do you mind just giving the high level it sounded like there was a lot of barriers.

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: Yeah. I mean, like, the from from my z, yeah, there are a number of barriers. Like, the the most compelling to me being that, like, you know, the the tax department doesn't administer the gas tax Yes. Right now. It's also not a tax that's paid between, like, the it's not like we pay it as consumers when we're at the pump. It's paid between the retailer and the distributor. So there's not, like, a, you know, a taxable event to tack a a 1% local option tax or a, you know, any type of local option tax too. So, like so I bring up my first point because, like, you know, we at the tax department are really good at administering local option tax. So it seems like if there was gonna be a new one, it would be nice to have it folded into our, you know, our world, to our administrative machine that, you know, exists here, whereas, you know, DMV would be doing this for the first time and have to kinda set up a novel system. And then that second point is, like, there isn't actually a taxable event that happens at the pump Yes. That DMV is even touching. So, you know, it'd be really, like, kind of, like, creating a a brand new taxable event tax type to get that to get that

[Sen. Rebecca "Becca" White — Vice Chair, Senate Transportation Committee]: And do you tax money. When a let's say I'm at the mobile station at the top of the hill in Wilder, Vermont. I purchased from a distributor, the my distributor, and there's only, like, three state distributors technically. Like don't there's there's like only a there's only a few depots that they actually are purchasing from. So you only work with like a very small number of people or companies essentially to do it. So In this example, are

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: you a driver or are you a gas station?

[Sen. Rebecca "Becca" White — Vice Chair, Senate Transportation Committee]: I'm a gas station.

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: Okay. Cool. Cool. Yeah.

[Sen. Rebecca "Becca" White — Vice Chair, Senate Transportation Committee]: So I don't like, mo if I'm a mobile station, I don't pay when the dis when I get a delivery that tax. It's the depot that pays before the delivery I

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: believe the the retailer pays the tax to the dealer that remits it to the state. However, I'm like, I was speaking about a tax type. No. So I apologize. I just put a little asterisk on that. Just remember with

[Sen. Rebecca "Becca" White — Vice Chair, Senate Transportation Committee]: the Affordable Heat Act, the whole debate was, well, who's actually paying it? And it turns out it was like three companies are really like the exchanger of the system. And that we have one depot in New Hampshire that basically serves, from my understanding, most of us.

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: But yeah, that would be my understanding that the wholesaler is the one collecting from the gas stations and then remitting to the state.

[Sen. Rebecca "Becca" White — Vice Chair, Senate Transportation Committee]: So they could give you the list of people, the list of stations that they serve and if they're in those towns.

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: So that would be like you're thinking about a local option tax that the gas station themselves would be the one it's paying. Yeah. Yeah. Collecting. Yeah.

[Sen. Rebecca "Becca" White — Vice Chair, Senate Transportation Committee]: They would have to it would be the distributor would have to either pay a specific yeah. I it's possible, but I understand your explanation of how

[Unidentified Member (Senate Transportation Committee)]: it stations. Seems like almost all of them now have things for shut up. So they're collecting a sales tax. Yeah. They would have to just add to the gas, which maybe sounds easy, but it's not a

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: Yeah. This Yeah. Well, yeah, gas is explicitly exempt from the state sales tax just to avoid having a bunch of taxation on the same product. You know?

[Sen. Rebecca "Becca" White — Vice Chair, Senate Transportation Committee]: Could you just change it so that you would allow municipalities to charge a sales tax on gas? Is that allowed?

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: I mean, it's not allowed under current law. No.

[Sen. Rebecca "Becca" White — Vice Chair, Senate Transportation Committee]: But if we we could change the law, that could be one way to do it. Or, like, is that something the state is allowed to

[Unidentified Member (Senate Transportation Committee)]: do to I don't think we

[Sen. Rebecca "Becca" White — Vice Chair, Senate Transportation Committee]: are legally allowed to charge sales tax on gas for some reason.

[Unidentified Member (Senate Transportation Committee)]: By here by federal?

[Sen. Rebecca "Becca" White — Vice Chair, Senate Transportation Committee]: Yeah. I know. Is it Us, or is it the fed?

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: That's a really good question that I'm not sure about. I know that it's it's, like, you know, certainly explicitly exempted, in our statute from laws that you all create and maintain and have control over. And I'm not sure if there's other federal prohibitions against I

[Sen. Rebecca "Becca" White — Vice Chair, Senate Transportation Committee]: know that this committee is probably unlikely to wanna have further conversation on this one, but I did want to ask, so thank you.

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: Have a great question. If he comes over from the House, will that have a deal? Is there anything else that you'd like to add at this point? No, that was great. Great questions, I'm just excited about the timing of actually having an answer for you when you have the question. Yeah, great. This is very helpful. I think that gives you four minutes to get to your Yeah, seriously, I'll bring you the hustle. Thank you so much. Really appreciate the time. Thank you so much. All right, bye.

[Sen. Rebecca "Becca" White — Vice Chair, Senate Transportation Committee]: So I texted you an alcohol answer. Oh,

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: You might as well move. Pardon, Candice? I mean, I'm happy to, chair, for the record. As soon as Logan comes, he's gonna join you. Okay. I it's just that I didn't have anything prepared. Oh.

[Unidentified Member (Senate Transportation Committee)]: That's what always

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: I didn't know. I think it was expected that Logan would lead. This is, you know, there's a lot of conversation in here, and every once in a while the tip on fund comes up. So the way it works is really what people are interested in, getting an update. Would you like me to finish Logan or just Yeah.

[Sen. Richard Westman — Chair, Senate Transportation Committee]: Why don't you move up there and as soon as Logan gets here, we'll get started. It looks like it's on 09:45, so I don't know. Maybe we need that. Oh, he is 945.

[Unidentified Member (Senate Transportation Committee)]: Maybe he's available.

[Sen. Richard Westman — Chair, Senate Transportation Committee]: I just sent him a note. Okay. Sorry. We're on the it would be quicker. I thought it was 09:30.

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: I did, sir.

[Unidentified Member (Senate Transportation Committee)]: What answer did you have? A quick note, Mr. Chair, for the record, Sarah Mircon, principal assistant with the Department of Taxes. I just conferred with Department of Liquor and Lottery, there are no legal sales of tobacco by mail.

[Sen. Rebecca "Becca" White — Vice Chair, Senate Transportation Committee]: Okay. So none of them would

[Sarah Mircon — Principal Assistant, Vermont Department of Taxes]: be subject to There's no legal sales of tobacco by mail. So that is probably a problem that people do in a good legal Correct, yes. But none of that would be subject to sales tax legal option because it's illegal. Alcohol? Alcohol, let me confirm that.

[Unidentified Member (Senate Transportation Committee)]: I don't think you can buy hard alcohol, can you? Don't think, I remember one time we couldn't buy wine because my father-in-law wanted to send us a case of wine. He said, well, you're not gonna get into Vermont, but I thought we changed it.

[Rebecca Sameroff — Deputy Commissioner, Vermont Department of Taxes]: Can he go offline and we'll pick back up and