Use Tax Check-Off Box Pays Off

May 7, 2014

A simple check-off box added to the 2013 Vermont State Individual Tax Return has significantly increased the number of people who declare out-of-state and online purchases.

By law the use tax, similar to the sales tax, is levied on many of the purchases, although the state has no way of tracking them.

In the past the majority of taxpayers simply left the line blank on the tax form instead of calculating their use tax.

This year the state added a line that reads “Check here to certify that no Use Tax is due.”

It appears the new check off box has succeeded in drawing attention to the use tax liability.

According to the Vermont Department of Taxes there’s been a 52 percent increase in the number of people declaring a use tax, and the revenue from the tax has increased 47 percent compared to last year at this time.

The figures are based on tax returns filed so far and although the department expects another 25,000 returns to be filed by those who received extensions, the percentages are not expected to change significantly.

The check-off box, “served its purpose of having people double check and educating themselves about what kind of sales might be taxable that they need to report,” says Tax Commissioner Mary Peterson.

Overall, the department expects to collect approximately $1.7 million in use taxes for calendar year 2013, mostly from online purchases.  

That’s still a far cry from the estimated $39 million in Vermont use tax that is undeclared each year.

Vermont officials were encouraged by a U.S. Supreme Court decision in December, 2013 that let stand a New York law requiring that retailers apply a state sales tax to some online purchases.

In doing so, the court paved the way for Congress to address the issue nationally.  The Senate has passed legislation, but the House has yet to act