Tax forms and a calculator on a desk, Vermont Remote Seller Sales Tax

Vermont Remote Seller Sales Tax: $100,000 or 200 Transactions, Marketplace Facilitators and Use Tax

Vermont Remote Seller Sales Tax: $100,000 or 200 Transactions, Marketplace Facilitators and Use Tax

Selling into Vermont from another state raises a simple question with a more complicated answer: when do you have to collect Vermont sales tax? For most remote sellers, the answer depends on two numbers: $100,000 in sales or 200 individual transactions. Cross either one and you must register and collect. Stay below both and you still have obligations, and Vermont buyers may owe use tax on purchases where no Vermont tax was charged. This guide covers each piece in the order you are likely to need it.

This is informational content, not legal or tax advice. Thresholds, rates and local option lists change. Confirm current requirements with the Vermont Department of Taxes, and talk to a CPA or attorney if your sales cross state lines in complicated ways or involve unusual products.

The two thresholds that trigger registration

Vermont requires an out-of-state vendor to register and collect Vermont sales tax if it made sales of at least $100,000, or at least 200 individual transactions, in the twelve-month period preceding the monthly period being tested. The rule comes from Act 134 of 2016 and appears at 32 V.S.A. 9701(9)(F). The lookback is the preceding twelve months, not the prior calendar year, so you need to track sales on a rolling basis.

Either number is enough. A seller with $40,000 in sales spread across 900 small orders crosses the transaction test. A seller with 30 large orders totaling $150,000 crosses the dollar test. Track both figures every month, because a shop with many small orders can cross the transaction count long before its revenue looks large.

The thresholds apply to out-of-state vendors. You do not need a Vermont office, employees or inventory to hit them. Once you cross a threshold, register through the Department of Taxes at https://tax.vermont.gov/business/register, which uses the myVTax system.

Registering for sales tax does not create a general business license. Vermont has no general statewide business license. The sales tax registration gives you a business tax account with the Department of Taxes, and any licenses for your specific trade come separately.

Marketplace sellers face the same two tests

If you sell through an online marketplace such as Etsy, eBay or Amazon, Vermont treats you as a marketplace seller. Marketplace sellers meet the same two thresholds, $100,000 or 200 transactions in the preceding twelve months, under 32 V.S.A. 9701(9)(J) and (K). Your count matters even when a platform handles some of the paperwork, because your own sales through other channels count toward the thresholds.

How marketplace facilitators change the picture

A marketplace facilitator is the platform that brings buyers and sellers together and processes the sale. Since June 1, 2019, a marketplace facilitator must collect and remit Vermont sales tax on sales made through its marketplace on behalf of the sellers it hosts. For those transactions, the platform does the collecting and remitting.

That does not end your responsibilities. Sales you make outside the platform, such as direct orders from your own website or a trade show, still fall under your own collection duty. Confirm with the Department of Taxes how marketplace collections affect your own filings, and keep records that show which sales the platform handled.

Your rate: 6% state tax plus local option tax

The Vermont state sales tax rate is 6%. On top of that, a 1% local option tax applies by destination in the 37 active towns. Destination means the buyer's delivery address controls which local rate applies, not your business address.

Out-of-state vendors that collect Vermont tax must also collect the local option tax on sales to buyers in those towns. You do not need a second registration to do so. Because the list of active towns can change, check the current list with the Department of Taxes before you set up your checkout rates.

Sellers below the threshold: notice and reporting duties

If your Vermont sales stay under both thresholds and you do not collect Vermont tax, you still have obligations under 32 V.S.A. 9712. You must give Vermont buyers a transactional notice explaining that tax may be owed on their purchase. You must also provide Vermont buyers with annual purchase summaries.

If your Vermont sales reach $100,000, you must also send the Department of Taxes an annual customer report. Many sellers discover this requirement late, so set up a reminder at the start of each year to review your Vermont sales totals and calendar the report.

Vermont use tax explained

Use tax is the companion to sales tax. It applies when Vermont sales tax was not collected on a taxable purchase. The most common examples are a Vermont buyer who orders from an online vendor that does not collect Vermont tax, and a Vermont buyer who purchases goods in New Hampshire, where there is no sales tax.

Use tax also applies when a business moves inventory into its own business use. If you buy goods for resale and then take some of them out of inventory to use in your operations, use tax is due on that conversion. Keep receipts and purchase records for every item where Vermont tax was not charged, so you can calculate what you owe.

Use tax is not subject to the local option tax. The local rate applies to taxable sales collected at the point of sale, not to use tax on purchases. Confirm with the Department of Taxes how and where to report use tax on your return, since the reporting path depends on your registration type.

What Vermont taxes, and what it does not

Vermont's sales tax reaches goods and a short list of other items: utilities, telecommunications, admissions, specified digital products and, since July 1, 2024, prewritten software, including software accessed remotely. Vermont does not tax most services. A remote seller of services alone usually has little or nothing to collect.

The service gap is significant. Labor by handymen, lawn care services, towing companies and junk haulers is not taxed. Contractors pay tax on the materials they buy and do not charge it to customers. If your business is primarily labor, your sales tax duties may be much lighter than your gross revenue suggests, but any sale of taxable goods or software still counts toward the thresholds.

Food, catering and lodging fall under a separate tax

Prepared food, coffee, bakery items eaten on the spot and catering fall under Vermont's separate 9% meals and rooms tax, not the general sales tax. Alcohol served through those channels is taxed at 10%. Fifty towns add a 1% local option tax on top of the meals and rooms tax.

Short-term rentals owe the 9% rooms tax plus a 3% surcharge. If your remote business involves food, catering or short-term lodging in Vermont, register for the meals and rooms side as well as the sales side, and confirm the local option details for each town with the Department of Taxes.

New Hampshire and the border effect

New Hampshire has no sales tax. That creates a border effect for Upper Valley retailers, many of whom compete with stores just across the river. It also creates a use tax issue for Vermont residents. A Vermont buyer who purchases goods in New Hampshire without paying Vermont tax owes Vermont use tax on that purchase.

Exemption certificates: Form S-3 and Form F0003

The resale exemption depends on Form S-3, which the buyer gives the seller. The buyer's sales tax account number does not establish the exemption on its own. If you sell to a Vermont reseller, collect a properly completed Form S-3 before you leave the sale untaxed.

Vermont joined the Streamlined Sales Tax Agreement in 2007. Form F0003 is the Streamlined exemption certificate. Confirm with the Department of Taxes which certificates it will accept in place of a Vermont form, and keep certificates on file for every tax-free sale.

Steps to take now

  1. Track Vermont sales dollars and transaction counts every month, looking back at the preceding twelve months each time.
  2. If you cross either threshold, register at https://tax.vermont.gov/business/register through myVTax.
  3. After registration, collect 6% state tax plus the 1% local option tax by destination in the 37 active towns, and confirm with the Department of Taxes when collection must begin.
  4. If you sell through a marketplace, confirm what the facilitator collects for your sales and what remains your responsibility.
  5. If you stay below both thresholds, give Vermont buyers the transactional notice and annual purchase summaries required by 32 V.S.A. 9712.
  6. If Vermont sales reach $100,000, send the Department of Taxes the annual customer report.
  7. Keep purchase records for any Vermont use tax you owe, and collect Form S-3 for every resale transaction.
  8. Ask a CPA to review your multistate exposure once a year, especially if your sales are growing quickly.

Official Vermont resources

Disclaimer: This article is informational content, not legal or tax advice. Thresholds, rates, local option lists and filing procedures can change. Verify current requirements with the Vermont Department of Taxes, and consult a qualified CPA or attorney before making decisions about your Vermont sales tax obligations.

Keep exploring: related Vermont guides