United States

Vermont continues the assault on Quill

Enacts expanded sales tax nexus and reporting requirements


On May 25, 2016, Vermont Gov. Peter Shumlin signed House Bill 873, requiring certain remote sellers with no physical presence in the state to collect and remit sales tax on sales to Vermont customers. House Bill 873 also imposes Colorado-style remote seller reporting requirements on ‘noncollecting vendor’ sales to in-state customers.

Expanded nexus to remote sellers

House Bill 873 amends the definition of ‘vendor’ for Vermont sales tax purposes to include any remote seller that is making sales of tangible personal property from outside the state to a destination within the state and both (1) engages in regular solicitations of sales in the state, and (2) has either made sales from outside the state to destinations within the state of at least $100,000, or totaling at least 200 individual sales transactions, during the previous 12-month period. This amendment results in a sales and use tax collection and remittance responsibility for remote sellers based solely on the total amount or number of sales into Vermont, and not based on the physical presence standard set forth in the United States Supreme Court’s 1992 decision in Quill Corp. v. North Dakota.

The expanded economic nexus requirements are almost identical to those enacted by South Dakota on March 22, 2016. The South Dakota legislation is currently enjoined pending the outcome of litigation over the new law. For more information regarding the South Dakota legislation, please read our article, South Dakota takes aim at Quill. Vermont becomes the most recent state to enact sales tax economic nexus legislation, and in doing so, continues state legislative challenges to Quill’s physical presence standard.

Remote seller reporting requirements

House Bill 873 also imposes various reporting requirements on noncollecting vendors, (i.e., remote sellers who do not voluntarily collect and remit tax or comply with the state’s sales tax economic nexus rules), to provide notification to their customers that Vermont sales or use tax is due on nonexempt purchases made from the vendor. Failure to provide the notification will result in a $5 penalty per failure, unless reasonable cause can be demonstrated. Noncollecting vendors must also provide their customers who make over $500 of purchases in the calendar year a notice of the total amount purchased from the noncollecting vendor. A $10 penalty per instance is imposed on the failure to send the notification unless reasonable cause can be demonstrated.

Effective date

The expanded nexus requirements take effect on the later of July 1, 2017 or beginning on the first day of the first quarter after a controlling court decision or federal legislation abrogates the physical presence requirement of Quill v. North Dakota, 504 U.S. 298 (1992). The reporting requirements are effective on the earlier of July 1, 2017, or beginning on the first day of the first quarter after the sales and use tax reporting requirements challenged in Direct Marketing Assoc. v. Brohl, 814 F.3d 1129 (10th Cir. 2016) are implemented by the state of Colorado. Those requirements are currently enjoined pending the outcome of the litigation. The United States Court of Appeals for the Tenth Circuit denied Direct Marketing’s rehearing request on April 1, 2016, beginning a 90-day period for Direct Marketing to appeal to the U.S. Supreme Court. For more information regarding the Direct Marketing Association case, please read our article, DMA's Colorado sales and use tax information reporting saga continues.


Remote sellers making sales into Vermont should review whether House Bill 873 requires sales and use tax collection and remittance or reporting as a result of those sales. Remote sellers should also follow the South Dakota and Colorado litigation, as decisions in these cases will have a significant impact on the effective date and enforceability of the nexus and reporting provisions implemented by House Bill 873.


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