MONTPELIER — Vermont Gov. Phil Scott is among the 20,000 Vermonters to receive a notice from the Department of Taxes warning that they may owe the state money from the oft-ignored use tax.
Rebecca Kelley, the Republican governor’s spokeswoman, confirmed to the Vermont Press Bureau Thursday that Scott recently received the letter. The state’s Tax Department sent the notices to thousands of Vermonters hoping to boost compliance with the 6 percent tax due on online and out-of-state purchases that were not subject to the state’s sales tax at the time of purchase.
“He did receive one of the use tax letters from the Tax Department,” she said. “It shows you that there was no bias in who the letters were sent to.”
The governor, Kelley said, does not believe he owes any outstanding use tax.
“His taxes are filed each year by an accountant. So, to his understanding, he hasn’t owed use tax in the past. He has shared the letter with the accountant to make sure that is the case,” Kelley said.
The Tax Department said the letters are part of an education campaign and “illustrate an individual’s history of paying use tax” and informs people how to determine if they owe use tax from the last three years. It also explains that an estimated tax can be paid based on income.
Only about 10 percent of Vermonters pay the use tax when filing their annual income tax returns, according to the department.
Lawmakers tasked the department with finding an additional $3.2 million in revenue in the recent legislative session. About $1.8 million is expected to be generated from better compliance with the use tax.
Kelley said the letters were not sent out as a threat. Rather, they are intended to educate Vermonters about when they owe the tax. She said the governor’s office has asked the Tax Department to continue its efforts to make it clear that the letters are intended to educate.
“We have looked at the letters and worked with the Tax Department to ensure that it’s very clear that this is an educational campaign, not an audit,” she said. “We did talk with the tax department about putting out some additional information.”
Tax Commission Kaj Samsom said the department cannot explain how recipients were chosen without revealing confidential information. He said the criteria includes use tax payment history, income, demographics, geography and other factors.
“We’re really boxed in to not talk about anything with specificity,” he said.
Those receiving the letter should not fear that the Tax Department has information that they owe use tax, Samsom said.
“There was nothing that we knew besides the use tax payment history that is disclosed to each person that received the letter,” Samsom said. “There is nothing that we know about … whether they have a use tax liability and haven’t reported it.”
Larger online retailers will be required to report tax information to the state beginning next year, however. Samsom said the Tax Department has not yet determined how, or if, it will use that information to force compliance.
“That will be in the mix with every other area on the compliance end. We have to evaluate the cost-benefit of going after something,” he said. “I can’t predict where that will fall as far as a priority for the compliance division. We don’t even quite know how much information we’ll get or what it will look like. We’ll find out in 2018.”
“We have very limited compliance resources so we want to make sure that we’re fairly distributing that strategically,” Samsom added.