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Gov. Phil Scott announced Monday that the state has pushed back tax deadlines for businesses and individual Vermonters, in an effort to provide economic relief during the COVID-19 pandemic.
The Scott administration said in a news release that businesses struggling during the outbreak would not be penalized for failing to pay meals and rooms or sales and use tax “until further notice.”
Businesses that are “unable to meet” March 25 and April 25 filing deadlines for remitting the taxes will not be charged penalties or interest.
“Our local businesses are facing serious economic and logistical challenges and the Administration will do all it can to help them get back on their feet and operational as soon as possible,” Secretary of Administration Susanne Young said in a statement.
In addition, the governor’s office said Vermonters would not be penalized for filing late income taxes or corporate income taxes until July 15 — three months after the typical deadline. The tax department also said it wouldn’t be issuing penalties for those who file late homestead declarations, property tax credit claims, or fiduciary income taxes until July 15.
Because the federal government pushed back its personal income or corporate income tax filing deadlines to July 15 last week, the state was required to follow suit, according to Vermont Tax Commissioner Craig Bolio.
But the state was able to exercise its own discretion in delaying the penalties and interest for rooms and meals and sales and use taxes. Bolio said that the decision allows businesses to “focus on more immediate concerns for their business.”
“In essence, we’re just trying to do everything we can to provide some relief in these unprecedented times,” Bolio said.
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Restaurant and bar owners have pushed hard for tax relief since Scott ordered all restaurants and bars to close all dine-in service as of March 17. Many restaurants continued offering takeout and delivery service for several days before finding that they weren’t seeing enough business to make it worthwhile.
Vermont restaurant and bar owners quickly banded together last week on an effort they called “Don’t 86 us,” referring to the state’s 9% rooms and meals tax.
While they sought a delay in tax payments, they’re also asking for total abatement of the tax, a step that would require the approval of lawmakers.
“All of them are facing these cash flow and liquidity pressures, and they have the rooms and meals tax coming down the road with payroll they’re trying to make, rent, utilities,” said Austin Davis, government affairs director for the Lake Champlain Chamber of Commerce. “A lot of them are counting on next week’s money to pay next week’s bills.”
In a letter to the governor last week, Betsy Bishop, the president of the Vermont Chamber of Commerce, requested that abatement. The tax had become due for restaurants in February and March.
“They need your support and this is the best way to invest in these Vermonters to ensure that they have a chance of re-opening in the future and hiring back their staff, and pay their expenses which continue to mount,” Bishop wrote.
Bolio noted that neither the tax department nor the governor have the authority to unilaterally abate or waive the rooms and meals or sales and use taxes, which are collected by the businesses from customers before they are remitted to the state.
Jed Davis, who owns The Farmhouse Group of four restaurants and a catering service, said Monday that he welcomed the move to delay tax payments.
“What we’re learning is that the state and our local municipalities get the message, and they really want to work with us,” he said. “There are going to be a variety of asks from restaurant owners that are very much needs-based, so just seeing the willingness from the state level to hear us out is very encouraging.”
Davis plans to keep advocating for tax abatement. He said he knows of restaurants that have closed in the last few days that will probably never reopen. He expects to see more of that as rents come due.
“I just can’t fathom how devastating it would be to Vermont restaurant owners if personal guarantees start to kick in on leases,” he said. “It’s a low-margin business, and in terms of the annual cash flow for restaurants — other than ski area restaurants — this is the worst time of year from a cash flow perspective.”
Editor’s note: This story was updated on March 25 to include that the state will not issue penalties for late homestead declarations, property tax credit claims, or fiduciary income taxes.
Correction: A earlier headline misstated that Scott was temporarily halting the rooms and meals tax.
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