32 V.S.A. § 5847 — Withholding on sales or exchanges of real estate

(a) Except as otherwise provided in this section, in the case of any sale or exchange
of real property located in Vermont by a nonresident of Vermont, the transferee shall
be required to withhold and transmit to the Commissioner within 30 days of such sale
or transfer, a withholding tax equal to 2 1/2 percent of the consideration paid for
the transfer. Any transferee who fails to withhold such amount shall be personally
liable for the amount of such tax.
(b) Subject to subsection (d) of this section, no person shall be required to withhold
any amount under subsection (a) of this section if:
(1) the transferor furnishes to the transferee a certificate by the transferor stating,
under penalty of perjury, the transferor’s Social Security number and the fact that
the transferor is a Vermont resident; or
(2) the transferor or transferee has received a certificate from the Commissioner stating
that:
(A) no tax is due on the gain from that transfer; or
(B) the transferor or transferee has satisfied the transferor’s tax liability or has provided
adequate security to cover such liability; or
(3) the transferor is a mortgagor conveying the mortgaged property to a mortgagee in foreclosure,
or in a transfer in lieu of foreclosure, with no additional consideration.
(c) At the request of the transferor or transferee, the Commissioner may issue the certificate
referred to in subdivision (b)(2) of this section or a certificate prescribing a reduced
amount to be withheld under this section if the Commissioner determines that such
reduced amount will not jeopardize the collection of the tax imposed by this chapter
and the transferor is in good standing with the Department of Taxes with respect to
any and all taxes. For purposes of this section, a transferor is in good standing
with respect to any and all taxes if:
(1) all returns due from the transferor for any and all taxes have been filed; and
(2) no taxes are due and payable, except those on appeal.
(d) If a transferee has actual knowledge that a certificate furnished under subsection
(b) of this section is false and the transferee fails to withhold the prescribed amount,
the transferee shall be liable for an amount equal to the amount that should have
been withheld together with penalty and interest as provided by this title.
(e) As used in this section “nonresident” of Vermont shall include individuals, trusts,
partnerships, and corporations, but not estates. A nonresident individual is an individual
who is domiciled outside Vermont at the time of closing. A nonresident trust is a
trust that, at the time of closing, does not qualify for Vermont residency as defined
in subdivision 5811(11) of this title. A nonresident partnership is a partnership, the controlling interest in which is
held by nonresidents. A nonresident corporation, other than a Subchapter S corporation,
is a corporation that is incorporated outside Vermont other than a corporation that
has its principal place of business in Vermont and does no business in its state of
incorporation. A nonresident Subchapter S corporation is a Subchapter S corporation
the controlling interest in which is held by nonresidents. A nonresident limited liability
company is a limited liability company the controlling interest in which is held by
nonresidents.
(f) The amount withheld pursuant to this section shall be deemed to be a payment against
the tax imposed by this chapter on income received by the seller.
(g) The Commissioner shall, by rule, establish a procedure by which a seller may apply
for an early refund of the tax withheld when the seller establishes that no tax under
this chapter will be owed or that a tax less than the amount withheld will be owed.
The Commissioner shall, by rule, establish methods by which nonresident transferors
may provide security in lieu of withholding.
(h) In the case of an installment sale, the seller may elect for Vermont purposes to report
the entire gain in the year of the sale and to pay a tax equal to six percent of that
gain. If the seller does not make this election, the real estate withholding will
be retained by the Department and applied as a credit against the seller’s tax liability
in each year that an installment is received. (