32 V.S.A. § 7473 — Allocation of payments

(a) Any payment received by the Commissioner from any taxpayer with respect to a tax liability
of the taxpayer may be applied to any tax liability in the following order of priority,
notwithstanding any direction by the taxpayer to the contrary:
(1) first, against any portion of any tax liability initially incurred with respect to
a preceding taxable year, with the portion incurred with respect to the earliest preceding
taxable year to be satisfied before any portion incurred with respect to any succeeding
taxable year; and
(2) next, against any portion of any tax liability incurred with respect to the current
taxable year.
(b) As to each portion, the payment shall be applied as follows:
(1) first, to the amount of any interest;
(2) next, to the amount of any penalty;
(3) next, to the amount of any fee; and
(4) next, to the amount of any unpaid tax, incurred with respect to the taxable year. (