Vermont has a structured taxation system that applies to both corporations and business entities like S corporations, partnerships, and LLCs. Each type of entity has distinct filing requirements, deadlines, and penalties for non-compliance. Corporate taxpayers must also meet obligations for estimated payments, while business entities are subject to Vermont’s Business Entity Tax.
This blog explains Vermont’s taxation framework, including the rules for Corporate Income Tax and Business Entity Tax. It covers who needs to file, the forms required, due dates, estimated tax obligations, and the penalties and interest applied to late filings or payments.
Corporate Income Tax
A C corporation in Vermont must file a corporate income tax return if any of these conditions apply:
- The corporation was incorporated under Vermont law
- The corporation received income allocable or apportioned to Vermont, including income as a shareholder, partner, or member
- The corporation has an open corporate income tax account
If a corporation wants to maintain its account even without activity or liability, it must file a No Vermont Activity return, also called a no tax due return.
Due Date: C corporations must file their return and pay taxes by the 15th day of the fourth month after the end of the reporting year.
Filing Requirements: Corporations file using Form CO-411, Vermont Corporate Tax Return.
Extension of Time to File: Corporations may request a 30-day extension using Form BA-403. This extension only applies to filing, not payment. Taxes are still due by the original deadline.
Estimated Tax Payment
C corporations anticipating a Vermont tax liability over USD 500 must make quarterly estimated payments. These are due on the 15th day of the 4th, 6th, 9th, and 12th months of the taxable year.
Payments must be submitted with Form CO-414, Corporate Estimated Tax Payment Voucher.
Interest and Penalty Rules:
- A USD 50 penalty applies if a return is filed more than 60 days late.
- Late tax payments incur a 1% penalty per month of the outstanding balance.
- If estimated payments are missed, Vermont imposes 4% interest plus a 1% late payment penalty per month, capped at 25% of the unpaid amount.
These rules ensure that corporations maintain compliance even in years when they expect smaller liabilities. Vermont’s system ties penalties to both late filing and late payment, which makes timely reporting and payment equally important.
Business Entity Tax
Vermont requires S corporations, partnerships, and LLCs — collectively known as business entities — to file a Business Entity Tax Return if they engage in any activity in the state. This includes entities whose income flows through to owners.
Due Date: Business entities must file their return by the 15th day of the third month following the end of the reporting year.
Filing Requirements: Entities must file Form BI-471, Vermont Business Entity Tax Return.
Extension of Time to File: Entities may request a 30-day filing extension using Form BA-403. Like with corporations, this extension applies only to filing, not to payment.
Estimated Tax Payments:
Business entities must make quarterly estimated tax payments on the following schedule:
- 15th day of the 4th month
- 15th day of the 6th month
- 15th day of the 9th month
- 15th day of the 1st month of the following year
Estimated payments are made using Form CO-414, Corporate Estimated Tax Payment Voucher.
Interest and Penalty Rules:
- A USD 50 late filing penalty applies if the return is not filed within 60 days after the due date.
- Late payments incur a 5% penalty per month, up to a maximum of 25% of the outstanding liability.
- For calendar year 2023, the interest rate on unpaid taxes is 4%.
Conclusion
Vermont’s tax system clearly distinguishes between corporations and business entities, but both groups face strict deadlines and penalties if they fail to comply.
- C corporations must file corporate income tax returns, make quarterly estimated payments if liability exceeds USD 500, and pay close attention to penalties tied to both late filing and payment.
- Business entities like S corporations, partnerships, and LLCs must file the Business Entity Tax Return, meet quarterly estimated payment requirements, and comply with interest and penalty provisions.
For both categories, Vermont allows filing extensions but does not extend payment deadlines. This means businesses need to carefully manage cash flow and filing schedules to avoid penalties. By meeting deadlines and paying estimated amounts on time, businesses can stay compliant and avoid unnecessary costs.
