Vermont OKs the Creation of Virtual Corporations
Posted by: AnderL
Date: Thursday, June 19, 2008 9:33:52 AM
#msg-30115259
OT sort of - Vermont INC.
Expect a slue of penny stocks and shell companies to come out of the wood work soon using Vermont as their base of operations. Seems all you need is an email address to incorporate. So buyer beware.
http://valleywag.com/5017746/vermonts-new-liberal-incorporation-laws-make-delawares-look-draconian
Delaware has long been the state of convenience for filing incorporation papers. But those nannies require you to have a physical address and all sorts of trappings of the 19th century. Thanks to law professor David Johnson, who just happens to be developing software to help manage a company with principles distributed remotely, a new law in Vermont will allow you to form limited liability corporations with nothing but a few email addresses. No opportunity for fraud there. No siree.
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Vermont OKs the Creation of Virtual Corporations
Ah Vermont, that lovely New England state known for its maple syrup, Ben & Jerry’s ice cream…and now, limited liability corporations that only exist online.
On June 6th, Gov. Jim Douglas signed an inauspicious-sounding bill entitled “H.0888, Miscellaneous Tax Documents” that could revolutionize the way startup companies are formed and run. As New York Law School professor David Johnson explained to me, up until now, U.S. law required LLCs to have physical headquarters, in-person board meetings and other regulations that have little relevance in the digital age.
No longer. Under the new law, for example, a board meeting may be conducted “in person or through the use of [an] electronic or telecommunications medium.” A “‘virtual company’ will be, as a legal matter, a Vermont limited liability company,” said Johnson. And other states are required to recognize the corporation as a legitimate LLC. So while in the past many companies registered in Delaware to take advantage of that state’s business-friendly policies, with this law, Internet-driven startups may find Vermont even more ideal.
Johnson was instrumental to crafting the bill’s language; he, along with his NYLS students and a couple of professors at Vermont Law School, spent the last two years putting it together. He foresees virtual companies launched for countless reasons, such as the production of software or publications written by people across the country, even for corporations that exist only in Second Life.
As you may have guessed, this isn’t just an academic exercise for Johnson; he’s also developing software to manage virtual corporations through NYLS’ DoTank project. Since word of the Vermont bill’s passing got out, he said, “I’ve had two people beg me to be the first to get on the list” to start filing virtual incorporation papers. Indeed, it’s easy to see this becoming standard practice in coming years, with traditional office buildings being abandoned for dynamic companies that exist wherever its employees happen to crack open their computers.
http://gigaom.com/2008/06/17/vermont-oks-the-creation-of-virtual-corporations/
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The Vermont Legislative
Bill Tracking System
Current Status of a Specific Bill or Resolution
2007-2008 Legislative Session
General:
Bill: H.0888
Title: MISCELLANEOUS TAX AMENDMENTS
Currently: Enacted Law
Sponsor(s): H Ways & Means
Request No: 08-0847
Drafter: Bergquist
Comments:
House Status:
Current Status: SIGNED BY GOVERNOR
Status Date: 06/06/2008
Date
Action
Jrn. Page
1st Reading: 03/21/2008 653
2nd Reading: 03/25/2008 743
3rd Reading: 03/27/2008 PASSED 787
http://www.leg.state.vt.us/database/status/summary.cfm?Bill=H%2E0888&Session=2008
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ACT OF THE GENERAL ASSEMBLY 2007-2008
NO. 190. AN ACT RELATING TO MISCELLANEOUS TAX AMENDMENTS.
(H.888)
It is hereby enacted by the General Assembly of the State of Vermont:
* * * Service of Process Costs * * *
Sec. 1. 32 V.S.A. § 3262 is amended to read:
§ 3262. Lien Fees; service of process costs
Notwithstanding section 502 of this title, the commissioner may charge against any collection of any liability any related lien fees specified in subdivision 1671(a)(6) or subsection 1671(c) of this title and any related service of process costs awarded to the department and paid by the commissioner. Fees and costs collected under this section shall be credited to a special fund established and managed pursuant to subchapter 5 of chapter 7 of this title, and shall be available as payment for the fees of the clerk of the municipality and the costs of service.
* * * Use Value Appraisal * * *
Sec. 2. 32 V.S.A. § 3756 is amended to read:
§ 3756. Qualification for use value appraisal
* * *
(b) Before January 15, the director shall submit to the assessing officials a list including a description of each parcel of land and any farm buildings for which an application has been received and preliminarily approved for that year. The listers shall review the list, and shall notify the director before February 15 if there is any reason why any property on the list should not be eligible for use value appraisal.
* * *
(f) Each year, prior to March 15, the director shall determine whether previously classified property is still eligible for use value appraisal and whether the amount of the previous appraisal is still valid. If the director determines that previously classified property is no longer eligible, or that the property has undergone a change in use such that the use change tax may be levied, in accordance with section 3757 of this chapter, or that the use value appraisal should be fixed at a different amount than the previous year, he or she shall thereafter notify the property owner of that determination by delivery of the notification to him or her in person or by mailing such notification to his or her last and usual place of abode. If a change in use which would render the parcel ineligible occurs between March 1 and April 1, the director shall notify the owner by April 15.
* * *
(h) By April March 15, the director shall mail to each municipality a list of property in the municipality which is to be taxed based on its use value appraisal. The list shall include the owners’ names, a grand list number or description of each parcel of land to be appraised at use value, the acreage to be taxed on the basis of use value, the use values to be used for land, and the number and type of farm buildings to be appraised by the assessing officials at use value. The assessing officials shall determine the listed value of the land to be taxed at use value and its estimated fair market value, and fill in these values and the difference between them on the form. This form shall be used by the treasurer or the collector of current taxes to make up tax bills such that the owner is billed only for taxes due on his or her property not enrolled in the program, plus taxes due on the use value of property enrolled in the program. The assessing officials shall submit the completed form to the director by July 5.
* * *
Sec. 3. 32 V.S.A. § 3757(e)(3) is amended to read:
(3) of any transfer of ownership. A transfer of ownership, alone, will not affect eligibility of the parcel, and no new maps will be required solely because of a transfer, but failure to provide maps, a new application, or transfer information to the division of property valuation and review within 30 days of a request being sent by certified mail by the director will result in removal of the parcel from the program.
Sec. 4. 32 V.S.A. § 3758(a) is amended to read:
(a) Whenever the director denies in whole or in part any application for classification as agricultural land or managed forest land or farm buildings, or grants a different classification than that applied for, or the director or assessing officials fix an erroneous a use value appraisal, or determine that previously classified property is no longer eligible or that the property has undergone a change in use, the aggrieved owner may appeal the decision of the director to the director within 30 days of the decision, and from there in the same manner and under the same procedures as an appeal from a decision of a board of civil authority, as set forth in subchapter 2 of chapter 131 of this title; and may appeal the decision of the assessing officials in the same manner as an appeal of a grand list valuation.
* * * FY09 Education Property Tax Rates * * *
Sec. 5. FISCAL YEAR 2009 REDUCTION OF EDUCATION PROPERTY TAX RATE ADJUSTMENTS
(a) For fiscal year 2009 only, the education property tax imposed under subsection 5402(a) of Title 32 shall be reduced from the rate of $1.59 and $1.10 and shall instead be at the following rates:
(1) the tax rate for nonresidential property shall be $1.36 per $100.00; and
(2) the tax rate for homestead property shall be $0.87 multiplied by the district spending adjustment for the municipality, per $100.00
of equalized property value as most recently determined under section 5405 of Title 32.
(b) For claims filed in 2009 only, “applicable percentage” in subdivision 6066(a)(2) of Title 32 shall be reduced from 2.0 percent and instead shall be 1.80 percent multiplied by the fiscal year 2009 district spending adjustment for the municipality in which the homestead residence is located; but in no event shall the applicable percentage be less than 1.80 percent.
* * * Education Property Tax * * *
Sec. 6. 32 V.S.A. § 3843 is amended to read:
§ 3843. Housing projects for low and moderate income occupants
(a) The selectboard of a town, the board of aldermen or city council of a city, or the supervisor of an unorganized town or gore, may enter into an agreement on behalf of the municipality with a person who owns or intends to acquire or seeks to construct a federally subsidized, low or moderate income housing project, for payments by such person to the municipality in lieu of all taxes which would otherwise be assessed against the property, where federal assistance would not be available in the absence of such an agreement. An agreement entered into under this section shall be in writing and shall be executed by the person owning or intending to acquire or to construct the project, and by the selectboard or aldermen, or in the case of an unorganized town or gore by the supervisor, on behalf of the municipality. Property which is subject to an agreement entered into under this section shall be included in the equalized grand list of the municipality under chapter 123 of Title 16 in an amount which at the tax rate in effect in the municipality would, if the property were subject to taxation, yield a tax equal to the amount of the payments in lieu of taxes provided for under the agreement. The amount of the payments and the date or dates when the payments are to be made shall be as specified in the agreement, and the term of the agreement shall not exceed 40 years, but otherwise the same may contain any provisions not inconsistent with this section A municipality may vote at any regular or special meeting to exempt, in full or in part, for a term not to exceed 40 years, a federally subsidized low or moderate income housing project from education property tax if federal assistance would not be available in the absence of such an exemption.
(b) An agreement entered into under this section shall be filed in the office of the clerk of the town or city executing the same within ten days following its execution or in the case of an agreement executed by the supervisor of an unorganized town or gore, in the county clerk’s office. The text of the agreement shall also be posted in at least five conspicuous places within the municipality and published in a newspaper circulating in the municipality within ten days following its execution.
(c) The agreement shall become effective 20 days following its execution unless a petition is filed for a referendum pursuant to section 3844 of this title in which case it shall become effective pursuant to the provisions of section 3844 of this title.
Sec. 7. REPEAL
32 V.S.A. § 3844 (allowing permissive referendum to disapprove action by the town’s selectboard under 32 V.S.A. § 3843, “Housing projects for low and moderate income occupants”) is repealed as of May 1, 2008.
Sec. 8. TRANSITION RULE
A federally subsidized low or moderate income housing project agreement entered into under 32 V.S.A. § 3843 prior to April 1, 2008, shall continue to be exempt from property tax to the extent and for the period provided for in the agreement; and shall affect the education property tax grand list and reduce the total education property tax due to the state from that municipality; provided, however, that beginning with fiscal year 2010, the agreement shall not affect the education property tax grand list nor reduce the total education property tax due to the state from that municipality, and that agreement shall be subject to the provisions of 32 V.S.A. § 5404a(d) for assessment of a separate tax on the municipality’s municipal grand list.
Sec. 9. REPEAL
32 V.S.A. § 4186 (refunds based on false or incorrect abstracts) is repealed.
Sec. 10. 32 V.S.A. § 5402(b)(1) is amended to read:
(b) Calculation of education tax.
(1) The commissioner of taxes shall determine for each municipality the education tax rates under subsection (a) of this section, divided by the municipality’s most recent common level of appraisal. The legislative body in each municipality shall then bill each property taxpayer at the homestead or nonresidential rate determined by the commissioner under this subdivision, multiplied by the education property tax grand list value of the property, properly classified as homestead or nonresidential property and without regard to any other tax classification of the property. Each homestead property tax bill shall include notice of the education spending per equalized pupil in the taxpayer’s district and its relation to the base education payment; and the effect of the education spending in the district upon the homestead tax rate and the applicable percentage for income sensitivity; and shall also include an insert supplied by the commissioner of taxes which explains the relationship of district education spending and the common level of appraisal to property tax rates. Tax bills shall show the tax due and the calculation of the rate determined under subsection (a) of this section, divided by the municipality’s most recent common level of appraisal, multiplied by the current grand list value of the property to be taxed. Each homestead property tax bill shall include a copy of the two page document attached to the May 11, 2007 memorandum from the speaker of the house to the commissioner of taxes, which shall be entitled “About Your 20XX Taxes ‘The more you spend the more you pay’,” updated annually for each town by the commissioner of taxes.
Sec. 11. 32 V.S.A. § 5402(c) is amended to read:
(c) The treasurer of each municipality shall by December 1 of the year in which the tax is levied and on June 1 of the following year pay to the state treasurer for deposit in the education fund one half of the municipality’s statewide nonresidential tax and one half of the municipality’s homestead education tax, as determined under subdivision (b)(1) of this section. The commissioner of education shall determine the municipality’s net nonresidential education tax payment, and its net homestead education tax payment to the state, and payment based on grand list information received by the commissioner no later than the March 15 prior to the June 1 net payment. Payment shall be accompanied by a return prescribed by the commissioner of education. The municipality may retain 0.225 of one percent of the total education tax collected, only upon timely remittance of net payment to the state treasurer. The municipality may also retain $15.00 for each late property tax adjustment claim filed after April 15 and before September 2, as notified by the department, for the cost of issuing a new property tax bill.
Sec. 12. 32 V.S.A. § 5410(h) is amended to read:
(h) The filing of a new or corrected declaration or rescission of an erroneous declaration, on or before September 1 of the property tax year, that is not reflected in the first education fund payment under 16 V.S.A. § 4028 for that fiscal year or in a municipality’s first payment to the education fund under subsection 5402(c) of this title for that fiscal year, shall be reflected in the final net payment to or from the education fund for that fiscal year. The municipality may retain one-eighth 0.225 of one percent of the tax collected. Any reduction in tax paid to a municipality due to a new, revised, or rescinded declaration shall be paid by the municipality to the taxpayer no later than May 15 of the fiscal year. No later than June 1, each municipality shall provide to the state treasurer a list of taxpayers who filed late or corrected declarations or rescinded declarations, the amount of the change in education tax, and the amount of any interest and penalty billed the taxpayer.
Sec. 13. 32 V.S.A. § 5412 is amended as follows:
§ 5412. Valuation appeals Reduction of listed value and recalculation of education tax liability
(a)(1) If a listed value is reduced as the result of an appeal or court action, and if the municipality files a written request with the commissioner within 30 days after the date of the settlement agreement, determination, or entry of the final order, or settlement agreement if the commissioner determines that the settlement value is the fair market value of the parcel, the commissioner shall recalculate the municipality’s education property tax liability for the year at issue, in accord with the reduced valuation, provided that:
(A) the reduction in valuation is the result of an appeal under chapter 131 of this title to the director of property valuation and review or to a court, with no further appeal available with regard to that valuation, or any judicial decision with no further right of appeal, or a settlement of either an appeal or court action if the commissioner determines that the settlement value is the fair market value of the parcel;
(B) the municipality notified the commissioner of the appeal or court action, in writing, within ten days after notice of the appeal was filed under section 4461 of this title or after the complaint was served; and
(C) as a result of the valuation reduction of the parcel, the value of the municipality’s grand list is reduced at least one percent.
(2) The municipality’s request shall include a copy of the agreement, determination or final order, and any other documentation necessary to show the existence of these conditions.
(b) To the extent that the municipality has paid that liability, the commissioner shall allow a credit for any reduction in education tax liability against the next ensuing year’s education tax liability or, at the request of the municipality, may refund to the municipality an amount equal to the reduction in education tax liability.
(c) If a listed value is increased as the result of an appeal under chapter 131 of this title or court action, whether adjudicated or settled and the commissioner determines that the settlement value is the fair market value of the parcel, with no further appeal available with regard to that valuation, the commissioner shall recalculate the municipality’s education property tax for each year at issue, in accord with the increased valuation, and shall assess the municipality for the additional tax at the same time the commissioner assesses the municipality’s education tax liability for the next ensuing year, unless the resulting assessment would be less than $300.00. Payment under this section shall be due with the municipality’s education tax liability for the next ensuing year.
(d) Recalculation of education property tax under this section shall have no effect other than to reimburse or assess a municipality for education property tax changes which result from property revaluation.
* * * Property Tax Adjustments * * *
Sec. 14. 32 V.S.A. § 6066a(c) is amended to read:
(c) The commissioner shall notify the municipality of any claim and refund amounts unresolved by September 15 at the time of final resolution, including adjudication if any; provided, however, that towns will not be notified of any additional adjustment amounts after December 31 of the claim year, and such amounts shall be paid to the claimant by the commissioner.
Sec. 15. 32 V.S.A. § 6066a(d) is amended to read:
(d) For late claims, filed after April 15, the property tax adjustment amount shall be reduced by $15.00, which shall be paid by the commissioner to the municipality for the cost of issuing a new property tax bill to the claimant.
Sec. 16. 32 V.S.A. § 6066a(f) is amended to read:
(f) Property tax bills.
(1) For amounts stated in the notice to towns on July 1, municipalities shall include on the homestead property tax bill notice to the taxpayer of the total amount allocated to payment of homestead education property tax liabilities and notice of the balance due. By a majority of those voting at an annual or special meeting called for that purpose, the voters of a municipality may elect to Municipalities shall apply the amount allocated under this chapter to current-year property taxes to in equal amounts to each of the taxpayers’ property tax installments in order or pro rata that include education taxes.
(2) For property tax adjustment amounts for which municipalities receive notice on or after September 15, municipalities shall issue a new homestead property tax bill with notice to the taxpayer of the total amount allocated to payment of homestead property tax liabilities and notice of the balance due.
(3) The property tax adjustment amount determined for the taxpayer shall be allocated first to current-year property tax on the homestead parcel, next to current-year homestead parcel penalties and interest, next to any prior year homestead parcel penalties and interest, and last to any prior year property tax on the homestead parcel. No adjustment shall be allocated to a property tax liability for any year after the year for which the claim or refund allocation was filed. If the property tax adjustment amount exceeds the amount allocated under this subsection, the municipality shall refund the excess to the taxpayer, without interest, within 20 days of the first date upon which taxes become due and payable or 20 days after notification by the commissioner of education, whichever is later. No municipal tax-reduction incentive for early payment of taxes shall apply to any amount allocated to the property tax bill under this chapter.
(4) If the property tax adjustment amount as described in subsection (b) of this section exceeds the property tax, penalties and interest, due for the current and all prior years, the municipality shall refund the excess to the taxpayer, without interest, within 20 days of the first date upon which taxes become due and payable or 20 days after notification by the commissioner of education, whichever is later.
Sec. 17. 32 V.S.A. § 6063 is amended to read:
§ 6063. CLAIM AS PERSONAL; ADJUSTMENT AMOUNT AT TIME OF
TRANSFER
(a) The right to file a claim under this chapter is personal to the claimant and shall not survive his or her death, but the right may be exercised on behalf of a claimant by his or her legal guardian or attorney-in-fact. When a claimant dies after having filed a timely claim, the property tax adjustment amount shall be credited to the homestead property tax liability of the claimant’s estate, as provided in section 6066a of this title.
(b) In case of sale or transfer of a residence, any property tax adjustment amounts related to that residence shall be allocated to the seller at closing unless the parties otherwise agree.
Sec. 18. REPEAL
32 V.S.A. § 6066(f) (proration of unadjusted property tax at time of sale) is repealed as of January 1, 2008.
* * * Capital Gains* * *
Sec. 19. 32 V.S.A. § 5811(21)(B) is amended to read:
(B) Decreased by the following items of income (to the extent such income is included in federal adjusted gross income):
(i) income from United States government obligations; and
(ii) 40 percent of adjusted net capital gain income as defined in Section 1(h) of the Internal Revenue Code, but the total amount of decrease under this subdivision (ii) shall not exceed 40 percent of federal taxable income.
* * * Refund Procedure * * *
Sec. 20. 32 V.S.A. § 3203 is amended to read:
§ 3203. Notice of deficiencies; assessment of penalties and interest; denial of refund
If the commissioner finds that any taxpayer has failed to discharge in full the amount of any tax liability incurred under this title, or has claimed a refund in error or that a penalty or interest should be assessed under it this title, the commissioner shall notify the taxpayer of the deficiency or denial of refund or assess the penalty or interest, as the case may be, by mail. The mailing of the notice shall be presumptive evidence of its receipt by the person to whom it is addressed. Any period of time which is determined under this chapter by the giving of notice shall commence to run from the date of mailing of the notice.
Sec. 21. 32 V.S.A. § 5882 is amended to read:
§ 5882. Time limitation on notices of deficiency and assessment of penalty and interest
(a) The commissioner may notify a taxpayer of a deficiency with respect to the payment of any tax liability, or assess a penalty or interest with respect thereto, in accordance with section 5881 3202 of this title, at any time within three years after the date that tax liability was originally required to be paid under this chapter.
(b) Notwithstanding subsection (a) of this section:
(1) If the taxpayer fails to file a proper return with respect to any tax liability at the time prescribed for its filing, the notification or assessment may be made at any time before the end of three years after the taxpayer files such a return.
(2) If the deficiency is caused by reason of fraud or the willful intent of the taxpayer to defeat or evade this chapter, the notification or assessment may be made at any time.
(3) If the notice of deficiency or assessment is founded upon an assertion or determination by the United States that the taxable income, or income tax liability, of the taxpayer under the laws of the United States is greater than the amount of the taxable income or income tax liability reported on any return of the taxpayer filed under the laws of the United States, the notification or assessment under section 5881 3203 of this title may be made within the time prescribed under subsection (a) of this section, or at any time before the expiration of six months after the date the commissioner is notified, in writing, by the taxpayer or by the United States of the federal assertion or determination, whichever period is the later to expire.
(4) If the taxpayer and commissioner agree, the notification or assessment may be made at any time before the date so agreed upon.
(5) If a person withholds tax under subchapter 4 of this chapter but under-reports the tax withheld by 20 percent or more, the notification or assessment may be made at any time before the expiration of six years from the date of the filing of such return.
(6) If the notice or deficiency is based upon a refund that was paid in error, the notification or assessment under section 3203 of this title may be made within the time prescribed under subsection (a) of this section or at any time before the expiration of one year after the date the refund was paid, whichever period is the later to expire.
Sec. 22. 32 V.S.A. § 5883 is amended to read:
§ 5883. Determination of deficiency, refund, penalty, or interest
Upon receipt of a notice of deficiency, of denial or reduction of a refund claim, or of assessment of penalty or interest under section 5881 3203 of this title, the taxpayer may, within 60 days after the date of mailing of the notice or assessment, petition the commissioner in writing for a determination of that deficiency, refund, or assessment. The commissioner shall thereafter grant a hearing upon the matter and notify the taxpayer in writing of his or her determination concerning the deficiency, penalty or interest.
Sec. 23. REPEAL
32 V.S.A. § 3802(10) (property tax exemption for Civil and Spanish American war veterans) is repealed.
* * * Tax Expenditures* * *
Sec. 24. 32 V.S.A. § 312(c) is added to read:
(c) Based on the information contained in the tax expenditure report, the commissioner shall recommend to the general assembly that any expenditure that has cost less than $50,000.00 or has been claimed by fewer than ten taxpayers in each of the three preceding years be repealed two years hence.
* * * Meals and Rooms Tax Petitions * * *
Sec. 25. 32 V.S.A. § 9243 is amended to read:
§ 9243. Returns and payment
(a) Where the meals and rooms tax liability under this chapter for the immediately preceding full calendar year has been (or would have been in cases when the business was not operating for the entire year) $500.00 or less, the gross receipts taxes imposed by this chapter shall be due and payable in quarterly installments on or before the twenty-fifth day of the calendar month succeeding the quarter ending the last day of March, June, September and December of each year. In all other cases, the gross receipts tax imposed by this chapter shall be due and payable monthly on or before the twenty-fifth (23rd of February) day of the month following the month for which the tax is due. The commissioner may authorize payment of the tax due by electronic funds transfer. The commissioner may require payment by electronic funds transfer from any taxpayer who is required by federal tax law to pay any federal tax in that manner, or from any taxpayer who has submitted to the tax department two or more protested or otherwise uncollectible checks with regard to any state tax payment in the prior two years. Each operator shall make out and sign under the pains and penalties of perjury a return for each quarter or month. The return shall be filed with the commissioner on a form prescribed by the commissioner. The commissioner shall distribute return forms to the operators, but no operator shall be excused from liability for failure to file a return or pay the tax because he has failed to receive a form. A remittance for the amount of taxes shall accompany each quarterly or monthly return. Returns shall be made on forms provided by the commissioner. Payment of taxes by electronic funds transfer does not affect the requirement to file returns.
(b) The commissioner may require returns and amended returns to be filed within 20 days after notice and to contain the information specified in the notice. Upon failure of a taxpayer to file any return required under this chapter within 20 days of the date of a notice to the taxpayer, the commissioner may petition a judge of the superior court in the county wherein the taxpayer resides or has a place of business (or, if the taxpayer neither resides nor has a place of business in this state, the commissioner may petition the Washington superior court), and upon the petition of the commissioner and a hearing, the judge shall issue a citation requiring the taxpayer (and, if the taxpayer is a corporation, any principal officer of such corporation) to file a proper return in accordance with this chapter, upon pain of contempt. The order of notice upon the petition shall be returnable not later than 20 days after the filing of the petition. The petition shall be heard and determined on the return day or on such day thereafter as the court shall fix, having regard to the speediest possible determination of the case consistent with the rights of the parties. The judgment shall include costs in favor of the prevailing party. The commissioner’s authority to petition under this subsection is in addition to the commissioner’s authority under subsection 9273 of this title to compute the tax liability of a taxpayer who fails to file a required return or files an incorrect or insufficient return.
* * * Annual Update of Links to Federal Law * * *
Sec. 26. 32 V.S.A. § 5824 is amended to read:
§ 5824. ADOPTION OF FEDERAL INCOME TAX LAWS
The statutes of the United States relating to the federal income tax, as in effect for taxable year 2006 2007, but without regard to federal income tax rates under Section 1 of the Internal Revenue Code, are hereby adopted for the purpose of computing the tax liability under this chapter.
Sec. 27. 32 V.S.A. § 7475 is amended to read:
§ 7475. ADOPTION OF FEDERAL ESTATE AND GIFT TAX LAWS
The laws of the United States, relating to federal estate and gift taxes as in effect on January 1, 2007 2008, are hereby adopted for the purpose of computing the tax liability under this chapter, except with the credit for state death taxes under Section 2011 and 2604 as in effect on January 1, 2001, of the Internal Revenue Code, and without any deduction for state death taxes under Section 2058 of the Internal Revenue Code.
* * * Vermont Employment Growth Incentive Grace Period * * *
Sec. 28. 32 V.S.A. § 5930b(c)(5) and (6) are amended to read:
(5) A business whose application is approved and, in the first award period year, fails to meet or exceed its payroll target and one out of two of its jobs and capital investment targets shall forfeit all authority to earn and claim incentives under this section. The department of taxes shall notify the Vermont economic progress council that the first year award period targets have not been met, and the council shall rescind the incentive authorization in its entirety.
(6) A business whose application is approved and, in the first, second, or third year of the award period, fails to meet or exceed its payroll target and one out of two of its jobs and capital investment targets may not claim incentives in that year. To the extent such business reaches its first, second, or third year award period targets within the succeeding two calendar year reporting periods immediately succeeding year one, two, or three of the award period, which ever is applicable, such business may claim incentives in five-year installments as provided in subdivisions (1) through (4) of this subsection. A business which fails to meet or exceed its payroll target and one of its two jobs and capital investment targets within this time frame shall forfeit all authority under this section to earn and claim incentives for award period year one, two, or three, as applicable, and any future award period years. The department of taxes shall notify the Vermont economic progress council that the first, second, or third year award period targets have not been met within the prescribed period, and the council shall rescind authority for the business to earn incentives for the activity in year one, two, or three, as applicable, and any future award period years.
* * * Wood Products Tax Credit * * *
Sec. 29. Sec. 9 of No. 212 of the Acts of the 2005 Adj. Sess. (2006) is amended to read:
Sec. 9. SUNSET
Sec. 2 of Act No. 2 of the Acts of 2005 is amended to read:
Sec. 2. EFFECTIVE DATE; SUNSET
Sec. 1 of this act (wood products manufacture tax credit) shall apply to taxable years beginning on or after July 1, 2005. 32 V.S.A. § 5930y is repealed July 1, 2008 2011, and no credit under that section shall be available for any taxable year beginning on or after July 1, 2008 2011.
Sec. 30. WOOD PRODUCTS TAX CREDIT REPORT
By January 15 in each of the years 2009, 2010, and 2011, the commissioner of economic development shall report to the house committee on ways and means and the senate committee on finance the effect of the wood products manufacture tax credit under 32 V.S.A. § 5930y on wood products manufacturing employment and on the outlook for future wood products manufacturing activity in Vermont by any taxpayers claiming the credit in the three years prior to each report.
* * * Common Level of Appraisal after Townwide Reappraisal* * *
Sec. 31. COMMON LEVEL OF APPRAISAL FOLLOWING 2007
TOWNWIDE REAPPRAISAL
In the case of a townwide reappraisal which adjusts the value of only the April 1, 2007, grand list, the common level of appraisal under 32 V.S.A.
§ 5406(c) to be applied to that grand list shall be no less than 100 percent; and any resulting reduction in the municipality’s fiscal-year 2008 education tax liability to the education fund shall be reimbursed as a credit on the municipality’s fiscal-year 2009 education tax liability to the education fund.
* * * Ratification of Act No. 81 Affordable Housing Provision * * *
Sec. 32. RATIFICATION OF ENROLLED VERSION OF H.521 IN
NO. 81 OF THE ACTS OF 2007
The enrolled version of No. 81 of the Acts of 2007, as published by the Secretary of State in the publication entitled “Acts and Resolves Passed by the General Assembly of the State of Vermont, sixty-ninth biennial session, 2007,” is hereby expressly ratified as the correct version of No. 81 of the Acts of 2007. This ratification shall not constitute a reenactment of No. 81 and shall have no effect upon the effective dates in that act.
Sec. 33. 32 V.S.A. § 8557 is amended to read:
§ 8557. VERMONT FIRE SERVICE TRAINING COUNCIL
(a) Sums for the expenses of the operation of training facilities and curriculum of the Vermont fire service training council not to exceed $400,000.00 $600,000.00 per year shall be paid to the fire service training council safety special fund created by section 3157 of Title 20 by insurance companies writing fire, homeowners multiple peril, allied lines, farmowners multiple peril, commercial multiple peril (fire and allied lines), private passenger auto physical damage and commercial auto physical damage
, surplus lines, and inland marine policies on property and persons situated within the state of Vermont within 30 days after notice from the commissioner of banking, insurance, securities, and health care administration of such estimated expenses. Captive and surplus line companies shall be excluded from the effect of this section. The commissioner shall annually, on or before July 1, apportion such charges among all such companies and shall assess them for the same on a fair and reasonable basis as a percentage of their gross direct written premiums on such insurance written during the second prior calendar year on property situated in the state. An amount not less than $100,000.00 shall be specifically allocated to the provision of what are now or formerly referred to as Level I, units I, II, and III (basic) courses for entry level firefighters.
* * *
Sec. 34. 32 V.S.A. § 8557 is amended to read:
§ 8557. VERMONT FIRE SERVICE TRAINING COUNCIL
(a) Sums for the expenses of the operation of training facilities and curriculum of the Vermont fire service training council not to exceed $600,000.00 $800,000.00 per year shall be paid to the fire safety special fund created by section 3157 of Title 20 by insurance companies writing fire, homeowners multiple peril, allied lines, farm owners multiple peril, commercial multiple peril (fire and allied lines), private passenger auto physical damage and commercial auto physical damage and liability, surplus lines, and inland marine policies on property and persons situated within the state of Vermont within 30 days after notice from the commissioner of banking, insurance, securities, and health care administration of such estimated expenses. Captive and surplus line companies shall be excluded from the effect of this section. The commissioner shall annually, on or before July 1, apportion such charges among all such companies and shall assess them for the same on a fair and reasonable basis as a percentage of their gross direct written premiums on such insurance written during the second prior calendar year on property situated in the state. An amount not less than $100,000.00 shall be specifically allocated to the provision of what are now or formerly referred to as Level I, units I, II, and III (basic) courses for entry level firefighters.
* * *
Sec. 35. 20 V.S.A. § 3152(a) is amended to read:
(a) The Vermont fire service training council is created. The council shall consist of 11 12 members. The commissioner of labor, the commissioner of public safety, the director of fire safety, the commissioner of forests, parks and recreation, the commissioner of education, and the commissioner of health, or their designees, shall serve as ex officio members of the council. Five Six members shall be appointed by the governor for three-year terms. Of the appointed members, the governor shall appoint one member who during incumbency is a representative of the Vermont career fire chiefs association; one member who, at the time of appointment, is a representative of the professional firefighters of Vermont; one member, who, at the time of appointment, is a representative of the Vermont fire chiefs association and who is a fire chief of a volunteer fire department; one member who, at the time of appointment, is a representative of the Vermont state firefighters association and who is a volunteer firefighter; one member who during incumbency is an employee, officer, or director of an insurance company domiciled in this state and subject to the assessment under 32 V.S.A. § 8557; and one member of the public who is not involved in fire service. To the extent possible, appointments shall be geographically representative.
* * * Elimination of Pass-Through of New Accelerated Depreciation
on the Personal Income Tax * * *
Sec. 36. 32 V.S.A. § 5811(21) is amended to read:
(21) “Taxable income” means federal taxable income determined without regard to Section 168(k) of the Internal Revenue Code and:
* * *
Sec. 37. EXTENSION OF 2007 FILING DEADLINE FOR CERTAIN
PROPERTY TAX ADJUSTMENT CLAIMS
(a) Any 2007 filed property tax adjustment claim filed on or before the September 4, 2007 deadline but which was denied before December 1, 2007, due to missing information or incomplete filing may be refiled before August 1, 2008, if all of the following conditions are met:
(1) the claimant submits a written request for reconsideration of claim, including all information required by the commissioner in the form prescribed by the commissioner and signed by the claimant under pains and penalties of perjury; and
(2) the first 2007 property tax bill issued in the claimant’s town was issued after September 4, 2007; and
(3) the commissioner, in his or her judgment, finds that the claimant was unable to complete the filing or provide the missing information prior to December 1, 2007, as a result of sickness, absence, or other disability, or other good cause.
(b) The commissioner’s determination to allow or deny a claim under this section shall be final, and the commissioner shall not notify the municipality of the claimant’s property tax adjustment, but instead shall refund the property tax adjustment amount to the claimant without interest and without penalty under 32 V.S.A. § 6066a(d).
* * * Disclosure of Tax Return Information * * *
Sec. 38. 32 V.S.A. § 3102(d) is amended to read:
(d) The commissioner shall disclose a return or return information:
* * *
(5) to the attorney general, if such return or return information relates to chapter 205 of this title or subchapters 1A and 1B of chapter 19 of Title 33, for purposes of investigating potential violations of and enforcing chapter 40 of Title 7, subchapter 2A of chapter 173 of Title 20; and subchapters 1A and 1B of chapter 19 of Title 33.
Sec. 39. 32 V.S.A. § 3102(e) is amended to read:
(e) The commissioner may, in his or her discretion and subject to such conditions and requirements as he or she may provide, including any confidentiality requirements of the Internal Revenue Service, disclose a return or return information:
* * *
(14) to the office of the state treasurer, only in the form of mailing labels, with only the last address known to the department of taxes of any person identified to the department by the treasurer by name and Social Security number, for the treasurer’s use in notifying owners of unclaimed property.
Sec. 40. EDUCATION PROPERTY TAX EXEMPTION FOR SKATING
RINKS USED FOR PUBLIC SCHOOLS
Real and personal property operated as a skating rink, owned and operated on a nonprofit basis but not necessarily by the same entity, and which, in the most recent calendar year, provided facilities to local public schools for a sport officially recognized by the Vermont Principals’ Association shall be exempt from education property taxes for fiscal years 2009 and 2010 only.
Sec. 41. 32 V.S.A. § 5930b(g) is added to read:
(g) Employment growth incentive for environmental technology business.
(1) For purposes of this subsection, an “environmental technology business” means a business that is subject to income taxation in Vermont and whose current or prospective economic activity in Vermont for which incentives are sought under this section is certified by the secretary of commerce and community development to be primarily research, design, engineering, development, or manufacturing activity related to any one or more of the following:
(A) Waste management, including waste collection, treatment, disposal, reduction, recycling, and remediation.
(B) Natural resource protection and management, including water and wastewater purification and treatment, air pollution control and prevention or remediation, soil and groundwater protection or remediation, and hazardous waste control or remediation.
(C) Energy efficiency or conservation.
(D) Clean energy, including solar, wind, wave, hydro, geothermal, hydrogen, fuel cells, waste-to-energy, or biomass.
(2) Any application for a Vermont employment growth incentive under this section for an environmental technology business shall be considered and administered pursuant to all provisions of this section, except that:
(A) the “incentive ratio” pursuant to subdivision (a)(11) of this section shall be set at 90 percent; and
(B) the “payroll threshold” pursuant to subdivision (a)(17) of this section shall be deemed to be 20 percent of the expected average industry payroll growth as determined by the cost-benefit model.
Sec. 42. 32 V.S.A. § 5930b(a)(9) and (23) are amended to read:
(9) “Full-time job” means a permanent position filled by an employee who works at least 37 35 hours each week.
(23) “Vermont gross wages and salaries” means Medicare wages as reported on Federal Tax Form W2 to the extent those wages are Vermont wages, excluding income from nonstatutory stock options.
Sec. 43. Sec. 7b of No. 81 of the Acts of 2007 is amended to read:
Sec. 7b. EFFECTIVE DATE
Sec. 7a of this act (amendment of sales tax exemption for aircraft parts) shall take effect July 1, 2011 2018.
Sec. 44. TAX CREDIT FOR HISTORIC BUILDING REHABILITATION
An owner awarded a tax credit under the provisions of section 5930n of Title 32 for a historic rehabilitation project who transfers the rehabilitated building to an entity which is tax-exempt under Internal Revenue Code Section 501(c)(3) shall not be liable for the recapture penalty under 32 V.S.A. § 5930n(f)(4)(A), but instead shall be subject to the recapture penalty under 32 V.S.A. § 5930ff(2).
Sec. 45. 32 V.S.A. § 6071(b) is amended to read:
(b) In any case in which it is determined that a claim is or was excessive, the commissioner may impose a ten percent penalty on such excess and if the claim has been paid or credited against property tax or income tax otherwise payable, the credit shall be reduced or canceled, and the proper portion of any amount paid shall be similarly recovered by assessment as income taxes are assessed and such assessment shall bear interest at the rate per annum established from time to time by the commissioner pursuant to section 3108 of this title from the date of payment or, in the case of adjustment of a property tax bill under section 6066a of this title, from December 1 of the year in which the claim is filed until refunded or paid.
Sec. 46. Sec. 5 of No. 213 of the Acts of 1892, as amended by No. 357 of the Acts of 1906, is amended to read:
Sec. 5. Said corporation shall have power to purchase and receive for the charitable purposes herein indicated, by gift, bequest, devise or otherwise, real and personal property, and the same to hold, for such purposes only, and to sell and convey the same or any part thereof when expedient in the judgment of the Directors. No more than fifty thousand dollars in value of the property of said corporation which is used directly as a nonprofit elder residential care home shall be exempt from municipal property taxation, and up to $500,000.00 of the same property shall be exempt from education property taxation, and such property, to be so exempt from taxation, shall be located in said Brattleboro.
* * * Health Care Provider Provisions * * *
Sec. 47. 33 V.S.A. § 1953(a)(1) is amended to read:
(1) Beginning July 1, 2005 January 1, 2008, each hospital’s annual assessment, except for hospitals assessed under subdivision (2) of this subsection, shall be 6.0 5.5 percent of its net patient revenues (less chronic, skilled, and swing bed revenues) for the hospital’s fiscal year as determined annually by the director from the hospital’s financial reports and other data filed with the department of banking, insurance, securities, and health care administration. The annual assessment shall be based on data from a hospital’s third most recent full fiscal year.
Sec. 48. 33 V.S.A. § 1955(a) is amended to read:
(a) Each Beginning January 1, 2008, each ICF/MR’s annual assessment shall be six 5.5 percent of the ICF/MR’s total annual direct and indirect expenses for the most recently settled ICF/MR audit.
Sec. 49. 33 V.S.A. § 1952(f) is added to read:
(f) If a health care provider fails to pay its assessments under this subchapter according to the schedule or a variation thereof adopted by the director, the director may, after notice and opportunity for hearing, deduct these assessment arrears and any late‑payment penalties from Medicaid payments otherwise due to the provider. The deduction of these assessment arrears may be made in one or more installments on a schedule to be determined by the director.
Sec. 50. 33 V.S.A. § 1954(d) is amended to read:
(d) Any nursing home that fails to make a payment to the office on or before the specified schedule, or under any schedule of delayed payments established by the director, shall be assessed not more than $1,000.00. The director may waive this late-payment assessment provided for in this subsection for good cause shown by the nursing home. The director may reduce Medicaid claim payments to satisfy all past due provider taxes assessed.
Sec. 51. 27 V.S.A. § 1248a is added to read:
§ 1248a. ELECTRIC UTILITY COOPERATIVES
(a) Electric utility cooperatives organized under or otherwise subject to 30 V.S.A. chapter 81 shall report capital credits which have been retired and declared payable by the cooperative’s board of directors, but which have not been claimed by the owner in accordance with the provisions of this chapter. Electric utility cooperatives shall not pay or deliver the unclaimed capital credits to the treasurer. For purposes of this section, capital credits shall mean those credits to a capital account of a member of an electric utility cooperative which the cooperative is obliged to pay after operating costs and expenses have been paid.
(b) The treasurer shall provide notice of unclaimed capital credit properties reported by electric utilities in accordance with the provisions of section 1249 of this title. In the event of a claim for a capital credit property, the treasurer shall refer the claimant to the appropriate electric utility cooperative who shall evaluate the claim and upon provision of satisfactory proof of ownership shall pay the claimant.
(c) The electric utility cooperative shall notify the treasurer of the resolution of all claims for unclaimed property.
Sec. 52. 30 V.S.A. § 209(d)(7) is amended to read:
(7) Net revenues above costs associated with payments from the New England Independent System Operator (ISO‑NE) for capacity savings resulting from the activities of the energy efficiency utility designated under subdivision (2) of this subsection shall be deposited into the electric efficiency fund established by this section and be used by the entity appointed under subdivision (2) of this subsection to deliver fossil fuel energy efficiency services to Vermont heating and process-fuel consumers on a whole-buildings basis to help meet the state’s building efficiency goals established by 10 V.S.A. § 581.
Sec. 53. 30 V.S.A. § 209(e)(15) is amended to read
(15) Ensure that the energy efficiency programs implemented under this section are designed to make continuous and proportional progress toward attaining the overall state building efficiency goals established by 10 V.S.A. § 581, by promoting all forms of energy end‑use efficiency and comprehensive sustainable building design. The funds made available under subdivision (d)(7) of this section may be used by an efficiency entity appointed under subdivision (2) of this section to deliver fossil fuel energy efficiency services to Vermont heating and process-fuel consumers on a whole-building basis.
Sec. 54. 24 V.S.A. § 1891 is amended to read:
§ 1891. DEFINITIONS
When used in this subchapter:
* * *
(6) “Related costs” means expenses, exclusive of the actual cost of constructing and financing improvements, as defined in subdivision 1751(3) of this title, that are directly related to creation of the tax increment financing district and reimbursement of sums previously advanced by the municipality for those purposes, and attaining the purposes and goals for which the tax increment financing district was created, as approved by the Vermont economic progress council. As used in this subdivision, related costs are “improvements” as defined in subdivision 1751(3) of this title.
(7) “Financing” means the following types of debt incurred or used by a municipality to pay for improvements in a tax increment financing district:
(A) Bonds.
(B) Housing and Urban Development Section 108 financing instruments.
(C) Interfund loans within a municipality.
(D) State of Vermont revolving loan funds.
(E) United States Department of Agriculture loans.
Sec. 55. 24 V.S.A. § 1893 is amended to read:
§ 1893. PURPOSE
The purpose of tax increment financing districts is to provide revenues for improvements, located wholly or partly within that serve the district and related costs, which will stimulate development or redevelopment within the district, provide for employment opportunities, improve and broaden the tax base, or enhance the general economic vitality of the municipality, the region, or the state.
Sec. 56. 24 V.S.A. § 1894 is amended to read:
§ 1894. POWER AND LIFE OF DISTRICT
(a) Incurring indebtedness.
(1) A municipality may incur indebtedness against revenues of the tax increment financing districts for district at any time during a period of up to 20 years following the creation of the district, if approved as required under subsection 5404a(h) of Title 32. The 20-year borrowing period of the district shall commence creation of the district shall occur at 12:01 a.m. on April 1 of the year so voted. Any indebtedness incurred during the borrowing this 20‑year period may be retired over any period authorized by the legislative body of the municipality under section 1898 of this title.
(2) If no indebtedness is incurred within the first five years after creation of the district, no indebtedness may be incurred unless the municipality obtains reapproval from the Vermont economic progress council under subsection 5404a(h) of Title 32.
(3) The district shall continue until the date and hour the indebtedness is retired.
(b) Use of the education property tax increment. Notwithstanding subsection (a) of this section, any district created to use education tax increment financing that has not incurred indebtedness within five years following the creation of the district, shall request reapproval from the Vermont economic progress council in order to utilize education tax increment financing following that period.
For any debt incurred within the first five years after creation of the district, or within the first five years after reapproval by the Vermont economic progress council, but for no other debt, the education tax increment may be retained for up to 20 years beginning with the initial date of the first debt incurred within the first five years.
(c) Prior to requesting municipal approval to secure financing, the municipality shall provide the council with all information related to the proposed financing necessary for approval and to assure its consistency with the plan approved pursuant to 32 V.S.A. § 5404a(h). The council shall also assure the viability and reasonableness of any proposed financing other than bonding and least‑cost financing.
Sec. 57. 24 V.S.A. § 1896(a) is amended to read:
§ 1896. TAX INCREMENTS
(a) In each subsequent year, the listers or assessor shall include no more than the original taxable value of such the real property in the assessed valuation upon which the listers or assessor computes the rates of all taxes levied by the municipality, the school district, and every other taxing district in which the tax increment financing district is situated; but the listers or assessor shall extend all rates so determined against the entire assessed valuation of such real property for that year. In each year for which the assessed valuation exceeds the original taxable value, the municipality treasurer shall hold apart, rather than remit to the taxing districts, that proportion of all taxes paid that year on the real property in the district which such the excess valuation bears to the total assessed valuation. The amount so held apart each year is referred to in this act as the “tax increment” for that year. So much of the tax increments received with respect to the district and pledged and appropriated under section 1897 of this title for the payment of debt service on bonds issued for financing for improvements and related costs shall be segregated by the municipality in a special account on its official books and records until all capital indebtedness of the district has been fully paid. The final payment shall be reported to the lister or assessor, who shall thereafter include the entire assessed valuation of the district in the assessed valuations upon which tax rates are computed and extended and taxes are remitted to all taxing districts.
Sec. 58. 24 V.S.A. § 1897 is amended to read:
§ 1897. TAX INCREMENT FINANCING
(a) The legislative body may pledge and appropriate in equal proportion any part or all of the state and municipal tax increments received from properties contained within the tax increment financing district for the payment of the principal of and interest on bonds issued financing for improvements contained wholly or partly within the district and for related costs in the same proportion by which the infrastructure or related costs directly serve the district at the time of approval of the project financing by the council, and in the case of infrastructure essential to the development of the district that does not reasonably lend itself to a proportionality formula, the council shall apply a rough proportionality and rational nexus test; provided, that if any tax increment utilization is approved pursuant to 32 V.S.A. § 5404a(g) 32 V.S.A. § 5404a(f), no more than 75 percent of the state property tax increment and no less than 75 an equal percent of the municipal tax increment may be used to service this debt. Bonds shall only be issued if the legal voters of the municipality, by a majority vote of all voters present and voting on the question at a special or annual municipal meeting duly warned for the purpose, shall give authority to the legislative body to pledge the credit of the municipality for these purposes. Notwithstanding any provision of any municipal charter, the legal voters of a municipality, by a single vote, shall authorize the legislative body to pledge the credit of the municipality up to a specified maximum dollar amount for all debt obligations to be financed with state property tax increment pursuant to approval by the Vermont economic progress council and subject to the provisions of this section and 32 V.S.A. § 5404a.
(b) A municipality’s pledge of credit for the purpose of issuing a bond financing improvements under this subchapter and 32 V.S.A. § 5404a shall include notice that if the tax increment received by the municipality from any property tax source is insufficient to pay the principal and interest on the debt in any year, for whatever reason, including a decrease in property value or repeal of a state property tax source, unless determined otherwise at the time of such repeal, the municipality shall remain liable for full payment of the bond principal and interest for the term of indebtedness.
Sec. 59. 24 V.S.A. § 1898(e) is amended to read:
(e) Prior to the resolution or ordinance of the local governing body authorizing the bonds issued financing under this section, the legislative body of the municipality shall hold one or more public hearings, after public notice, on a financial plan for the proposed improvements and related costs to be funded, including a statement of costs and sources of revenue, the estimates of assessed values within the district, the portion of those assessed values to be applied to the proposed improvements, the resulting tax increments in each year of the financial plan, the amount of bonded indebtedness or other financing to be incurred, other sources of financing and anticipated revenues, and the duration of the financial plan. A municipality that has approved the creation of a district under this chapter may designate a coordinating agency to administer the district to ensure compliance with this chapter and any other statutory or other requirements.
Sec. 60. 24 V.S.A. § 1900 is amended to read:
§ 1900. DISTRIBUTION
In addition to all other provisions of this chapter, with respect to any tax increment financing district, any of the municipal and education tax increment increments received in any tax year that exceed the amounts pledged for the payment on principal and interest on the bonds issued of the financing for improvements and related costs in the district shall be distributed to the city, town, or village budget in proportion that each budget bears to the combined total of the budgets unless otherwise negotiated by the city, town, or village. Any state education tax increment received in any tax year that exceeds the amount pledged for the payment on principal and interest on the bonds issued for improvements and related costs in the district shall not be remitted to the municipality but shall , an equal portion of each increment may be used only for prepayment of principal and interest on the bonds issued financing, placed in escrow for bond financing payment, or otherwise used for defeasance of the bonds financing; and any remaining portion of the excess municipal tax increment shall be distributed to the city, town, or village budget, in proportion that each budget bears to the combined total of the budgets unless otherwise negotiated by the city, town, or village; and any remaining portion of the excess education tax increment shall be distributed to the education fund.
Sec. 61. 32 V.S.A. § 5404a(f) and (h) are amended and (j) and (k) are added to read:
(f) A municipality that establishes a tax increment financing district under subchapter 5 of chapter 53 of Title 24 shall collect all property taxes on properties contained within the district and apply up to 75 percent of the tax increment as defined in 24 V.S.A. § 1896 to repayment of debt issued to finance financing of the improvements and related costs for up to 20 years pursuant to 24 V.S.A. § 1894, if approved by the Vermont economic progress council pursuant to this section.
(h) Criteria for approval. To approve utilization of incremental revenues pursuant to subsection (f) of this section, the Vermont economic progress council shall do all the following:
(1) Review each application to determine that the new real property development would not have occurred or would have occurred in a significantly different and less desirable manner but for the proposed utilization of the incremental tax revenues. A district created in a designated growth center under 24 V.S.A. § 2793c shall be deemed to have complied with this subdivision. The review shall take into account:
* * *
(C) The amount of additional revenue expected to be generated as a result of the proposed development; the percentage of that revenue that shall be paid to the education fund; the percentage that shall be paid to the municipality; and the percentage of the revenue paid to the municipality that shall be used to pay the municipal tax increment bonds financing incurred for development of the tax increment financing district.
(2) Process requirements. Determine that each application meets all of the following four requirements:
* * *
(B) The municipality has developed a tax increment financing district plan, including: a project description; a development financing plan; a pro forma projection of expected costs; a projection of revenues; a statement and demonstration that the project would not proceed without the allocation of a tax increment; evidence that the municipality is actively seeking or has obtained other sources of funding and investment; and a development schedule that includes a list, a cost estimate, and a schedule for public improvements and projected private development to occur as a result of the improvements.
* * *
(3) Location criteria. Determine that each application meets one of the following criteria:
(A) The development or redevelopment is compact, high density, and located in or near existing industrial areas.
(B) The proposed district is within an approved growth center, designated downtown, designated village center, or new town center.
(C) The development will occur in an area that is economically distressed, which for the purposes of this subdivision means that the area has experienced patterns of increasing unemployment, a drop in average wages, or a decline in real property values.
(4) Project criteria. Determine that the proposed development within a tax incentive increment financing district will accomplish at least three of the following five criteria:
* * *
(C) The project will affect the mitigation remediation and redevelopment of a brownfield located within the district. For the purposes of this section, “brownfield” means an area in which a hazardous substance, pollutant, or contaminant is or may be present, and that situation is likely to complicate the expansion, development, redevelopment, or reuse of the property.
* * *
(j) The municipality shall provide the council with all information related to the proposed financing necessary to assure its consistency with the plan approved pursuant to all other provisions of subsection (h) of this section. The council shall assure the viability and reasonableness of any proposed financing other than bonding and least‑cost financing.
(k) The state auditor of accounts shall review and audit all active tax increment financing districts every three years.
Sec. 62. 24 V.S.A. § 1901 is added to read:
§ 1901. INFORMATION REPORTING
Every municipality with an active tax increment financing district shall:
(1) On or before December 1 of each year, report to the Vermont economic progress council (VEPC) and the tax department all information described in subsection 5404a(i) of Title 32, in the form prescribed by VEPC.
(2) Report its tax increment financing actual investment, bond or other financing repayments, escrow status, and “related cost” accounting to the Vermont economic progress council according to the municipal audit cycle prescribed in section 1681 of this title.
Sec. 63. REPEAL
32 V.S.A. § 5404a(e) (allocations) is repealed.
Sec. 64. 32 V.S.A. § 5404a(g) is amended to read:
(g) Any allocation approved pursuant to subsection (e) of this section or utilization of tax increment approved under subsection (f) of this section shall be in addition to any other payments to the municipality under chapter 133 of Title 16. Allocations and tax Tax increment utilizations approved pursuant to subsections (e) and subsection (f) of this section shall affect the education property tax grand list and the municipal grand list of the municipality under this chapter beginning April 1 of the year following approval and shall remain available to the municipality for the full period authorized under 24 V.S.A. § 1894, and restricted only to the extent that the real property development giving rise to the increased value to the grand list fails to occur within the authorized period.
Sec. 65. TAX INCREMENT FINANCING DATA
(a) The joint fiscal office and the department of taxes shall analyze:
(1) Fiscal aspects of the four existing tax increment financing districts (TIFs). The study shall assemble the details of each TIF’s financial components since their inception and analyze the fiscal impact on the state level.
(2) The best option for addressing how tax increment financing property should be included in the determination of the host town’s common level of appraisal, and what provisions may need to be added to tax increment financing laws to address the possibility of changes to the state education financing structure.
(3) How existing tax increment financing districts meet the goals of economic development, whether they provide municipalities with more useful development tools than possible alternatives, and how they affect the state’s education fund stability.
(4) Homestead property within tax increment financing districts and whether the education tax revenue retained by the municipality is net or gross of property tax adjustments; and shall propose language and a method to ensure that the actual amount of education tax increment retained is net of property tax adjustments.
(5) The following types of financing instruments: conventional loans, certificates of participation, lease-purchase, revenue anticipation notes, and bank loans.
(b) In collecting and analyzing data on the issues in subdivisions (a)(1) through (3) of this section, the joint fiscal office and the department of taxes shall consult with the Vermont League of Cities and Towns, the Vermont Economic Progress Council, Smart Growth Vermont, the Lake Champlain Regional Chamber of Commerce, and the Vermont chapter of the National Education Association.
(c) The joint fiscal office and the department of taxes shall report their findings to the house committee on ways and means and the senate committee on finance by January 15, 2009.
Sec. 66. JOINT FISCAL OFFICE REPORTING OF TIF DATA
The joint fiscal office shall reflect tax increment financing on any education fund outlooks and balance sheets which it prepares.
Sec. 67. Sec. 2i of No. 184 of the Acts of the 2005 Adj. Sess. (2006) is amended to read:
Sec. 2i. TAX INCREMENT FINANCING DISTRICTS; CAP
Notwithstanding any other provision of law, the Vermont economic progress council may not approve the use of education tax increment financing for more than ten six tax increment financing districts and no more than one newly created tax increment financing district in any municipality within the period of five state fiscal years beginning July 1, 2006 2008. Thereafter no tax increment financing districts may be approved without further authorization by the General Assembly general assembly.
Sec. 68. Sec. 2j of No. 184 of the Acts of the 2005 Adj. Sess. (2006) is amended to read:
Sec. 2j. EXISTING TAX INCREMENT FINANCING DISTRICTS;
MILTON
Notwithstanding the limitations under 32 V.S.A. § 5404a, the town of Milton may extend for an additional ten years beyond the initial ten years approved for the two existing tax increment financing districts identified and known as the Husky campus and the Catamount Industrial Park, and collect all state and local property taxes on properties contained wholly or partly within the tax increment financing districts beyond the original taxable value of those properties at the time of the initial approval of the tax increment financing districts and apply no more than 75 percent of the increase in the value and liability assessed under 32 V.S.A. § 5402 state property tax increment, and an equal percent of the municipal tax increment, on new real property improvements to repayment of debt issued to finance improvements within that serve the tax increment financing district and for related costs, upon application by the Town of Milton; and such that the Town of Milton shall apply equal percentages of the state property tax increment and municipal property tax increment to debt obligations incurred prior to April 1, 2009, related to the two existing tax increment financing districts identified and known as Husky campus and Catamount Industrial Park, without regard to the proportionality rule of 24 V.S.A. § 1897.
Sec. 69. Sec. 18(b) of No. 184 of the Acts of the 2005 Adjourned Session (2006) is amended to read:
Sec. 18. EFFECTIVE DATES
(b) Those provisions of Sec. 2h adding 32 V.S.A. § 5404a(h)(3)(D) [location criteria] are repealed effective July 1, 2008 2009.
Sec. 70. FY2008 COMMON LEVEL OF APPRAISAL IN WINOOSKI
The fiscal year 2008 education property tax liability for the City of Winooski shall be recalculated using a common level of appraisal factor of 1.0952; and any resulting overpayment of education property taxes from the City of Winooski to the education fund in fiscal year 2008 shall be credited to the City of Winooski against its fiscal year 2009 education property tax liability.
Sec. 71. Sec. 38(3) of No. 159 of the Acts of 1999 Adj Sess. (2000) is amended to read:
(3) The excess valuation of property within a tax increment financing district organized and created pursuant to Sec. 37 of this act, to the extent that taxes generated on the excess property valuation are pledged and appropriated for debt service on bonds issued under section 1897 of Title 24 or the funding of reserves under subdivision (2) of this section, shall not be included within the education property tax grand list provided for in section 5404 of Title 32 as taxable property, nor shall the excess valuation of the property be subject to the education property tax imposed under section 5402 of Title 32 until bonds issued under section 1897 of Title 24 are released, discharged, paid, defeased, or fully reserved; provided, however, that 5 2 percent of the education taxes imposed annually on the excess valuation of the residential property within the district shall be paid to the education fund. The tax rate assessed on the excess value of property within the district shall be the same rate assessed on property outside the district. Until the bonds are paid in full or have been fully redeemed or defeased through fully funded reserves and accounts, 100 percent of the municipal taxes assessed against the excess valuation of property within the district shall be pledged and appropriated solely for debt service on the bonds. For purposes of this act, “excess valuation” means the difference between the current grand list value and the grand list value at commencement of the development.
Sec. 72. RETROACTIVE APPROVAL OF BURLINGTON TIF
FINANCING
Municipalities that expanded tax increment financing districts under subchapter 5 of chapter 53 of Title 24 by June 30, 1997, as authorized by No. 60 of the Acts of 1997, shall have authority to apply those state and local property taxes assessed on properties within the tax increment financing district to repayment of certificates of participation and HUD Section 108 financing issued to finance public improvements within the tax increment financing district. This authority is retroactive to June 30, 1997, and is applicable to certificates of participation and HUD Section 108 financing instruments issued after April 1, 1996, and on or before March 31, 2006. State education property taxes may be used in accordance with this provision for a period of no more than 20 years from the date the debt was incurred. Refinancing such debt shall not extend the 20-year period for any portion of the debt.
Sec. 73. SALES TAX HOLIDAY; ENERGY STAR APPLIANCES
(a) Notwithstanding the provisions of chapter 233 of Title 32 and section 138 of Title 24, no sales and use tax or local option sales tax shall be imposed or collected on sales to individuals for personal use of items of tangible personal property at a sales price of $2,000.00 or less from July 12, 2008, through July 13, 2008.
(b) Notwithstanding the provisions of chapter 233 of Title 32 and section 138 of Title 24, no sales and use tax or local option sales tax shall be imposed or collected on sales to individuals for personal use of Energy Star Appliances at a sales price of $2,000.00 or less from July 12, 2008, through July 18, 2008.
(c) A vendor in good standing shall be entitled to claim reimbursement for its expenditures for reprogramming of cash registers and computer equipment which were in use at the place of business on and after July 12, 2008. Claims must be filed on or before November 1, 2008, with the department of taxes with receipts or such other documentation the department may require. The amount of reimbursement to each vendor shall not exceed the least of the three following amounts: the actual cost to the vendor of reprogramming its cash registers and computer equipment; $50.00; or $50,000.00 divided by the number of qualified vendor applicants.
(d) Any municipality with a local option sales tax affected by the sales tax holidays imposed by this section shall be reimbursed from the department of taxes for the amount of local option sales tax revenues lost to the municipality. The commissioner of taxes shall develop a methodology for determining such reimbursement. The commissioner shall also adjust the deposit in the PILOT special fund for lost deposits due to the sales tax holidays. Should the amount appropriated for these purposes under subsection (e) of this section be insufficient to fully reimburse the municipalities and adjust the PILOT special fund, reimbursements to municipalities shall take priority.
(e) In fiscal year 2009, $50,000.00 in general funds is appropriated for payments for reprogramming under subsection (c) of this section, and $100,000.00 in general funds is appropriated for reimbursement to municipalities and adjustments under subsection (d) of this section.
Sec. 74. 11 V.S.A. § 3001 is amended to read:
§ 3001. DEFINITIONS
As used in this chapter:
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(15) “Operating agreement” means the agreement in writing any form of description of membership rights and obligations under section 3003 of this title, stored or depicted in any tangible or electronic medium, which is agreed to by the members, including amendments to the agreement.
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(19) “Signed” includes any symbol or electronic schema that may be prescribed by the secretary of state that is executed or adopted by a person with the present intention to authenticate a record.
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(23) “Document” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
(24) “Writing” means written communications, including letters, faxes, e-mails, or other electronic formats that may be prescribed by the secretary of state.
(25) “Delivery” means surface mail or methods of electronic transmission the secretary of state may prescribe.
(26) “Meeting” means any structured communications conducted by participants in person or through the use of electronic or telecommunications medium permitting simultaneous or sequentially structured communications for the purpose of reaching a collective agreement.
Sec. 75. 11 V.S.A. § 3026(f) is added to read:
(f) An original copy may consist of an electronic communication received by the secretary of state’s office, endorsement may consist of an attached electronic record, and the delivery of a duplicate may be done electronically.
Sec. 76. 11 V.S.A. § 3058(c) is amended to read:
(c) A company may maintain its records in other than written form if such form is capable of conversion into written form within a reasonable time or into an electronic form that may be prescribed by the secretary of state.
Sec. 77. 11A V.S.A. § 1.20 is amended to read:
§ 1.20. FILING REQUIREMENTS
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(d) The document must be typewritten or printed or, if electronically transmitted, it must be in a format that can be retrieved or reproduced in typewritten or printed form or in an electronic format prescribed by the secretary of state.
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(h) If the secretary of state has prescribed a mandatory form or electronic format for the document under section 1.21 of this title, the document must be in or on the prescribed form.
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(j)(1) Any of the terms of a plan or filed documents may be made dependent on facts ascertainable outside the plan or filed documents as follows:
(A) The manner in which the facts operate on the terms of the plan or filed document must be clearly and expressly set forth in the plan or filed document.
(B) The facts may include without limitation actions or events within the control of, or determinations made by, a part to the plan or filing the filed document or a representative of a party to the plan or filing the filed document.
(2) As used in this section:
(A) “Filed document” means a document filed with the secretary of state under any provision of this title, except chapter 15 or section 16.22 of this title.
(B) “Plan” means a plan of merger or share exchange.
Sec. 78. 11A V.S.A. § 1.21(a) is amended to read:
(a) The secretary of state may prescribe the form or electronic format of and furnish on request forms or specifications for formats for:
(1) articles of incorporation. such form shall note the information required under subsection 2.02(a) of this title, together with a summary of such information or provisions as are permitted by this title;
(2) an application for a certificate of good standing;
(3) a foreign corporation’s application for a certificate of authority to transact business in this state;
(4) a foreign corporation’s application for a certificate of withdrawal; and
(5) the annual report.
Sec. 79. 11A V.S.A. § 1.23(a) is amended to read:
§ 1.23. EFFECTIVE TIME AND DATE OF DOCUMENT
(a) Except as provided in subsection (b) of this section, section subsection 1.24(c) of this title, and section 2.03 of this title, a document accepted for filing is effective at the time of filing on the date it is filed, as evidenced by the secretary of state’s date and time endorsement on the original document:
(1) at the date and time of filing, as evidenced by such means as the secretary of state may use for the purpose of recording the date and time of filing; or
(2) at the time specified in the document as its effective time on the date it is filed.
Sec. 80. 11A V.S.A § 1.24(a) is amended to read:
(a) A domestic or foreign corporation may correct a document filed by the secretary of state if the document:
(1) is incomplete;
(2) contains an incorrect statement; or
(3) was defectively executed, attested, sealed, verified, or acknowledged; or
(4) the electronic transmission of which was defective.
Sec. 81. 11A V.S.A. § 1.25(b) is amended to read:
(b) The secretary of state files a document by stamping or otherwise endorsing recording it as “Filed” together with his or her name and official title and on the date and time of receipt, on both the original and the document copy document and on the record of the receipt for the filing fee. After filing a document, except as provided in sections 5.03 and 15.10 of this title, the secretary of state shall deliver a copy of the document copy, with the and filing fee receipt (or acknowledgement of receipt if no fee is required) attached, to the domestic or foreign corporation or its representative.
Sec. 82. 11A V.S.A. § 1.27 is amended to read:
§ 1.27. EVIDENTIARY EFFECT OF COPY OF FILED DOCUMENT
(a) A certificate attached to a copy of a document filed by the secretary of state, bearing his or her signature (which may be in facsimile) and the seal of this state, is conclusive evidence that the original document is on file with the secretary of state.
(b) A certificate by the secretary of state that a diligent search has failed to locate documents claimed to be filed with the secretary of state shall be taken and received in all courts, public offices, and official bodies as prima facie evidence of the absence of those documents in the files of the secretary of state.
(c) The secretary of state’s filing of the articles of incorporation is conclusive proof that the incorporators satisfied all conditions precedent to incorporation except in a proceeding by the state to cancel or revoke the incorporation or involuntarily dissolve the corporation
A certificate from the secretary of state delivered with a copy of a document filed by the secretary of state is conclusive evidence that the document is on file with the secretary of state.
Sec. 83. 11A V.S.A. § 1.40 is amended to read:
§ 1.40. DEFINITIONS
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(5) “Deliver” includes mail or “delivery” means any method of delivery used in conventional commercial practice, including delivery by hand, mail, commercial delivery, and electronic transmission.
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(25) “Electronic transmission” or “electronically transmitted” means a process of communication not directly involving the physical transfer of paper that is suitable for the retention, retrieval, and reproduction of information by the recipient.
(26) “Meeting” means any structured communications conducted by participants in person or through the use of electronic or telecommunications medium permitting simultaneous or sequentially structured communications for the purpose of reaching a collective agreement.
(27) “Sign” or “signature” includes any manual, facsimile, conformed, or electronic signature.
Sec. 84. 11A V.S.A. § 141(b) and (c) are amended to read:
(b) Notice may be communicated in person; by telephone, voice mail, telegraph, teletype, facsimile, or other form of wire or, wireless, or electronic communication; or by mail or private carrier or other method of delivery. If these forms of personal notice are impracticable, notice may be communicated by a newspaper of general circulation in the area where published; or by radio, television, or other form of public broadcast communication.
(c) Notice to shareholders. Written notice by a domestic or foreign corporation to its shareholder, if in a comprehensible form, is effective when:
(1) mailed first class postpaid and correctly addressed to the shareholder’s address as shown in the corporation’s current record of shareholders; or
(2) electronically transmitted to the shareholder in a manner authorized by the shareholder.
Sec. 85. 11A V.S.A. § 6.01 is amended to read:
§ 6.01. AUTHORIZED SHARES
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(d) The description of the designations, preferences, limitations, and relative rights of share classes in subsection (c) of this section is not exhaustive Terms of shares may be made dependent upon facts objectively ascertainable outside the articles of incorporation in accordance with subsection 1.20(k) of this title.
(e) Any of the terms of shares may vary among holders of the same class or series so long as such variations are expressly set forth in the articles of incorporation.
(f) The description of the designations, preferences, limitations, and relative rights of share classes in subsection (c) of this section is not exhaustive.
Sec. 86. 11A V.S.A. § 6.21 is amended to read:
§ 6.21. ISSUANCE OF SHARES
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(b) The board of directors may authorize shares to be issued for consideration consisting of any tangible or intangible property or benefit to the corporation, including cash, promissory notes, services performed, contracts for services performed, or other securities of the corporation. Future services shall not constitute payment or part payment for shares of a corporation.
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(e) The corporation may place in escrow shares issued for a contract for future services or benefits or a promissory note, or make other arrangements to restrict the transfer of the shares, and may credit distributions in respect of the shares against their purchase price, until the services are performed, the note is paid, or the benefits are received. If the services are not performed, the note is not paid, or the benefits are not received, the shares escrowed or restricted and the distributions credited may be cancelled in whole or part.
Sec. 87. 11A V.S.A. § 6.24 is amended to read:
§ 6.24. SHARE OPTIONS
A corporation may issue rights, options, or warrants for the purchase of shares of the corporation. The board of directors shall determine the terms upon which the rights, options, or warrants are issued, their form and content, and the consideration for which the shares are to be issued. The provisions of sections 8.60 through 8.63 of this title apply in accordance with their terms in the case of transactions involving the issuance of rights, options, or warrants for the purchase of shares to directors. Any transactions involving the issuance of options for the purchase of shares to directors, as such, shall be subject to the approval of the shareholders.
(a) A corporation may issue rights, options, or warrants for the purchase of shares or other securities of the corporation. The board of directors shall determine:
(1) the terms upon which the rights, options, or warrants are issued; and
(2) the terms, including the consideration for which the shares or other securities are to be issued.
(b) The authorization by the board of directors for the corporation to issue such rights, options, or warrants constitutes authorization of the issuance of the shares or other securities for which the rights, options, or warrants are exercisable.
(c) The terms and conditions of such rights, options, or warrants, including those outstanding on the effective date of this section, may include, without limitation, restrictions or conditions that:
(1) preclude or limit the exercise, transfer, or receipt of such rights, options, or warrants by any person or persons owning or offering to acquire a specified number or percentage of the outstanding shares or other securities of the corporation or by any transferee or transferees of any such person or persons; or
(2) invalidate or void such rights, options, or warrants held by any such person or persons or any such transferee or transferees.
Sec. 88. 11A V.S.A. § 7.01 is amended to read:
§ 7.01. ANNUAL MEETING
(a) A corporation shall hold a meeting of shareholders annually at a time stated in or fixed in accordance with the bylaws.
(b) Annual shareholders’ meetings shall be held in this state, unless permitted in the bylaws of the corporation to be held out of this state. Annual meetings shall be held at the place stated in or fixed in accordance with the bylaws. If no place is stated in or fixed in accordance with the bylaws, annual meetings shall be held at the corporation’s principal office. An annual meeting may be conducted by means of any telecommunications mechanism, including video-conference telecommunication.
(c) The failure to hold an annual meeting at the time stated in or fixed in accordance with a corporation’s bylaws does not affect the validity of any corporate action, and shall result not in a forfeiture or dissolution of the corporation
Annual shareholders’ meetings shall be held in this state, unless permitted in the bylaws of the corporation to be held outside this state. Annual meetings shall be held at the place stated in or fixed in accordance with the bylaws. If no place is stated in or fixed in accordance with the bylaws, annual meetings shall be held at the corporation’s principal office. An annual meeting may be conducted by means of any electronic or telecommunications mechanism, including video-conference telecommunication. The failure to hold an annual meeting at the time stated or fixed in accordance with a corporation’s bylaws does not affect the validity of any corporate action.
Sec. 89. 11A V.S.A. § 7.02(c) is amended to read:
(c) Special shareholders’ meetings shall be held in this state, unless permitted in the bylaws of the corporation to be held out of this state. Meetings shall be held at the place stated in or fixed in accordance with the bylaws. If no place is stated in or fixed in accordance with the bylaws, annual meetings shall be held at the corporation’s principal office. A special meeting may be conducted by means of any electronic or telecommunications mechanism, including video-conference telecommunication.
Sec. 90. 11A V.S.A. § 7.04(a) is amended to read:
(a) Unless the articles of incorporation preclude the taking of action required or permitted by this title without a shareholders’ meeting, action required or permitted by this title to be taken at a shareholders’ meeting may be taken without a meeting if the action is taken by all the shareholders entitled to vote on the action. Each action must be evidenced by one or more written consents describing the action taken, signed by all the shareholders entitled to vote on the action, and delivered to the corporation for inclusion in the minutes or filed with the corporate records. For purposes of this section, consent evidenced by electronic communications or an electronic record is written consent.
Sec. 91. 11A V.S.A. § 7.32 is added to read:
§ 7.32. SHAREHOLDER AGREEMENTS
(a) An agreement among the shareholders of a corporation that complies with this section is effective among the shareholders and the corporation even though it is inconsistent with one or more other provisions of this title in that it:
(1) eliminates the board of directors or restricts the discretion or powers of the board of directors;
(2) governs the authorization or making of distributions whether or not in proportion to ownership of shares, subject to the limitations in section 6.40 of this title;
(3) establishes who shall be directors or officers of the corporation, or
their terms of office or manner of selection or removal;
(4) governs, in general or in regard to specific matters, the exercise or division of voting power by or between the shareholders and directors or by or among any of them, including the use of weighted voting rights or director proxies;
(5) establishes the terms and conditions of any agreement for the transfer or use of property or the provision of services between the corporation and any shareholder, director, officer, or employee of the corporation or among any of them;
(6) transfers to one or more shareholders or other persons all or part of the authority to exercise the corporate powers or to manage the business and affairs of the corporation, including the resolution of any issue about which there exists a deadlock among directors or shareholders;
(7) requires dissolution of the corporation at the request of one or more of the shareholders or upon the occurrence of a specified event; or
(8) otherwise governs the exercise of the corporate powers or the management of the business and affairs of the corporation or the relationship among the shareholders, the directors, and the corporation, or among any of them, and is not contrary to public policy.
(b) An agreement authorized by this section shall be:
(1) set forth:
(A) in the articles of incorporation or bylaws and approved by all persons who are shareholders at the time of the agreement; or
(B) in a written agreement that is signed by all persons who are shareholders at the time of the agreement and is made known to the corporation;
(2) subject to amendment only by the holders of a majority of each class of the corporation’s issued and outstanding capital stock, with each class voting as a separate group, unless the agreement provides otherwise; and
(3) valid for 10 years, unless the agreement provides otherwise.
(c) The existence of an agreement authorized by this section shall be noted conspicuously on the front or back of each certificate for outstanding shares or on the information statement required by subsection 6.26(b) of this title. If at the time of the agreement the corporation has shares outstanding represented by certificates, the corporation shall recall the outstanding certificates and issue substitute certificates that comply with this subsection. The failure to note the existence of the agreement on the certificate or information statement shall not affect the validity of the agreement or any action taken pursuant to it. Any purchaser of shares who, at the time of purchase, did not have knowledge of the existence of the agreement shall be entitled to rescission of the purchase. A purchaser shall be deemed to have knowledge of the existence of the agreement if its existence is noted on the certificate or information statement for the shares in compliance with this subsection and, if the shares are not represented by a certificate, the information statement is delivered to the purchaser at or prior to the time of the purchase of the shares. An action to enforce the right of rescission authorized by this subsection must be commenced within the earlier of 90 days after discovery of the existence of the agreement or two years after the time of the purchase of the shares.
(d) An agreement authorized by this section shall cease to be effective when the corporation becomes a public corporation. If the agreement ceases to be effective for any reason, the board of directors may, if the agreement is contained or referred to in the corporation’s articles of incorporation or bylaws, adopt an amendment to the articles of incorporation or bylaws, without shareholder action, to delete the agreement and any references to it.
(e) An agreement authorized by this section that limits the discretion or powers of the board of directors shall relieve the directors of, and impose upon the person or persons in whom such discretion or powers are vested, liability for acts or omissions imposed by law on directors to the extent that the discretion or powers of the directors are limited by the agreement.
(f) The existence or performance of an agreement authorized by this section shall not be a ground for imposing personal liability on any shareholder for the acts or debts of the corporation, even if the agreement or its performance treats the corporation as if it were a partnership or results in failure to observe the corporate formalities otherwise applicable to the matters governed by the agreement.
(g) Incorporators or subscribers for shares may act as shareholders with respect to an agreement authorized by this section if no shares have been issued when the agreement is made.
Sec. 92. 11A V.S.A. § 8.03(a) amended to read:
(a) A board of directors of a corporation which is not a close corporation dispensing with a board of directors pursuant to section 20.08 of this title must consist of three one or more individuals, with the number specified in or fixed in accordance with the articles of incorporation or bylaws. If the number of shareholders in any corporation is less than three, the The number of directors may be as few as the number of shareholders increased or decreased from time to time by amendment to, or in the manner provided in, the articles of incorporation or the bylaws.
Sec. 93. 11A V.S.A. § 8.20 is amended to read:
§ 8.20. MEETINGS
(a) The board of directors may hold regular or special meetings, as defined in subdivision 1.40(26) of this title, in or out of outside this state.
(b) The board of directors may permit any or all directors to participate in a regular or special meeting by, or conduct the meeting through the use of, any means of communication, including an electronic, telecommunications, and video- or audio‑conferencing conference telephone call, by which all directors participating may simultaneously hear communicate with each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting.
Sec. 94. 11A V.S.A. § 8.40 is amended to read:
§ 8.40. REQUIRED OFFICERS
(a) A corporation has the officers described in its bylaws or appointed by the board of directors in accordance with the bylaws, provided that a corporation shall have a president and a secretary. Any two or more offices may be held by the same person, except the offices of president and secretary, unless the corporation is a professional corporation organized under chapter 3 or 4 of Title 11.
(b) A duly appointed The board of directors may elect individuals to fill one or more offices of the corporations. An officer may appoint one or more officers or assistant officers if authorized by the bylaws or the board of directors.
(c) The bylaws or the board of directors shall delegate assign to one of the officers responsibility for preparing the minutes of the directors’ and shareholders’ meetings and for authenticating and maintaining the records of the corporation required to be kept under subsections 16.01(a) and 16.10(e) of this title.
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(e) An individual who holds more than one office may execute, acknowledge or verify in more than one capacity any document required to be executed, acknowledged or verified by the holders of two or more officers.
Sec. 95. 11A V.S.A. § 8.60 is amended to read:
§ 8.60. DEFINITIONS
For purposes of this subchapter:
(1) “Conflicting interest” with respect to a corporation means the interest a director of the corporation has respecting a transaction effected or proposed to be effected by the corporation (or by a subsidiary of the corporation or any other entity in which the corporation has a controlling interest) if
(A) whether or not the transaction is brought before the board of directors of the corporation for action, the director knows at the time of commitment that he or she or a related person is a party to the transaction or has a beneficial financial interest in or so closely linked to the transaction and of such financial significance to the director or a related person that the interest would reasonably be expected to exert an influence on the director’s judgment if he or she were called upon to vote on the transaction; or
(B) the transaction is brought (or is of such character and significance to the corporation that it would in the normal course be brought) before the board of directors of the corporation for action, and the director knows at the time of commitment that any of the following persons is either a party to the transaction or has a beneficial financial interest in or so closely linked to the transaction and of such financial significance to the person that the interest would reasonably be expected to exert an influence on the director’s judgment if he or she were called upon to vote on the transaction:
(i) an entity (other than the corporation) of which the director is a director, general partner, agent, or employee;
(ii) a person that controls one or more of the entities specified in subdivision (i) of this subdivision or an entity that is controlled by, or is under common control with, one or more of the entities specified in subdivision (i); or
(iii) an individual who is a general partner, principal, or employer of the director.
(2) “Director’s conflicting interest transaction” with respect to a corporation means a transaction effected or proposed to be effected by the corporation (or by a subsidiary of the corporation or any other entity in which the corporation has a controlling interest) respecting which a director of the corporation has a conflicting interest.
(3) “Related person” of a director means (A) the spouse (or a parent or sibling thereof) of the director, or a child, grandchild, sibling, parent (or spouse of any thereof) of the director, or an individual having the same home as the director, or a trust or estate of which an individual specified in this subdivision (A) is a substantial beneficiary; or (B) a trust, estate, incompetent, conservatee, or minor of which the director is a fiduciary.
(4) “Required disclosure” means disclosure by the director who has a conflicting interest of (A) the existence and nature of his or her conflicting interest, and (B) all facts known to him or her respecting the subject matter of the transaction that an ordinarily prudent person would reasonably believe to be material to a judgment about whether or not to proceed with the transaction.
(5) “Time of commitment” respecting a transaction means the time when the transaction is consummated or, if made pursuant to contract, the time when the corporation (or its subsidiary or the entity in which it has a controlling interest) becomes contractually obligated so that its unilateral withdrawal from the transaction would entail significant loss, liability, or other damage.
(1) “Control” including the term “controlled by” means:
(A) having the power, directly or indirectly, to elect or remove a majority of the members of the board of directors or other governing body of an entity whether through the ownership of voting shares or interests, by contract, or otherwise; or
(B) being subject to a majority of the risk of loss from the entity’s activities or entitled to receive a majority of the entity’s residual returns.
(2) “Director’s conflicting interest transaction” means a transaction effected or proposed to be effected by the corporation or by an entity controlled by the corporation that at the relevant time the director:
(A) was a party to; or
(B) had knowledge of and a material financial interest known to the director; or
(C) knew that a related person was a party or had a material financial interest.
(3) “Fair to the corporation” means, for purposes of subdivision 8.61(b)(3) of this title, that the transaction as a whole was beneficial to the corporation, taking into appropriate account whether it was:
(A) fair in terms of the director’s dealings with the corporation; and
(B) comparable to what might have been obtainable in an arm’s length transaction, given the consideration paid or received by the corporation.
(4) “Material financial interest” means a financial interest in a transaction that would reasonably be expected to impair the objectivity of the director’s judgment when participating in action on the authorization of the transaction.
(5) “Related person” means:
(A) the director’s spouse;
(B) a child, stepchild, grandchild, parent, stepparent, grandparent, sibling, step sibling, half sibling, aunt, uncle, niece, or nephew (or spouse of any thereof) of the director or of the director’s spouse;
(C) an individual living in the same home as the director;
(D) an entity, other than the corporation or an entity controlled by the corporation, controlled by the director or any person specified in this subdivision;
(E) a domestic or foreign:
(i) business or nonprofit corporation (other than the corporation or an entity controlled by the corporation) of which the director is a director;
(ii) unincorporated entity of which the director is a general partner or a member of the governing body; or
(iii) individual, trust, or estate for whom or of which the director is a trustee, guardian, personal representative, or like fiduciary; or
(F) a person that is, or an entity that is controlled by, an employer of the director.
(6) “Relevant time” means:
(A) the time at which the directors’ action respecting the transaction is taken in compliance with section 8.62 of this title; or
(B) if the transaction is not brought before the board of directors of the corporation or its committee for action under section 8.62 of this title, at the time the corporation, or an entity controlled by the corporation, becomes legally obligated to consummate the transaction.
(7) “Required disclosure” means disclosure of:
(A) the existence and nature of the director’s conflicting interest; and
(B) all facts known to the director respecting the subject matter of the transaction that a director free of such conflicting interest would reasonably believe to be material in deciding whether to proceed with the transaction.
Sec. 96. 11A V.S.A. § 8.61 is amended to read:
§ 8.61. JUDICIAL ACTION
(a) A transaction effected or proposed to be effected by a corporation (or by a subsidiary of the corporation or any other entity in which the corporation has a controlling interest) that is not a director’s conflicting interest transaction may not be enjoined, set aside, or give rise to an award of damages or other sanctions, in a proceeding by a shareholder or by or in the right of the corporation, because a director of the corporation, or any person with whom or which he or she has a personal, economic, or other association, has an interest in the transaction.
(b) A director’s conflicting interest transaction may not be enjoined, set aside, or give rise to an award of damages or other sanctions, in a proceeding by a shareholder or by or in the right of the corporation, because the director, or any person with whom or which he or she has a personal, economic, or other association, has an interest in the transaction, if:
(1) directors’ action respecting the transaction was at any time taken in compliance with section 8.62 of this subchapter;
(2) shareholders’ action respecting the transaction was at any time taken in compliance with section 8.63 of this subchapter; or
(3) the transaction, judged according to the circumstances at the time of commitment, is established to have been fair to the corporation.
(a) A transaction effected or proposed to be effected by the corporation, or by an entity controlled by the corporation, may not be the subject of equitable relief, or give rise to an award of damages or other sanctions against a director of the corporation, in a proceeding by a shareholder or by or in the right of the corporation, on the ground that the director has an interest respecting the transaction, if it is not a director’s conflicting interest transaction.
(b) A director’s conflicting interest transaction may not be the subject of equitable relief, or give rise to an award of damages or other sanctions against a director of the corporation, in a proceeding by a shareholder, or by or in the right of the corporation, on the ground that the director has an interest respecting the transaction, if:
(1) the directors’ action respecting the transaction was taken in compliance with section 8.62 of this title at any time; or
(2) the shareholders’ action respecting the transaction was taken in compliance with section 8.63 of this title at any time; or
(3) the transaction, judged according to the circumstances at the relevant time, is established to have been fair to the corporation.
Sec. 97. 11A V.S.A. § 8.62 is amended to read:
§ 8.62. DIRECTORS’ ACTION
(a) Directors’ action respecting a transaction is effective for purposes of section 8.61(b)(1) of this subchapter if the transaction received the affirmative vote of a majority (but no fewer than two) of those qualified directors on the board of directors or on a duly empowered committee of the board who voted on the transaction after either required disclosure to them (to the extent the information was not known by them) or compliance with subsection (b) of this section; provided that action by a committee is so effective only if:
(1) all its members are qualified directors; and
(2) its members are either all the qualified directors on the board or are appointed by the affirmative vote of a majority of the qualified directors on the board.
(b) If a director has a conflicting interest respecting a transaction, but neither he nor she nor a related person of the director specified in section 8.60(3) of this subchapter is a party to the transaction, and if the director has a duty under law or professional canon, or a duty of confidentiality to another person, respecting information relating to the transaction such that the director may not make the disclosure described in section 8.60(4), then disclosure is sufficient for purposes of subsection (a) of this section if the director (1) discloses to the directors voting on the transaction the existence and nature of his or her conflicting interest and informs them of the character and limitations imposed by that duty before their vote on the transaction, and (2) plays no part, directly or indirectly, in their deliberations or vote.
(c) A majority (but no fewer than two) of all the qualified directors on the board of directors, or on the committee, constitutes a quorum for purposes of action that complies with this section. Directors’ action that otherwise complies with this section is not affected by the presence or vote of a director who is not a qualified director.
(d) For purposes of this section, “qualified director” means, with respect to a director’s conflicting interest transaction, any director who does not have either (1) a conflicting interest respecting the transaction, or (2) a familial, financial, professional, or employment relationship with a second director who does have a conflicting interest respecting the transaction, which relationship would, in the circumstances, reasonably be expected to exert an influence on the first director’s judgment when voting on the transaction.
(a) Directors’ action respecting a director’s conflicting interest transaction is effective for purposes of subdivision 8.61(b)(1) of this title if the transaction has been authorized by the affirmative vote of a majority, but no fewer than two, of the qualified directors who voted on the transaction after required disclosure by the conflicted director of information not already known by such qualified directors, or after modified disclosure in compliance with subsection (b) of this section, provided that:
(1) the qualified directors have deliberated and voted outside the
presence of and without the participation by any other director; and
(2) where the action has been taken by a committee, all members of the committee were qualified directors, and either:
(A) the committee was composed of all the qualified directors on the board of directors; or
(B) the members of the committee were appointed by the affirmative vote of a majority of the qualified directors on the board.
(b) Notwithstanding subsection (a) of this section, when a transaction is a director’s conflicting interest transaction only because a related person described in subdivisions 8.60(5)(E) and (F) of this title is a party to or has a material financial interest in the transaction, the conflicted director is not obligated to make required disclosure to the extent that the director reasonably believes that doing so would violate a duty imposed under law, a legally enforceable obligation of confidentiality, or a professional ethics rule, provided that the conflicted director discloses to the qualified directors voting on the transaction:
(1) all information required to be disclosed that is not so violative;
(2) the existence and nature of the director’s conflicting interest; and
(3) the nature of the conflicted director’s duty not to disclose the confidential information.
(c) A majority, but no fewer than two, of all the qualified directors on the board of directors or on the committee constitutes a quorum for purposes of action that complies with this section.
(d) Where directors’ action under this section does not satisfy a quorum or voting requirement applicable to the authorization of the transaction by reason of the articles of incorporation, the bylaws, or a provision of law, independent action to satisfy those authorization requirements must be taken by the board of directors or a committee, in which action directors who are not qualified directors may participate.
Sec. 98. 11A V.S.A. § 8.63 is amended to read:
§ 8.63. SHAREHOLDERS’ ACTION
(a) Shareholders’ action respecting a transaction is effective for purposes of section 8.61(b)(2) of this subchapter if a majority of the votes entitled to be cast by the holders of all qualified shares was cast in favor of the transaction after (1) notice to shareholders describing the director’s conflicting interest transaction, (2) provision of the information referred to in subsection (d) of this section, and (3) required disclosure to the shareholders who voted on the transaction (to the extent the information was not known by them).
(b) For purposes of this section, “qualified shares” mean any shares entitled to vote with respect to the director’s conflicting interest transaction except shares that, to the knowledge, before the vote, of the secretary (or other officer or agent of the corporation authorized to tabulate votes), are beneficially owned (or the voting of which is controlled) by a director who has a conflicting interest respecting the transaction or by a related person of the director, or both.
(c) A majority of the votes entitled to be cast by the holders of all qualified shares constitutes a quorum for purposes of action that complies with this section. Subject to the provisions of subsections (d) and (e) of this section, shareholders’ action that otherwise complies with this section is not affected by the presence of holders, or the voting, of shares that are not qualified shares.
(d) For purposes of compliance with subsection (a) of this section, a director who has a conflicting interest respecting the transaction shall, before the shareholders’ vote, inform the secretary (or other officer or agent of the corporation authorized to tabulate votes) of the number, and the identity of persons holding or controlling the vote, of all shares that the director knows are beneficially owned (or the voting of which is controlled) by the director or by a related person of the director, or both.
(e) If a shareholders’ vote does not comply with subsection (a) of this section solely because of a failure of a director to comply with subsection (d), and if the director establishes that his or her failure did not determine and was not intended by him or her to influence the outcome of the vote, the court may, with or without further proceedings respecting section 8.61(b)(3) of this subchapter, take such action respecting the transaction and the director, and give such effect, if any, to the shareholders’ vote, as it considers appropriate in the circumstances.
(a) Shareholders’ action respecting a director’s conflicting interest transaction is effective for purposes of subdivision 8.61(b)(2) of this title if a majority of the votes cast by the holders of all qualified shares is in favor of the transaction after:
(1) notice to shareholders describing the action to be taken respecting the transaction;
(2) provision to the corporation of the information referred to in subsection (b) of this section; and
(3) communication of the information that is the subject of required disclosure to the shareholders entitled to vote on the transaction, to the extent the information is not known by them.
(b) A director who has a conflicting interest respecting the transaction shall, before the shareholders’ vote, inform the secretary or other officer or agent of the corporation authorized to tabulate votes, in writing, of the number of shares that the director knows are not qualified shares under subsection (c) of this section and the identity of the holders of those shares.
(c) For purposes of this section:
(1) “Holder” means and “held by” refers to shares held by both a record shareholder, as defined in subdivision 13.01(7) of this title, and a beneficial shareholder, as defined in subdivision 13.01(2) of this title;
(2) “Qualified shares” means all shares entitled to be voted with respect to the transaction except for shares that the secretary or other officer or agent of the corporation authorized to tabulate votes either knows, or under subsection (b) of this section is notified, are held by:
(A) a director who has a conflicting interest respecting the transaction; or
(B) a related person of the director, excluding a person described in subdivision 8.60(5)(F) of this title.
(d) A majority of the votes entitled to be cast by the holders of all qualified shares constitutes a quorum for purposes of compliance with this section. Subject to the provisions of subsection (e) of this section, shareholders’ action that otherwise complies with this section is not affected by the presence of holders, or by the voting, of shares that are not qualified shares.
(e) If a shareholders’ vote does not comply with subsection (a) of this section solely because of a director’s failure to comply with subsection (b) of this section, and if the director establishes that the failure was not intended to influence and did not in fact determine the outcome of the vote, the court may take such action respecting the transaction and the director, and may give such effect, if any, to the shareholders’ vote, as the court considers appropriate in the circumstances.
(f) Where shareholders’ action under this section does not satisfy a quorum or voting requirement applicable to the authorization of the transaction by reason of the articles of incorporation, the bylaws, or a provision of law, independent action to satisfy those authorization requirements must be taken by the shareholders, in which action shares that are not qualified shares may participate.
Sec. 99. 11A V.S.A. § 12.02(a) is amended to read:
(a) A corporation may sell, lease, exchange, or otherwise dispose of all, or substantially all, of its property (with or without the good will), otherwise than in the usual and regular course of business, on the terms and conditions and for the consideration determined by the corporation’s board of directors, if the board of directors proposes and its shareholders approve the proposed transaction A sale, lease, exchange, or other disposition of assets, other than a disposition described in section 12.01 of this title, requires approval of the corporation’s shareholders if the disposition would leave the corporation without a significant continuing business activity. If a corporation retains a business activity that represented at least 25 percent of the total assets at the end of the most recently completed fiscal year and 25 percent of either income from continuing operations before taxes or revenues from continuing operations for that fiscal year, in each case of the corporation and its subsidiaries on a consolidated basis, the corporation will conclusively be deemed to have retained a significant continuing business activity.
Sec. 100. 11A V.S.A. § 16.01(d) and (e) are amended to read:
(d) A corporation shall maintain its records in written form or in another form, including electronic form, capable of conversion into written form within a reasonable time.
(e) A corporation shall keep a copy of the following records at its principal office (or, if none in this state, then the registered office):
* * *
(5) all written or electronic communications to shareholders generally within the past three years, including the financial statements furnished for the past three years under section 16.20 of this title;
* * *
Sec. 101. HEALTH CARE REFORM PROPERTY TAX EXEMPTION
In fiscal year 2009 only, the following two properties shall be exempt from education property tax under chapter 135 of Title 32: Buildings and land owned and occupied by a health, recreation, and fitness organization which is exempt under Section 501(c)(3) of the Internal Revenue Code, the income of which is entirely used for its exempt purpose, one of which is designated by the Springfield Hospital and the other designated by the North Country Hospital, to promote exercise and healthy lifestyles for the community and to serve citizens of all income levels in this mission. This exemption shall apply notwithstanding the provisions of subdivision 3832(7) of Title 32.
* * * Effective Dates * * *
Sec. 102. EFFECTIVE DATES
This act shall take effect upon passage, except as follows:
(1) Sec. 10 (property tax bill notice on education spending and rates) shall apply to property tax bills for 2008 and after.
(2) Sec. 11 provisions regarding final date for grand list information used in net education tax calculation shall take effect July 1, 2008; and Sec. 11 provisions regarding town retention of $15.00 late fee for property tax adjustment claims shall apply to claims filed in 2008 and after.
(3) Sec. 12 (increasing amount municipalities may retain to 0.225 of one percent of education taxes collected) shall apply to education property taxes for fiscal years 2009 and after.
(4) Sec. 15 (commissioner does not pay $15.00 late fee to town) shall apply to claims filed in 2008 and after.
(5) Sec. 16 (property tax adjustments allocated to property tax installments) shall apply to property taxes for fiscal years 2009 and after.
(6) Sec. 19 (regarding a limitation on the reduction of taxable income by the capital gains deduction) shall apply to taxable years 2008 and after.
(7) Sec. 26 of this act (update of link to federal income tax laws) shall apply to taxable years beginning on or after January 1, 2007; and Sec. 27 of this act (update of link to federal estate and gift tax laws) shall apply to estates of decedents with a date of death on or after, and gifts made on or after, January 1, 2007.
(8) Sec. 28 of this act (VEGI grace period for first year) shall take effect retroactively as of January 1, 2007.
(9) Sec. 33 ($600,000.00 fire training council assessment) shall apply to fiscal year 2009; and Sec. 34 ($800,000.00 fire training council assessment) shall apply to fiscal years 2010 and after.
(10) Sec. 36 (block of federal bonus depreciation on personal income tax) shall apply to taxable years 2008 and after, and shall apply only to assets placed in service on or after January 1, 2008.
(11) Sec. 42 of this act (amendment of VEGI definitions; “full-time job” at 35 hours and “wages” excluding stock options) shall take effect retroactively from January 1, 2007.
(12) Sec. 45 of this act (interest due on repayment of an excessive property tax adjustment) shall apply to property tax adjustment claims filed in 2008 and after.
(13) Sec. 68 of this act (equal percentage of education tax increment and municipal tax increment required to be used by Town of Milton for tax increment financing) shall take effect July 1, 2008.
(14) The provisions of Sec. 58 of this act pertaining to proportional use of education and municipal tax in TIF financing shall apply to tax increment financing districts approved pursuant to 32 V.S.A. § 5404a.
Approved: June 6, 2008
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Published by:
The Vermont General Assembly
115 State Street
Montpelier, Vermont
www.leg.state.vt.us
Posted by: AnderL
Date: Thursday, June 19, 2008 9:33:52 AM
#msg-30115259
OT sort of - Vermont INC.
Expect a slue of penny stocks and shell companies to come out of the wood work soon using Vermont as their base of operations. Seems all you need is an email address to incorporate. So buyer beware.
http://valleywag.com/5017746/vermonts-new-liberal-incorporation-laws-make-delawares-look-draconian
Delaware has long been the state of convenience for filing incorporation papers. But those nannies require you to have a physical address and all sorts of trappings of the 19th century. Thanks to law professor David Johnson, who just happens to be developing software to help manage a company with principles distributed remotely, a new law in Vermont will allow you to form limited liability corporations with nothing but a few email addresses. No opportunity for fraud there. No siree.
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Vermont OKs the Creation of Virtual Corporations
Ah Vermont, that lovely New England state known for its maple syrup, Ben & Jerry’s ice cream…and now, limited liability corporations that only exist online.
On June 6th, Gov. Jim Douglas signed an inauspicious-sounding bill entitled “H.0888, Miscellaneous Tax Documents” that could revolutionize the way startup companies are formed and run. As New York Law School professor David Johnson explained to me, up until now, U.S. law required LLCs to have physical headquarters, in-person board meetings and other regulations that have little relevance in the digital age.
No longer. Under the new law, for example, a board meeting may be conducted “in person or through the use of [an] electronic or telecommunications medium.” A “‘virtual company’ will be, as a legal matter, a Vermont limited liability company,” said Johnson. And other states are required to recognize the corporation as a legitimate LLC. So while in the past many companies registered in Delaware to take advantage of that state’s business-friendly policies, with this law, Internet-driven startups may find Vermont even more ideal.
Johnson was instrumental to crafting the bill’s language; he, along with his NYLS students and a couple of professors at Vermont Law School, spent the last two years putting it together. He foresees virtual companies launched for countless reasons, such as the production of software or publications written by people across the country, even for corporations that exist only in Second Life.
As you may have guessed, this isn’t just an academic exercise for Johnson; he’s also developing software to manage virtual corporations through NYLS’ DoTank project. Since word of the Vermont bill’s passing got out, he said, “I’ve had two people beg me to be the first to get on the list” to start filing virtual incorporation papers. Indeed, it’s easy to see this becoming standard practice in coming years, with traditional office buildings being abandoned for dynamic companies that exist wherever its employees happen to crack open their computers.
http://gigaom.com/2008/06/17/vermont-oks-the-creation-of-virtual-corporations/
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The Vermont Legislative
Bill Tracking System
Current Status of a Specific Bill or Resolution
2007-2008 Legislative Session
General:
Bill: H.0888
Title: MISCELLANEOUS TAX AMENDMENTS
Currently: Enacted Law
Sponsor(s): H Ways & Means
Request No: 08-0847
Drafter: Bergquist
Comments:
House Status:
Current Status: SIGNED BY GOVERNOR
Status Date: 06/06/2008
Date
Action
Jrn. Page
1st Reading: 03/21/2008 653
2nd Reading: 03/25/2008 743
3rd Reading: 03/27/2008 PASSED 787
http://www.leg.state.vt.us/database/status/summary.cfm?Bill=H%2E0888&Session=2008
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ACT OF THE GENERAL ASSEMBLY 2007-2008
NO. 190. AN ACT RELATING TO MISCELLANEOUS TAX AMENDMENTS.
(H.888)
It is hereby enacted by the General Assembly of the State of Vermont:
* * * Service of Process Costs * * *
Sec. 1. 32 V.S.A. § 3262 is amended to read:
§ 3262. Lien Fees; service of process costs
Notwithstanding section 502 of this title, the commissioner may charge against any collection of any liability any related lien fees specified in subdivision 1671(a)(6) or subsection 1671(c) of this title and any related service of process costs awarded to the department and paid by the commissioner. Fees and costs collected under this section shall be credited to a special fund established and managed pursuant to subchapter 5 of chapter 7 of this title, and shall be available as payment for the fees of the clerk of the municipality and the costs of service.
* * * Use Value Appraisal * * *
Sec. 2. 32 V.S.A. § 3756 is amended to read:
§ 3756. Qualification for use value appraisal
* * *
(b) Before January 15, the director shall submit to the assessing officials a list including a description of each parcel of land and any farm buildings for which an application has been received and preliminarily approved for that year. The listers shall review the list, and shall notify the director before February 15 if there is any reason why any property on the list should not be eligible for use value appraisal.
* * *
(f) Each year, prior to March 15, the director shall determine whether previously classified property is still eligible for use value appraisal and whether the amount of the previous appraisal is still valid. If the director determines that previously classified property is no longer eligible, or that the property has undergone a change in use such that the use change tax may be levied, in accordance with section 3757 of this chapter, or that the use value appraisal should be fixed at a different amount than the previous year, he or she shall thereafter notify the property owner of that determination by delivery of the notification to him or her in person or by mailing such notification to his or her last and usual place of abode. If a change in use which would render the parcel ineligible occurs between March 1 and April 1, the director shall notify the owner by April 15.
* * *
(h) By April March 15, the director shall mail to each municipality a list of property in the municipality which is to be taxed based on its use value appraisal. The list shall include the owners’ names, a grand list number or description of each parcel of land to be appraised at use value, the acreage to be taxed on the basis of use value, the use values to be used for land, and the number and type of farm buildings to be appraised by the assessing officials at use value. The assessing officials shall determine the listed value of the land to be taxed at use value and its estimated fair market value, and fill in these values and the difference between them on the form. This form shall be used by the treasurer or the collector of current taxes to make up tax bills such that the owner is billed only for taxes due on his or her property not enrolled in the program, plus taxes due on the use value of property enrolled in the program. The assessing officials shall submit the completed form to the director by July 5.
* * *
Sec. 3. 32 V.S.A. § 3757(e)(3) is amended to read:
(3) of any transfer of ownership. A transfer of ownership, alone, will not affect eligibility of the parcel, and no new maps will be required solely because of a transfer, but failure to provide maps, a new application, or transfer information to the division of property valuation and review within 30 days of a request being sent by certified mail by the director will result in removal of the parcel from the program.
Sec. 4. 32 V.S.A. § 3758(a) is amended to read:
(a) Whenever the director denies in whole or in part any application for classification as agricultural land or managed forest land or farm buildings, or grants a different classification than that applied for, or the director or assessing officials fix an erroneous a use value appraisal, or determine that previously classified property is no longer eligible or that the property has undergone a change in use, the aggrieved owner may appeal the decision of the director to the director within 30 days of the decision, and from there in the same manner and under the same procedures as an appeal from a decision of a board of civil authority, as set forth in subchapter 2 of chapter 131 of this title; and may appeal the decision of the assessing officials in the same manner as an appeal of a grand list valuation.
* * * FY09 Education Property Tax Rates * * *
Sec. 5. FISCAL YEAR 2009 REDUCTION OF EDUCATION PROPERTY TAX RATE ADJUSTMENTS
(a) For fiscal year 2009 only, the education property tax imposed under subsection 5402(a) of Title 32 shall be reduced from the rate of $1.59 and $1.10 and shall instead be at the following rates:
(1) the tax rate for nonresidential property shall be $1.36 per $100.00; and
(2) the tax rate for homestead property shall be $0.87 multiplied by the district spending adjustment for the municipality, per $100.00
of equalized property value as most recently determined under section 5405 of Title 32.
(b) For claims filed in 2009 only, “applicable percentage” in subdivision 6066(a)(2) of Title 32 shall be reduced from 2.0 percent and instead shall be 1.80 percent multiplied by the fiscal year 2009 district spending adjustment for the municipality in which the homestead residence is located; but in no event shall the applicable percentage be less than 1.80 percent.
* * * Education Property Tax * * *
Sec. 6. 32 V.S.A. § 3843 is amended to read:
§ 3843. Housing projects for low and moderate income occupants
(a) The selectboard of a town, the board of aldermen or city council of a city, or the supervisor of an unorganized town or gore, may enter into an agreement on behalf of the municipality with a person who owns or intends to acquire or seeks to construct a federally subsidized, low or moderate income housing project, for payments by such person to the municipality in lieu of all taxes which would otherwise be assessed against the property, where federal assistance would not be available in the absence of such an agreement. An agreement entered into under this section shall be in writing and shall be executed by the person owning or intending to acquire or to construct the project, and by the selectboard or aldermen, or in the case of an unorganized town or gore by the supervisor, on behalf of the municipality. Property which is subject to an agreement entered into under this section shall be included in the equalized grand list of the municipality under chapter 123 of Title 16 in an amount which at the tax rate in effect in the municipality would, if the property were subject to taxation, yield a tax equal to the amount of the payments in lieu of taxes provided for under the agreement. The amount of the payments and the date or dates when the payments are to be made shall be as specified in the agreement, and the term of the agreement shall not exceed 40 years, but otherwise the same may contain any provisions not inconsistent with this section A municipality may vote at any regular or special meeting to exempt, in full or in part, for a term not to exceed 40 years, a federally subsidized low or moderate income housing project from education property tax if federal assistance would not be available in the absence of such an exemption.
(b) An agreement entered into under this section shall be filed in the office of the clerk of the town or city executing the same within ten days following its execution or in the case of an agreement executed by the supervisor of an unorganized town or gore, in the county clerk’s office. The text of the agreement shall also be posted in at least five conspicuous places within the municipality and published in a newspaper circulating in the municipality within ten days following its execution.
(c) The agreement shall become effective 20 days following its execution unless a petition is filed for a referendum pursuant to section 3844 of this title in which case it shall become effective pursuant to the provisions of section 3844 of this title.
Sec. 7. REPEAL
32 V.S.A. § 3844 (allowing permissive referendum to disapprove action by the town’s selectboard under 32 V.S.A. § 3843, “Housing projects for low and moderate income occupants”) is repealed as of May 1, 2008.
Sec. 8. TRANSITION RULE
A federally subsidized low or moderate income housing project agreement entered into under 32 V.S.A. § 3843 prior to April 1, 2008, shall continue to be exempt from property tax to the extent and for the period provided for in the agreement; and shall affect the education property tax grand list and reduce the total education property tax due to the state from that municipality; provided, however, that beginning with fiscal year 2010, the agreement shall not affect the education property tax grand list nor reduce the total education property tax due to the state from that municipality, and that agreement shall be subject to the provisions of 32 V.S.A. § 5404a(d) for assessment of a separate tax on the municipality’s municipal grand list.
Sec. 9. REPEAL
32 V.S.A. § 4186 (refunds based on false or incorrect abstracts) is repealed.
Sec. 10. 32 V.S.A. § 5402(b)(1) is amended to read:
(b) Calculation of education tax.
(1) The commissioner of taxes shall determine for each municipality the education tax rates under subsection (a) of this section, divided by the municipality’s most recent common level of appraisal. The legislative body in each municipality shall then bill each property taxpayer at the homestead or nonresidential rate determined by the commissioner under this subdivision, multiplied by the education property tax grand list value of the property, properly classified as homestead or nonresidential property and without regard to any other tax classification of the property. Each homestead property tax bill shall include notice of the education spending per equalized pupil in the taxpayer’s district and its relation to the base education payment; and the effect of the education spending in the district upon the homestead tax rate and the applicable percentage for income sensitivity; and shall also include an insert supplied by the commissioner of taxes which explains the relationship of district education spending and the common level of appraisal to property tax rates. Tax bills shall show the tax due and the calculation of the rate determined under subsection (a) of this section, divided by the municipality’s most recent common level of appraisal, multiplied by the current grand list value of the property to be taxed. Each homestead property tax bill shall include a copy of the two page document attached to the May 11, 2007 memorandum from the speaker of the house to the commissioner of taxes, which shall be entitled “About Your 20XX Taxes ‘The more you spend the more you pay’,” updated annually for each town by the commissioner of taxes.
Sec. 11. 32 V.S.A. § 5402(c) is amended to read:
(c) The treasurer of each municipality shall by December 1 of the year in which the tax is levied and on June 1 of the following year pay to the state treasurer for deposit in the education fund one half of the municipality’s statewide nonresidential tax and one half of the municipality’s homestead education tax, as determined under subdivision (b)(1) of this section. The commissioner of education shall determine the municipality’s net nonresidential education tax payment, and its net homestead education tax payment to the state, and payment based on grand list information received by the commissioner no later than the March 15 prior to the June 1 net payment. Payment shall be accompanied by a return prescribed by the commissioner of education. The municipality may retain 0.225 of one percent of the total education tax collected, only upon timely remittance of net payment to the state treasurer. The municipality may also retain $15.00 for each late property tax adjustment claim filed after April 15 and before September 2, as notified by the department, for the cost of issuing a new property tax bill.
Sec. 12. 32 V.S.A. § 5410(h) is amended to read:
(h) The filing of a new or corrected declaration or rescission of an erroneous declaration, on or before September 1 of the property tax year, that is not reflected in the first education fund payment under 16 V.S.A. § 4028 for that fiscal year or in a municipality’s first payment to the education fund under subsection 5402(c) of this title for that fiscal year, shall be reflected in the final net payment to or from the education fund for that fiscal year. The municipality may retain one-eighth 0.225 of one percent of the tax collected. Any reduction in tax paid to a municipality due to a new, revised, or rescinded declaration shall be paid by the municipality to the taxpayer no later than May 15 of the fiscal year. No later than June 1, each municipality shall provide to the state treasurer a list of taxpayers who filed late or corrected declarations or rescinded declarations, the amount of the change in education tax, and the amount of any interest and penalty billed the taxpayer.
Sec. 13. 32 V.S.A. § 5412 is amended as follows:
§ 5412. Valuation appeals Reduction of listed value and recalculation of education tax liability
(a)(1) If a listed value is reduced as the result of an appeal or court action, and if the municipality files a written request with the commissioner within 30 days after the date of the settlement agreement, determination, or entry of the final order, or settlement agreement if the commissioner determines that the settlement value is the fair market value of the parcel, the commissioner shall recalculate the municipality’s education property tax liability for the year at issue, in accord with the reduced valuation, provided that:
(A) the reduction in valuation is the result of an appeal under chapter 131 of this title to the director of property valuation and review or to a court, with no further appeal available with regard to that valuation, or any judicial decision with no further right of appeal, or a settlement of either an appeal or court action if the commissioner determines that the settlement value is the fair market value of the parcel;
(B) the municipality notified the commissioner of the appeal or court action, in writing, within ten days after notice of the appeal was filed under section 4461 of this title or after the complaint was served; and
(C) as a result of the valuation reduction of the parcel, the value of the municipality’s grand list is reduced at least one percent.
(2) The municipality’s request shall include a copy of the agreement, determination or final order, and any other documentation necessary to show the existence of these conditions.
(b) To the extent that the municipality has paid that liability, the commissioner shall allow a credit for any reduction in education tax liability against the next ensuing year’s education tax liability or, at the request of the municipality, may refund to the municipality an amount equal to the reduction in education tax liability.
(c) If a listed value is increased as the result of an appeal under chapter 131 of this title or court action, whether adjudicated or settled and the commissioner determines that the settlement value is the fair market value of the parcel, with no further appeal available with regard to that valuation, the commissioner shall recalculate the municipality’s education property tax for each year at issue, in accord with the increased valuation, and shall assess the municipality for the additional tax at the same time the commissioner assesses the municipality’s education tax liability for the next ensuing year, unless the resulting assessment would be less than $300.00. Payment under this section shall be due with the municipality’s education tax liability for the next ensuing year.
(d) Recalculation of education property tax under this section shall have no effect other than to reimburse or assess a municipality for education property tax changes which result from property revaluation.
* * * Property Tax Adjustments * * *
Sec. 14. 32 V.S.A. § 6066a(c) is amended to read:
(c) The commissioner shall notify the municipality of any claim and refund amounts unresolved by September 15 at the time of final resolution, including adjudication if any; provided, however, that towns will not be notified of any additional adjustment amounts after December 31 of the claim year, and such amounts shall be paid to the claimant by the commissioner.
Sec. 15. 32 V.S.A. § 6066a(d) is amended to read:
(d) For late claims, filed after April 15, the property tax adjustment amount shall be reduced by $15.00, which shall be paid by the commissioner to the municipality for the cost of issuing a new property tax bill to the claimant.
Sec. 16. 32 V.S.A. § 6066a(f) is amended to read:
(f) Property tax bills.
(1) For amounts stated in the notice to towns on July 1, municipalities shall include on the homestead property tax bill notice to the taxpayer of the total amount allocated to payment of homestead education property tax liabilities and notice of the balance due. By a majority of those voting at an annual or special meeting called for that purpose, the voters of a municipality may elect to Municipalities shall apply the amount allocated under this chapter to current-year property taxes to in equal amounts to each of the taxpayers’ property tax installments in order or pro rata that include education taxes.
(2) For property tax adjustment amounts for which municipalities receive notice on or after September 15, municipalities shall issue a new homestead property tax bill with notice to the taxpayer of the total amount allocated to payment of homestead property tax liabilities and notice of the balance due.
(3) The property tax adjustment amount determined for the taxpayer shall be allocated first to current-year property tax on the homestead parcel, next to current-year homestead parcel penalties and interest, next to any prior year homestead parcel penalties and interest, and last to any prior year property tax on the homestead parcel. No adjustment shall be allocated to a property tax liability for any year after the year for which the claim or refund allocation was filed. If the property tax adjustment amount exceeds the amount allocated under this subsection, the municipality shall refund the excess to the taxpayer, without interest, within 20 days of the first date upon which taxes become due and payable or 20 days after notification by the commissioner of education, whichever is later. No municipal tax-reduction incentive for early payment of taxes shall apply to any amount allocated to the property tax bill under this chapter.
(4) If the property tax adjustment amount as described in subsection (b) of this section exceeds the property tax, penalties and interest, due for the current and all prior years, the municipality shall refund the excess to the taxpayer, without interest, within 20 days of the first date upon which taxes become due and payable or 20 days after notification by the commissioner of education, whichever is later.
Sec. 17. 32 V.S.A. § 6063 is amended to read:
§ 6063. CLAIM AS PERSONAL; ADJUSTMENT AMOUNT AT TIME OF
TRANSFER
(a) The right to file a claim under this chapter is personal to the claimant and shall not survive his or her death, but the right may be exercised on behalf of a claimant by his or her legal guardian or attorney-in-fact. When a claimant dies after having filed a timely claim, the property tax adjustment amount shall be credited to the homestead property tax liability of the claimant’s estate, as provided in section 6066a of this title.
(b) In case of sale or transfer of a residence, any property tax adjustment amounts related to that residence shall be allocated to the seller at closing unless the parties otherwise agree.
Sec. 18. REPEAL
32 V.S.A. § 6066(f) (proration of unadjusted property tax at time of sale) is repealed as of January 1, 2008.
* * * Capital Gains* * *
Sec. 19. 32 V.S.A. § 5811(21)(B) is amended to read:
(B) Decreased by the following items of income (to the extent such income is included in federal adjusted gross income):
(i) income from United States government obligations; and
(ii) 40 percent of adjusted net capital gain income as defined in Section 1(h) of the Internal Revenue Code, but the total amount of decrease under this subdivision (ii) shall not exceed 40 percent of federal taxable income.
* * * Refund Procedure * * *
Sec. 20. 32 V.S.A. § 3203 is amended to read:
§ 3203. Notice of deficiencies; assessment of penalties and interest; denial of refund
If the commissioner finds that any taxpayer has failed to discharge in full the amount of any tax liability incurred under this title, or has claimed a refund in error or that a penalty or interest should be assessed under it this title, the commissioner shall notify the taxpayer of the deficiency or denial of refund or assess the penalty or interest, as the case may be, by mail. The mailing of the notice shall be presumptive evidence of its receipt by the person to whom it is addressed. Any period of time which is determined under this chapter by the giving of notice shall commence to run from the date of mailing of the notice.
Sec. 21. 32 V.S.A. § 5882 is amended to read:
§ 5882. Time limitation on notices of deficiency and assessment of penalty and interest
(a) The commissioner may notify a taxpayer of a deficiency with respect to the payment of any tax liability, or assess a penalty or interest with respect thereto, in accordance with section 5881 3202 of this title, at any time within three years after the date that tax liability was originally required to be paid under this chapter.
(b) Notwithstanding subsection (a) of this section:
(1) If the taxpayer fails to file a proper return with respect to any tax liability at the time prescribed for its filing, the notification or assessment may be made at any time before the end of three years after the taxpayer files such a return.
(2) If the deficiency is caused by reason of fraud or the willful intent of the taxpayer to defeat or evade this chapter, the notification or assessment may be made at any time.
(3) If the notice of deficiency or assessment is founded upon an assertion or determination by the United States that the taxable income, or income tax liability, of the taxpayer under the laws of the United States is greater than the amount of the taxable income or income tax liability reported on any return of the taxpayer filed under the laws of the United States, the notification or assessment under section 5881 3203 of this title may be made within the time prescribed under subsection (a) of this section, or at any time before the expiration of six months after the date the commissioner is notified, in writing, by the taxpayer or by the United States of the federal assertion or determination, whichever period is the later to expire.
(4) If the taxpayer and commissioner agree, the notification or assessment may be made at any time before the date so agreed upon.
(5) If a person withholds tax under subchapter 4 of this chapter but under-reports the tax withheld by 20 percent or more, the notification or assessment may be made at any time before the expiration of six years from the date of the filing of such return.
(6) If the notice or deficiency is based upon a refund that was paid in error, the notification or assessment under section 3203 of this title may be made within the time prescribed under subsection (a) of this section or at any time before the expiration of one year after the date the refund was paid, whichever period is the later to expire.
Sec. 22. 32 V.S.A. § 5883 is amended to read:
§ 5883. Determination of deficiency, refund, penalty, or interest
Upon receipt of a notice of deficiency, of denial or reduction of a refund claim, or of assessment of penalty or interest under section 5881 3203 of this title, the taxpayer may, within 60 days after the date of mailing of the notice or assessment, petition the commissioner in writing for a determination of that deficiency, refund, or assessment. The commissioner shall thereafter grant a hearing upon the matter and notify the taxpayer in writing of his or her determination concerning the deficiency, penalty or interest.
Sec. 23. REPEAL
32 V.S.A. § 3802(10) (property tax exemption for Civil and Spanish American war veterans) is repealed.
* * * Tax Expenditures* * *
Sec. 24. 32 V.S.A. § 312(c) is added to read:
(c) Based on the information contained in the tax expenditure report, the commissioner shall recommend to the general assembly that any expenditure that has cost less than $50,000.00 or has been claimed by fewer than ten taxpayers in each of the three preceding years be repealed two years hence.
* * * Meals and Rooms Tax Petitions * * *
Sec. 25. 32 V.S.A. § 9243 is amended to read:
§ 9243. Returns and payment
(a) Where the meals and rooms tax liability under this chapter for the immediately preceding full calendar year has been (or would have been in cases when the business was not operating for the entire year) $500.00 or less, the gross receipts taxes imposed by this chapter shall be due and payable in quarterly installments on or before the twenty-fifth day of the calendar month succeeding the quarter ending the last day of March, June, September and December of each year. In all other cases, the gross receipts tax imposed by this chapter shall be due and payable monthly on or before the twenty-fifth (23rd of February) day of the month following the month for which the tax is due. The commissioner may authorize payment of the tax due by electronic funds transfer. The commissioner may require payment by electronic funds transfer from any taxpayer who is required by federal tax law to pay any federal tax in that manner, or from any taxpayer who has submitted to the tax department two or more protested or otherwise uncollectible checks with regard to any state tax payment in the prior two years. Each operator shall make out and sign under the pains and penalties of perjury a return for each quarter or month. The return shall be filed with the commissioner on a form prescribed by the commissioner. The commissioner shall distribute return forms to the operators, but no operator shall be excused from liability for failure to file a return or pay the tax because he has failed to receive a form. A remittance for the amount of taxes shall accompany each quarterly or monthly return. Returns shall be made on forms provided by the commissioner. Payment of taxes by electronic funds transfer does not affect the requirement to file returns.
(b) The commissioner may require returns and amended returns to be filed within 20 days after notice and to contain the information specified in the notice. Upon failure of a taxpayer to file any return required under this chapter within 20 days of the date of a notice to the taxpayer, the commissioner may petition a judge of the superior court in the county wherein the taxpayer resides or has a place of business (or, if the taxpayer neither resides nor has a place of business in this state, the commissioner may petition the Washington superior court), and upon the petition of the commissioner and a hearing, the judge shall issue a citation requiring the taxpayer (and, if the taxpayer is a corporation, any principal officer of such corporation) to file a proper return in accordance with this chapter, upon pain of contempt. The order of notice upon the petition shall be returnable not later than 20 days after the filing of the petition. The petition shall be heard and determined on the return day or on such day thereafter as the court shall fix, having regard to the speediest possible determination of the case consistent with the rights of the parties. The judgment shall include costs in favor of the prevailing party. The commissioner’s authority to petition under this subsection is in addition to the commissioner’s authority under subsection 9273 of this title to compute the tax liability of a taxpayer who fails to file a required return or files an incorrect or insufficient return.
* * * Annual Update of Links to Federal Law * * *
Sec. 26. 32 V.S.A. § 5824 is amended to read:
§ 5824. ADOPTION OF FEDERAL INCOME TAX LAWS
The statutes of the United States relating to the federal income tax, as in effect for taxable year 2006 2007, but without regard to federal income tax rates under Section 1 of the Internal Revenue Code, are hereby adopted for the purpose of computing the tax liability under this chapter.
Sec. 27. 32 V.S.A. § 7475 is amended to read:
§ 7475. ADOPTION OF FEDERAL ESTATE AND GIFT TAX LAWS
The laws of the United States, relating to federal estate and gift taxes as in effect on January 1, 2007 2008, are hereby adopted for the purpose of computing the tax liability under this chapter, except with the credit for state death taxes under Section 2011 and 2604 as in effect on January 1, 2001, of the Internal Revenue Code, and without any deduction for state death taxes under Section 2058 of the Internal Revenue Code.
* * * Vermont Employment Growth Incentive Grace Period * * *
Sec. 28. 32 V.S.A. § 5930b(c)(5) and (6) are amended to read:
(5) A business whose application is approved and, in the first award period year, fails to meet or exceed its payroll target and one out of two of its jobs and capital investment targets shall forfeit all authority to earn and claim incentives under this section. The department of taxes shall notify the Vermont economic progress council that the first year award period targets have not been met, and the council shall rescind the incentive authorization in its entirety.
(6) A business whose application is approved and, in the first, second, or third year of the award period, fails to meet or exceed its payroll target and one out of two of its jobs and capital investment targets may not claim incentives in that year. To the extent such business reaches its first, second, or third year award period targets within the succeeding two calendar year reporting periods immediately succeeding year one, two, or three of the award period, which ever is applicable, such business may claim incentives in five-year installments as provided in subdivisions (1) through (4) of this subsection. A business which fails to meet or exceed its payroll target and one of its two jobs and capital investment targets within this time frame shall forfeit all authority under this section to earn and claim incentives for award period year one, two, or three, as applicable, and any future award period years. The department of taxes shall notify the Vermont economic progress council that the first, second, or third year award period targets have not been met within the prescribed period, and the council shall rescind authority for the business to earn incentives for the activity in year one, two, or three, as applicable, and any future award period years.
* * * Wood Products Tax Credit * * *
Sec. 29. Sec. 9 of No. 212 of the Acts of the 2005 Adj. Sess. (2006) is amended to read:
Sec. 9. SUNSET
Sec. 2 of Act No. 2 of the Acts of 2005 is amended to read:
Sec. 2. EFFECTIVE DATE; SUNSET
Sec. 1 of this act (wood products manufacture tax credit) shall apply to taxable years beginning on or after July 1, 2005. 32 V.S.A. § 5930y is repealed July 1, 2008 2011, and no credit under that section shall be available for any taxable year beginning on or after July 1, 2008 2011.
Sec. 30. WOOD PRODUCTS TAX CREDIT REPORT
By January 15 in each of the years 2009, 2010, and 2011, the commissioner of economic development shall report to the house committee on ways and means and the senate committee on finance the effect of the wood products manufacture tax credit under 32 V.S.A. § 5930y on wood products manufacturing employment and on the outlook for future wood products manufacturing activity in Vermont by any taxpayers claiming the credit in the three years prior to each report.
* * * Common Level of Appraisal after Townwide Reappraisal* * *
Sec. 31. COMMON LEVEL OF APPRAISAL FOLLOWING 2007
TOWNWIDE REAPPRAISAL
In the case of a townwide reappraisal which adjusts the value of only the April 1, 2007, grand list, the common level of appraisal under 32 V.S.A.
§ 5406(c) to be applied to that grand list shall be no less than 100 percent; and any resulting reduction in the municipality’s fiscal-year 2008 education tax liability to the education fund shall be reimbursed as a credit on the municipality’s fiscal-year 2009 education tax liability to the education fund.
* * * Ratification of Act No. 81 Affordable Housing Provision * * *
Sec. 32. RATIFICATION OF ENROLLED VERSION OF H.521 IN
NO. 81 OF THE ACTS OF 2007
The enrolled version of No. 81 of the Acts of 2007, as published by the Secretary of State in the publication entitled “Acts and Resolves Passed by the General Assembly of the State of Vermont, sixty-ninth biennial session, 2007,” is hereby expressly ratified as the correct version of No. 81 of the Acts of 2007. This ratification shall not constitute a reenactment of No. 81 and shall have no effect upon the effective dates in that act.
Sec. 33. 32 V.S.A. § 8557 is amended to read:
§ 8557. VERMONT FIRE SERVICE TRAINING COUNCIL
(a) Sums for the expenses of the operation of training facilities and curriculum of the Vermont fire service training council not to exceed $400,000.00 $600,000.00 per year shall be paid to the fire service training council safety special fund created by section 3157 of Title 20 by insurance companies writing fire, homeowners multiple peril, allied lines, farmowners multiple peril, commercial multiple peril (fire and allied lines), private passenger auto physical damage and commercial auto physical damage
, surplus lines, and inland marine policies on property and persons situated within the state of Vermont within 30 days after notice from the commissioner of banking, insurance, securities, and health care administration of such estimated expenses. Captive and surplus line companies shall be excluded from the effect of this section. The commissioner shall annually, on or before July 1, apportion such charges among all such companies and shall assess them for the same on a fair and reasonable basis as a percentage of their gross direct written premiums on such insurance written during the second prior calendar year on property situated in the state. An amount not less than $100,000.00 shall be specifically allocated to the provision of what are now or formerly referred to as Level I, units I, II, and III (basic) courses for entry level firefighters.
* * *
Sec. 34. 32 V.S.A. § 8557 is amended to read:
§ 8557. VERMONT FIRE SERVICE TRAINING COUNCIL
(a) Sums for the expenses of the operation of training facilities and curriculum of the Vermont fire service training council not to exceed $600,000.00 $800,000.00 per year shall be paid to the fire safety special fund created by section 3157 of Title 20 by insurance companies writing fire, homeowners multiple peril, allied lines, farm owners multiple peril, commercial multiple peril (fire and allied lines), private passenger auto physical damage and commercial auto physical damage and liability, surplus lines, and inland marine policies on property and persons situated within the state of Vermont within 30 days after notice from the commissioner of banking, insurance, securities, and health care administration of such estimated expenses. Captive and surplus line companies shall be excluded from the effect of this section. The commissioner shall annually, on or before July 1, apportion such charges among all such companies and shall assess them for the same on a fair and reasonable basis as a percentage of their gross direct written premiums on such insurance written during the second prior calendar year on property situated in the state. An amount not less than $100,000.00 shall be specifically allocated to the provision of what are now or formerly referred to as Level I, units I, II, and III (basic) courses for entry level firefighters.
* * *
Sec. 35. 20 V.S.A. § 3152(a) is amended to read:
(a) The Vermont fire service training council is created. The council shall consist of 11 12 members. The commissioner of labor, the commissioner of public safety, the director of fire safety, the commissioner of forests, parks and recreation, the commissioner of education, and the commissioner of health, or their designees, shall serve as ex officio members of the council. Five Six members shall be appointed by the governor for three-year terms. Of the appointed members, the governor shall appoint one member who during incumbency is a representative of the Vermont career fire chiefs association; one member who, at the time of appointment, is a representative of the professional firefighters of Vermont; one member, who, at the time of appointment, is a representative of the Vermont fire chiefs association and who is a fire chief of a volunteer fire department; one member who, at the time of appointment, is a representative of the Vermont state firefighters association and who is a volunteer firefighter; one member who during incumbency is an employee, officer, or director of an insurance company domiciled in this state and subject to the assessment under 32 V.S.A. § 8557; and one member of the public who is not involved in fire service. To the extent possible, appointments shall be geographically representative.
* * * Elimination of Pass-Through of New Accelerated Depreciation
on the Personal Income Tax * * *
Sec. 36. 32 V.S.A. § 5811(21) is amended to read:
(21) “Taxable income” means federal taxable income determined without regard to Section 168(k) of the Internal Revenue Code and:
* * *
Sec. 37. EXTENSION OF 2007 FILING DEADLINE FOR CERTAIN
PROPERTY TAX ADJUSTMENT CLAIMS
(a) Any 2007 filed property tax adjustment claim filed on or before the September 4, 2007 deadline but which was denied before December 1, 2007, due to missing information or incomplete filing may be refiled before August 1, 2008, if all of the following conditions are met:
(1) the claimant submits a written request for reconsideration of claim, including all information required by the commissioner in the form prescribed by the commissioner and signed by the claimant under pains and penalties of perjury; and
(2) the first 2007 property tax bill issued in the claimant’s town was issued after September 4, 2007; and
(3) the commissioner, in his or her judgment, finds that the claimant was unable to complete the filing or provide the missing information prior to December 1, 2007, as a result of sickness, absence, or other disability, or other good cause.
(b) The commissioner’s determination to allow or deny a claim under this section shall be final, and the commissioner shall not notify the municipality of the claimant’s property tax adjustment, but instead shall refund the property tax adjustment amount to the claimant without interest and without penalty under 32 V.S.A. § 6066a(d).
* * * Disclosure of Tax Return Information * * *
Sec. 38. 32 V.S.A. § 3102(d) is amended to read:
(d) The commissioner shall disclose a return or return information:
* * *
(5) to the attorney general, if such return or return information relates to chapter 205 of this title or subchapters 1A and 1B of chapter 19 of Title 33, for purposes of investigating potential violations of and enforcing chapter 40 of Title 7, subchapter 2A of chapter 173 of Title 20; and subchapters 1A and 1B of chapter 19 of Title 33.
Sec. 39. 32 V.S.A. § 3102(e) is amended to read:
(e) The commissioner may, in his or her discretion and subject to such conditions and requirements as he or she may provide, including any confidentiality requirements of the Internal Revenue Service, disclose a return or return information:
* * *
(14) to the office of the state treasurer, only in the form of mailing labels, with only the last address known to the department of taxes of any person identified to the department by the treasurer by name and Social Security number, for the treasurer’s use in notifying owners of unclaimed property.
Sec. 40. EDUCATION PROPERTY TAX EXEMPTION FOR SKATING
RINKS USED FOR PUBLIC SCHOOLS
Real and personal property operated as a skating rink, owned and operated on a nonprofit basis but not necessarily by the same entity, and which, in the most recent calendar year, provided facilities to local public schools for a sport officially recognized by the Vermont Principals’ Association shall be exempt from education property taxes for fiscal years 2009 and 2010 only.
Sec. 41. 32 V.S.A. § 5930b(g) is added to read:
(g) Employment growth incentive for environmental technology business.
(1) For purposes of this subsection, an “environmental technology business” means a business that is subject to income taxation in Vermont and whose current or prospective economic activity in Vermont for which incentives are sought under this section is certified by the secretary of commerce and community development to be primarily research, design, engineering, development, or manufacturing activity related to any one or more of the following:
(A) Waste management, including waste collection, treatment, disposal, reduction, recycling, and remediation.
(B) Natural resource protection and management, including water and wastewater purification and treatment, air pollution control and prevention or remediation, soil and groundwater protection or remediation, and hazardous waste control or remediation.
(C) Energy efficiency or conservation.
(D) Clean energy, including solar, wind, wave, hydro, geothermal, hydrogen, fuel cells, waste-to-energy, or biomass.
(2) Any application for a Vermont employment growth incentive under this section for an environmental technology business shall be considered and administered pursuant to all provisions of this section, except that:
(A) the “incentive ratio” pursuant to subdivision (a)(11) of this section shall be set at 90 percent; and
(B) the “payroll threshold” pursuant to subdivision (a)(17) of this section shall be deemed to be 20 percent of the expected average industry payroll growth as determined by the cost-benefit model.
Sec. 42. 32 V.S.A. § 5930b(a)(9) and (23) are amended to read:
(9) “Full-time job” means a permanent position filled by an employee who works at least 37 35 hours each week.
(23) “Vermont gross wages and salaries” means Medicare wages as reported on Federal Tax Form W2 to the extent those wages are Vermont wages, excluding income from nonstatutory stock options.
Sec. 43. Sec. 7b of No. 81 of the Acts of 2007 is amended to read:
Sec. 7b. EFFECTIVE DATE
Sec. 7a of this act (amendment of sales tax exemption for aircraft parts) shall take effect July 1, 2011 2018.
Sec. 44. TAX CREDIT FOR HISTORIC BUILDING REHABILITATION
An owner awarded a tax credit under the provisions of section 5930n of Title 32 for a historic rehabilitation project who transfers the rehabilitated building to an entity which is tax-exempt under Internal Revenue Code Section 501(c)(3) shall not be liable for the recapture penalty under 32 V.S.A. § 5930n(f)(4)(A), but instead shall be subject to the recapture penalty under 32 V.S.A. § 5930ff(2).
Sec. 45. 32 V.S.A. § 6071(b) is amended to read:
(b) In any case in which it is determined that a claim is or was excessive, the commissioner may impose a ten percent penalty on such excess and if the claim has been paid or credited against property tax or income tax otherwise payable, the credit shall be reduced or canceled, and the proper portion of any amount paid shall be similarly recovered by assessment as income taxes are assessed and such assessment shall bear interest at the rate per annum established from time to time by the commissioner pursuant to section 3108 of this title from the date of payment or, in the case of adjustment of a property tax bill under section 6066a of this title, from December 1 of the year in which the claim is filed until refunded or paid.
Sec. 46. Sec. 5 of No. 213 of the Acts of 1892, as amended by No. 357 of the Acts of 1906, is amended to read:
Sec. 5. Said corporation shall have power to purchase and receive for the charitable purposes herein indicated, by gift, bequest, devise or otherwise, real and personal property, and the same to hold, for such purposes only, and to sell and convey the same or any part thereof when expedient in the judgment of the Directors. No more than fifty thousand dollars in value of the property of said corporation which is used directly as a nonprofit elder residential care home shall be exempt from municipal property taxation, and up to $500,000.00 of the same property shall be exempt from education property taxation, and such property, to be so exempt from taxation, shall be located in said Brattleboro.
* * * Health Care Provider Provisions * * *
Sec. 47. 33 V.S.A. § 1953(a)(1) is amended to read:
(1) Beginning July 1, 2005 January 1, 2008, each hospital’s annual assessment, except for hospitals assessed under subdivision (2) of this subsection, shall be 6.0 5.5 percent of its net patient revenues (less chronic, skilled, and swing bed revenues) for the hospital’s fiscal year as determined annually by the director from the hospital’s financial reports and other data filed with the department of banking, insurance, securities, and health care administration. The annual assessment shall be based on data from a hospital’s third most recent full fiscal year.
Sec. 48. 33 V.S.A. § 1955(a) is amended to read:
(a) Each Beginning January 1, 2008, each ICF/MR’s annual assessment shall be six 5.5 percent of the ICF/MR’s total annual direct and indirect expenses for the most recently settled ICF/MR audit.
Sec. 49. 33 V.S.A. § 1952(f) is added to read:
(f) If a health care provider fails to pay its assessments under this subchapter according to the schedule or a variation thereof adopted by the director, the director may, after notice and opportunity for hearing, deduct these assessment arrears and any late‑payment penalties from Medicaid payments otherwise due to the provider. The deduction of these assessment arrears may be made in one or more installments on a schedule to be determined by the director.
Sec. 50. 33 V.S.A. § 1954(d) is amended to read:
(d) Any nursing home that fails to make a payment to the office on or before the specified schedule, or under any schedule of delayed payments established by the director, shall be assessed not more than $1,000.00. The director may waive this late-payment assessment provided for in this subsection for good cause shown by the nursing home. The director may reduce Medicaid claim payments to satisfy all past due provider taxes assessed.
Sec. 51. 27 V.S.A. § 1248a is added to read:
§ 1248a. ELECTRIC UTILITY COOPERATIVES
(a) Electric utility cooperatives organized under or otherwise subject to 30 V.S.A. chapter 81 shall report capital credits which have been retired and declared payable by the cooperative’s board of directors, but which have not been claimed by the owner in accordance with the provisions of this chapter. Electric utility cooperatives shall not pay or deliver the unclaimed capital credits to the treasurer. For purposes of this section, capital credits shall mean those credits to a capital account of a member of an electric utility cooperative which the cooperative is obliged to pay after operating costs and expenses have been paid.
(b) The treasurer shall provide notice of unclaimed capital credit properties reported by electric utilities in accordance with the provisions of section 1249 of this title. In the event of a claim for a capital credit property, the treasurer shall refer the claimant to the appropriate electric utility cooperative who shall evaluate the claim and upon provision of satisfactory proof of ownership shall pay the claimant.
(c) The electric utility cooperative shall notify the treasurer of the resolution of all claims for unclaimed property.
Sec. 52. 30 V.S.A. § 209(d)(7) is amended to read:
(7) Net revenues above costs associated with payments from the New England Independent System Operator (ISO‑NE) for capacity savings resulting from the activities of the energy efficiency utility designated under subdivision (2) of this subsection shall be deposited into the electric efficiency fund established by this section and be used by the entity appointed under subdivision (2) of this subsection to deliver fossil fuel energy efficiency services to Vermont heating and process-fuel consumers on a whole-buildings basis to help meet the state’s building efficiency goals established by 10 V.S.A. § 581.
Sec. 53. 30 V.S.A. § 209(e)(15) is amended to read
(15) Ensure that the energy efficiency programs implemented under this section are designed to make continuous and proportional progress toward attaining the overall state building efficiency goals established by 10 V.S.A. § 581, by promoting all forms of energy end‑use efficiency and comprehensive sustainable building design. The funds made available under subdivision (d)(7) of this section may be used by an efficiency entity appointed under subdivision (2) of this section to deliver fossil fuel energy efficiency services to Vermont heating and process-fuel consumers on a whole-building basis.
Sec. 54. 24 V.S.A. § 1891 is amended to read:
§ 1891. DEFINITIONS
When used in this subchapter:
* * *
(6) “Related costs” means expenses, exclusive of the actual cost of constructing and financing improvements, as defined in subdivision 1751(3) of this title, that are directly related to creation of the tax increment financing district and reimbursement of sums previously advanced by the municipality for those purposes, and attaining the purposes and goals for which the tax increment financing district was created, as approved by the Vermont economic progress council. As used in this subdivision, related costs are “improvements” as defined in subdivision 1751(3) of this title.
(7) “Financing” means the following types of debt incurred or used by a municipality to pay for improvements in a tax increment financing district:
(A) Bonds.
(B) Housing and Urban Development Section 108 financing instruments.
(C) Interfund loans within a municipality.
(D) State of Vermont revolving loan funds.
(E) United States Department of Agriculture loans.
Sec. 55. 24 V.S.A. § 1893 is amended to read:
§ 1893. PURPOSE
The purpose of tax increment financing districts is to provide revenues for improvements, located wholly or partly within that serve the district and related costs, which will stimulate development or redevelopment within the district, provide for employment opportunities, improve and broaden the tax base, or enhance the general economic vitality of the municipality, the region, or the state.
Sec. 56. 24 V.S.A. § 1894 is amended to read:
§ 1894. POWER AND LIFE OF DISTRICT
(a) Incurring indebtedness.
(1) A municipality may incur indebtedness against revenues of the tax increment financing districts for district at any time during a period of up to 20 years following the creation of the district, if approved as required under subsection 5404a(h) of Title 32. The 20-year borrowing period of the district shall commence creation of the district shall occur at 12:01 a.m. on April 1 of the year so voted. Any indebtedness incurred during the borrowing this 20‑year period may be retired over any period authorized by the legislative body of the municipality under section 1898 of this title.
(2) If no indebtedness is incurred within the first five years after creation of the district, no indebtedness may be incurred unless the municipality obtains reapproval from the Vermont economic progress council under subsection 5404a(h) of Title 32.
(3) The district shall continue until the date and hour the indebtedness is retired.
(b) Use of the education property tax increment. Notwithstanding subsection (a) of this section, any district created to use education tax increment financing that has not incurred indebtedness within five years following the creation of the district, shall request reapproval from the Vermont economic progress council in order to utilize education tax increment financing following that period.
For any debt incurred within the first five years after creation of the district, or within the first five years after reapproval by the Vermont economic progress council, but for no other debt, the education tax increment may be retained for up to 20 years beginning with the initial date of the first debt incurred within the first five years.
(c) Prior to requesting municipal approval to secure financing, the municipality shall provide the council with all information related to the proposed financing necessary for approval and to assure its consistency with the plan approved pursuant to 32 V.S.A. § 5404a(h). The council shall also assure the viability and reasonableness of any proposed financing other than bonding and least‑cost financing.
Sec. 57. 24 V.S.A. § 1896(a) is amended to read:
§ 1896. TAX INCREMENTS
(a) In each subsequent year, the listers or assessor shall include no more than the original taxable value of such the real property in the assessed valuation upon which the listers or assessor computes the rates of all taxes levied by the municipality, the school district, and every other taxing district in which the tax increment financing district is situated; but the listers or assessor shall extend all rates so determined against the entire assessed valuation of such real property for that year. In each year for which the assessed valuation exceeds the original taxable value, the municipality treasurer shall hold apart, rather than remit to the taxing districts, that proportion of all taxes paid that year on the real property in the district which such the excess valuation bears to the total assessed valuation. The amount so held apart each year is referred to in this act as the “tax increment” for that year. So much of the tax increments received with respect to the district and pledged and appropriated under section 1897 of this title for the payment of debt service on bonds issued for financing for improvements and related costs shall be segregated by the municipality in a special account on its official books and records until all capital indebtedness of the district has been fully paid. The final payment shall be reported to the lister or assessor, who shall thereafter include the entire assessed valuation of the district in the assessed valuations upon which tax rates are computed and extended and taxes are remitted to all taxing districts.
Sec. 58. 24 V.S.A. § 1897 is amended to read:
§ 1897. TAX INCREMENT FINANCING
(a) The legislative body may pledge and appropriate in equal proportion any part or all of the state and municipal tax increments received from properties contained within the tax increment financing district for the payment of the principal of and interest on bonds issued financing for improvements contained wholly or partly within the district and for related costs in the same proportion by which the infrastructure or related costs directly serve the district at the time of approval of the project financing by the council, and in the case of infrastructure essential to the development of the district that does not reasonably lend itself to a proportionality formula, the council shall apply a rough proportionality and rational nexus test; provided, that if any tax increment utilization is approved pursuant to 32 V.S.A. § 5404a(g) 32 V.S.A. § 5404a(f), no more than 75 percent of the state property tax increment and no less than 75 an equal percent of the municipal tax increment may be used to service this debt. Bonds shall only be issued if the legal voters of the municipality, by a majority vote of all voters present and voting on the question at a special or annual municipal meeting duly warned for the purpose, shall give authority to the legislative body to pledge the credit of the municipality for these purposes. Notwithstanding any provision of any municipal charter, the legal voters of a municipality, by a single vote, shall authorize the legislative body to pledge the credit of the municipality up to a specified maximum dollar amount for all debt obligations to be financed with state property tax increment pursuant to approval by the Vermont economic progress council and subject to the provisions of this section and 32 V.S.A. § 5404a.
(b) A municipality’s pledge of credit for the purpose of issuing a bond financing improvements under this subchapter and 32 V.S.A. § 5404a shall include notice that if the tax increment received by the municipality from any property tax source is insufficient to pay the principal and interest on the debt in any year, for whatever reason, including a decrease in property value or repeal of a state property tax source, unless determined otherwise at the time of such repeal, the municipality shall remain liable for full payment of the bond principal and interest for the term of indebtedness.
Sec. 59. 24 V.S.A. § 1898(e) is amended to read:
(e) Prior to the resolution or ordinance of the local governing body authorizing the bonds issued financing under this section, the legislative body of the municipality shall hold one or more public hearings, after public notice, on a financial plan for the proposed improvements and related costs to be funded, including a statement of costs and sources of revenue, the estimates of assessed values within the district, the portion of those assessed values to be applied to the proposed improvements, the resulting tax increments in each year of the financial plan, the amount of bonded indebtedness or other financing to be incurred, other sources of financing and anticipated revenues, and the duration of the financial plan. A municipality that has approved the creation of a district under this chapter may designate a coordinating agency to administer the district to ensure compliance with this chapter and any other statutory or other requirements.
Sec. 60. 24 V.S.A. § 1900 is amended to read:
§ 1900. DISTRIBUTION
In addition to all other provisions of this chapter, with respect to any tax increment financing district, any of the municipal and education tax increment increments received in any tax year that exceed the amounts pledged for the payment on principal and interest on the bonds issued of the financing for improvements and related costs in the district shall be distributed to the city, town, or village budget in proportion that each budget bears to the combined total of the budgets unless otherwise negotiated by the city, town, or village. Any state education tax increment received in any tax year that exceeds the amount pledged for the payment on principal and interest on the bonds issued for improvements and related costs in the district shall not be remitted to the municipality but shall , an equal portion of each increment may be used only for prepayment of principal and interest on the bonds issued financing, placed in escrow for bond financing payment, or otherwise used for defeasance of the bonds financing; and any remaining portion of the excess municipal tax increment shall be distributed to the city, town, or village budget, in proportion that each budget bears to the combined total of the budgets unless otherwise negotiated by the city, town, or village; and any remaining portion of the excess education tax increment shall be distributed to the education fund.
Sec. 61. 32 V.S.A. § 5404a(f) and (h) are amended and (j) and (k) are added to read:
(f) A municipality that establishes a tax increment financing district under subchapter 5 of chapter 53 of Title 24 shall collect all property taxes on properties contained within the district and apply up to 75 percent of the tax increment as defined in 24 V.S.A. § 1896 to repayment of debt issued to finance financing of the improvements and related costs for up to 20 years pursuant to 24 V.S.A. § 1894, if approved by the Vermont economic progress council pursuant to this section.
(h) Criteria for approval. To approve utilization of incremental revenues pursuant to subsection (f) of this section, the Vermont economic progress council shall do all the following:
(1) Review each application to determine that the new real property development would not have occurred or would have occurred in a significantly different and less desirable manner but for the proposed utilization of the incremental tax revenues. A district created in a designated growth center under 24 V.S.A. § 2793c shall be deemed to have complied with this subdivision. The review shall take into account:
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(C) The amount of additional revenue expected to be generated as a result of the proposed development; the percentage of that revenue that shall be paid to the education fund; the percentage that shall be paid to the municipality; and the percentage of the revenue paid to the municipality that shall be used to pay the municipal tax increment bonds financing incurred for development of the tax increment financing district.
(2) Process requirements. Determine that each application meets all of the following four requirements:
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(B) The municipality has developed a tax increment financing district plan, including: a project description; a development financing plan; a pro forma projection of expected costs; a projection of revenues; a statement and demonstration that the project would not proceed without the allocation of a tax increment; evidence that the municipality is actively seeking or has obtained other sources of funding and investment; and a development schedule that includes a list, a cost estimate, and a schedule for public improvements and projected private development to occur as a result of the improvements.
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(3) Location criteria. Determine that each application meets one of the following criteria:
(A) The development or redevelopment is compact, high density, and located in or near existing industrial areas.
(B) The proposed district is within an approved growth center, designated downtown, designated village center, or new town center.
(C) The development will occur in an area that is economically distressed, which for the purposes of this subdivision means that the area has experienced patterns of increasing unemployment, a drop in average wages, or a decline in real property values.
(4) Project criteria. Determine that the proposed development within a tax incentive increment financing district will accomplish at least three of the following five criteria:
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(C) The project will affect the mitigation remediation and redevelopment of a brownfield located within the district. For the purposes of this section, “brownfield” means an area in which a hazardous substance, pollutant, or contaminant is or may be present, and that situation is likely to complicate the expansion, development, redevelopment, or reuse of the property.
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(j) The municipality shall provide the council with all information related to the proposed financing necessary to assure its consistency with the plan approved pursuant to all other provisions of subsection (h) of this section. The council shall assure the viability and reasonableness of any proposed financing other than bonding and least‑cost financing.
(k) The state auditor of accounts shall review and audit all active tax increment financing districts every three years.
Sec. 62. 24 V.S.A. § 1901 is added to read:
§ 1901. INFORMATION REPORTING
Every municipality with an active tax increment financing district shall:
(1) On or before December 1 of each year, report to the Vermont economic progress council (VEPC) and the tax department all information described in subsection 5404a(i) of Title 32, in the form prescribed by VEPC.
(2) Report its tax increment financing actual investment, bond or other financing repayments, escrow status, and “related cost” accounting to the Vermont economic progress council according to the municipal audit cycle prescribed in section 1681 of this title.
Sec. 63. REPEAL
32 V.S.A. § 5404a(e) (allocations) is repealed.
Sec. 64. 32 V.S.A. § 5404a(g) is amended to read:
(g) Any allocation approved pursuant to subsection (e) of this section or utilization of tax increment approved under subsection (f) of this section shall be in addition to any other payments to the municipality under chapter 133 of Title 16. Allocations and tax Tax increment utilizations approved pursuant to subsections (e) and subsection (f) of this section shall affect the education property tax grand list and the municipal grand list of the municipality under this chapter beginning April 1 of the year following approval and shall remain available to the municipality for the full period authorized under 24 V.S.A. § 1894, and restricted only to the extent that the real property development giving rise to the increased value to the grand list fails to occur within the authorized period.
Sec. 65. TAX INCREMENT FINANCING DATA
(a) The joint fiscal office and the department of taxes shall analyze:
(1) Fiscal aspects of the four existing tax increment financing districts (TIFs). The study shall assemble the details of each TIF’s financial components since their inception and analyze the fiscal impact on the state level.
(2) The best option for addressing how tax increment financing property should be included in the determination of the host town’s common level of appraisal, and what provisions may need to be added to tax increment financing laws to address the possibility of changes to the state education financing structure.
(3) How existing tax increment financing districts meet the goals of economic development, whether they provide municipalities with more useful development tools than possible alternatives, and how they affect the state’s education fund stability.
(4) Homestead property within tax increment financing districts and whether the education tax revenue retained by the municipality is net or gross of property tax adjustments; and shall propose language and a method to ensure that the actual amount of education tax increment retained is net of property tax adjustments.
(5) The following types of financing instruments: conventional loans, certificates of participation, lease-purchase, revenue anticipation notes, and bank loans.
(b) In collecting and analyzing data on the issues in subdivisions (a)(1) through (3) of this section, the joint fiscal office and the department of taxes shall consult with the Vermont League of Cities and Towns, the Vermont Economic Progress Council, Smart Growth Vermont, the Lake Champlain Regional Chamber of Commerce, and the Vermont chapter of the National Education Association.
(c) The joint fiscal office and the department of taxes shall report their findings to the house committee on ways and means and the senate committee on finance by January 15, 2009.
Sec. 66. JOINT FISCAL OFFICE REPORTING OF TIF DATA
The joint fiscal office shall reflect tax increment financing on any education fund outlooks and balance sheets which it prepares.
Sec. 67. Sec. 2i of No. 184 of the Acts of the 2005 Adj. Sess. (2006) is amended to read:
Sec. 2i. TAX INCREMENT FINANCING DISTRICTS; CAP
Notwithstanding any other provision of law, the Vermont economic progress council may not approve the use of education tax increment financing for more than ten six tax increment financing districts and no more than one newly created tax increment financing district in any municipality within the period of five state fiscal years beginning July 1, 2006 2008. Thereafter no tax increment financing districts may be approved without further authorization by the General Assembly general assembly.
Sec. 68. Sec. 2j of No. 184 of the Acts of the 2005 Adj. Sess. (2006) is amended to read:
Sec. 2j. EXISTING TAX INCREMENT FINANCING DISTRICTS;
MILTON
Notwithstanding the limitations under 32 V.S.A. § 5404a, the town of Milton may extend for an additional ten years beyond the initial ten years approved for the two existing tax increment financing districts identified and known as the Husky campus and the Catamount Industrial Park, and collect all state and local property taxes on properties contained wholly or partly within the tax increment financing districts beyond the original taxable value of those properties at the time of the initial approval of the tax increment financing districts and apply no more than 75 percent of the increase in the value and liability assessed under 32 V.S.A. § 5402 state property tax increment, and an equal percent of the municipal tax increment, on new real property improvements to repayment of debt issued to finance improvements within that serve the tax increment financing district and for related costs, upon application by the Town of Milton; and such that the Town of Milton shall apply equal percentages of the state property tax increment and municipal property tax increment to debt obligations incurred prior to April 1, 2009, related to the two existing tax increment financing districts identified and known as Husky campus and Catamount Industrial Park, without regard to the proportionality rule of 24 V.S.A. § 1897.
Sec. 69. Sec. 18(b) of No. 184 of the Acts of the 2005 Adjourned Session (2006) is amended to read:
Sec. 18. EFFECTIVE DATES
(b) Those provisions of Sec. 2h adding 32 V.S.A. § 5404a(h)(3)(D) [location criteria] are repealed effective July 1, 2008 2009.
Sec. 70. FY2008 COMMON LEVEL OF APPRAISAL IN WINOOSKI
The fiscal year 2008 education property tax liability for the City of Winooski shall be recalculated using a common level of appraisal factor of 1.0952; and any resulting overpayment of education property taxes from the City of Winooski to the education fund in fiscal year 2008 shall be credited to the City of Winooski against its fiscal year 2009 education property tax liability.
Sec. 71. Sec. 38(3) of No. 159 of the Acts of 1999 Adj Sess. (2000) is amended to read:
(3) The excess valuation of property within a tax increment financing district organized and created pursuant to Sec. 37 of this act, to the extent that taxes generated on the excess property valuation are pledged and appropriated for debt service on bonds issued under section 1897 of Title 24 or the funding of reserves under subdivision (2) of this section, shall not be included within the education property tax grand list provided for in section 5404 of Title 32 as taxable property, nor shall the excess valuation of the property be subject to the education property tax imposed under section 5402 of Title 32 until bonds issued under section 1897 of Title 24 are released, discharged, paid, defeased, or fully reserved; provided, however, that 5 2 percent of the education taxes imposed annually on the excess valuation of the residential property within the district shall be paid to the education fund. The tax rate assessed on the excess value of property within the district shall be the same rate assessed on property outside the district. Until the bonds are paid in full or have been fully redeemed or defeased through fully funded reserves and accounts, 100 percent of the municipal taxes assessed against the excess valuation of property within the district shall be pledged and appropriated solely for debt service on the bonds. For purposes of this act, “excess valuation” means the difference between the current grand list value and the grand list value at commencement of the development.
Sec. 72. RETROACTIVE APPROVAL OF BURLINGTON TIF
FINANCING
Municipalities that expanded tax increment financing districts under subchapter 5 of chapter 53 of Title 24 by June 30, 1997, as authorized by No. 60 of the Acts of 1997, shall have authority to apply those state and local property taxes assessed on properties within the tax increment financing district to repayment of certificates of participation and HUD Section 108 financing issued to finance public improvements within the tax increment financing district. This authority is retroactive to June 30, 1997, and is applicable to certificates of participation and HUD Section 108 financing instruments issued after April 1, 1996, and on or before March 31, 2006. State education property taxes may be used in accordance with this provision for a period of no more than 20 years from the date the debt was incurred. Refinancing such debt shall not extend the 20-year period for any portion of the debt.
Sec. 73. SALES TAX HOLIDAY; ENERGY STAR APPLIANCES
(a) Notwithstanding the provisions of chapter 233 of Title 32 and section 138 of Title 24, no sales and use tax or local option sales tax shall be imposed or collected on sales to individuals for personal use of items of tangible personal property at a sales price of $2,000.00 or less from July 12, 2008, through July 13, 2008.
(b) Notwithstanding the provisions of chapter 233 of Title 32 and section 138 of Title 24, no sales and use tax or local option sales tax shall be imposed or collected on sales to individuals for personal use of Energy Star Appliances at a sales price of $2,000.00 or less from July 12, 2008, through July 18, 2008.
(c) A vendor in good standing shall be entitled to claim reimbursement for its expenditures for reprogramming of cash registers and computer equipment which were in use at the place of business on and after July 12, 2008. Claims must be filed on or before November 1, 2008, with the department of taxes with receipts or such other documentation the department may require. The amount of reimbursement to each vendor shall not exceed the least of the three following amounts: the actual cost to the vendor of reprogramming its cash registers and computer equipment; $50.00; or $50,000.00 divided by the number of qualified vendor applicants.
(d) Any municipality with a local option sales tax affected by the sales tax holidays imposed by this section shall be reimbursed from the department of taxes for the amount of local option sales tax revenues lost to the municipality. The commissioner of taxes shall develop a methodology for determining such reimbursement. The commissioner shall also adjust the deposit in the PILOT special fund for lost deposits due to the sales tax holidays. Should the amount appropriated for these purposes under subsection (e) of this section be insufficient to fully reimburse the municipalities and adjust the PILOT special fund, reimbursements to municipalities shall take priority.
(e) In fiscal year 2009, $50,000.00 in general funds is appropriated for payments for reprogramming under subsection (c) of this section, and $100,000.00 in general funds is appropriated for reimbursement to municipalities and adjustments under subsection (d) of this section.
Sec. 74. 11 V.S.A. § 3001 is amended to read:
§ 3001. DEFINITIONS
As used in this chapter:
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(15) “Operating agreement” means the agreement in writing any form of description of membership rights and obligations under section 3003 of this title, stored or depicted in any tangible or electronic medium, which is agreed to by the members, including amendments to the agreement.
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(19) “Signed” includes any symbol or electronic schema that may be prescribed by the secretary of state that is executed or adopted by a person with the present intention to authenticate a record.
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(23) “Document” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
(24) “Writing” means written communications, including letters, faxes, e-mails, or other electronic formats that may be prescribed by the secretary of state.
(25) “Delivery” means surface mail or methods of electronic transmission the secretary of state may prescribe.
(26) “Meeting” means any structured communications conducted by participants in person or through the use of electronic or telecommunications medium permitting simultaneous or sequentially structured communications for the purpose of reaching a collective agreement.
Sec. 75. 11 V.S.A. § 3026(f) is added to read:
(f) An original copy may consist of an electronic communication received by the secretary of state’s office, endorsement may consist of an attached electronic record, and the delivery of a duplicate may be done electronically.
Sec. 76. 11 V.S.A. § 3058(c) is amended to read:
(c) A company may maintain its records in other than written form if such form is capable of conversion into written form within a reasonable time or into an electronic form that may be prescribed by the secretary of state.
Sec. 77. 11A V.S.A. § 1.20 is amended to read:
§ 1.20. FILING REQUIREMENTS
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(d) The document must be typewritten or printed or, if electronically transmitted, it must be in a format that can be retrieved or reproduced in typewritten or printed form or in an electronic format prescribed by the secretary of state.
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(h) If the secretary of state has prescribed a mandatory form or electronic format for the document under section 1.21 of this title, the document must be in or on the prescribed form.
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(j)(1) Any of the terms of a plan or filed documents may be made dependent on facts ascertainable outside the plan or filed documents as follows:
(A) The manner in which the facts operate on the terms of the plan or filed document must be clearly and expressly set forth in the plan or filed document.
(B) The facts may include without limitation actions or events within the control of, or determinations made by, a part to the plan or filing the filed document or a representative of a party to the plan or filing the filed document.
(2) As used in this section:
(A) “Filed document” means a document filed with the secretary of state under any provision of this title, except chapter 15 or section 16.22 of this title.
(B) “Plan” means a plan of merger or share exchange.
Sec. 78. 11A V.S.A. § 1.21(a) is amended to read:
(a) The secretary of state may prescribe the form or electronic format of and furnish on request forms or specifications for formats for:
(1) articles of incorporation. such form shall note the information required under subsection 2.02(a) of this title, together with a summary of such information or provisions as are permitted by this title;
(2) an application for a certificate of good standing;
(3) a foreign corporation’s application for a certificate of authority to transact business in this state;
(4) a foreign corporation’s application for a certificate of withdrawal; and
(5) the annual report.
Sec. 79. 11A V.S.A. § 1.23(a) is amended to read:
§ 1.23. EFFECTIVE TIME AND DATE OF DOCUMENT
(a) Except as provided in subsection (b) of this section, section subsection 1.24(c) of this title, and section 2.03 of this title, a document accepted for filing is effective at the time of filing on the date it is filed, as evidenced by the secretary of state’s date and time endorsement on the original document:
(1) at the date and time of filing, as evidenced by such means as the secretary of state may use for the purpose of recording the date and time of filing; or
(2) at the time specified in the document as its effective time on the date it is filed.
Sec. 80. 11A V.S.A § 1.24(a) is amended to read:
(a) A domestic or foreign corporation may correct a document filed by the secretary of state if the document:
(1) is incomplete;
(2) contains an incorrect statement; or
(3) was defectively executed, attested, sealed, verified, or acknowledged; or
(4) the electronic transmission of which was defective.
Sec. 81. 11A V.S.A. § 1.25(b) is amended to read:
(b) The secretary of state files a document by stamping or otherwise endorsing recording it as “Filed” together with his or her name and official title and on the date and time of receipt, on both the original and the document copy document and on the record of the receipt for the filing fee. After filing a document, except as provided in sections 5.03 and 15.10 of this title, the secretary of state shall deliver a copy of the document copy, with the and filing fee receipt (or acknowledgement of receipt if no fee is required) attached, to the domestic or foreign corporation or its representative.
Sec. 82. 11A V.S.A. § 1.27 is amended to read:
§ 1.27. EVIDENTIARY EFFECT OF COPY OF FILED DOCUMENT
(a) A certificate attached to a copy of a document filed by the secretary of state, bearing his or her signature (which may be in facsimile) and the seal of this state, is conclusive evidence that the original document is on file with the secretary of state.
(b) A certificate by the secretary of state that a diligent search has failed to locate documents claimed to be filed with the secretary of state shall be taken and received in all courts, public offices, and official bodies as prima facie evidence of the absence of those documents in the files of the secretary of state.
(c) The secretary of state’s filing of the articles of incorporation is conclusive proof that the incorporators satisfied all conditions precedent to incorporation except in a proceeding by the state to cancel or revoke the incorporation or involuntarily dissolve the corporation
A certificate from the secretary of state delivered with a copy of a document filed by the secretary of state is conclusive evidence that the document is on file with the secretary of state.
Sec. 83. 11A V.S.A. § 1.40 is amended to read:
§ 1.40. DEFINITIONS
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(5) “Deliver” includes mail or “delivery” means any method of delivery used in conventional commercial practice, including delivery by hand, mail, commercial delivery, and electronic transmission.
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(25) “Electronic transmission” or “electronically transmitted” means a process of communication not directly involving the physical transfer of paper that is suitable for the retention, retrieval, and reproduction of information by the recipient.
(26) “Meeting” means any structured communications conducted by participants in person or through the use of electronic or telecommunications medium permitting simultaneous or sequentially structured communications for the purpose of reaching a collective agreement.
(27) “Sign” or “signature” includes any manual, facsimile, conformed, or electronic signature.
Sec. 84. 11A V.S.A. § 141(b) and (c) are amended to read:
(b) Notice may be communicated in person; by telephone, voice mail, telegraph, teletype, facsimile, or other form of wire or, wireless, or electronic communication; or by mail or private carrier or other method of delivery. If these forms of personal notice are impracticable, notice may be communicated by a newspaper of general circulation in the area where published; or by radio, television, or other form of public broadcast communication.
(c) Notice to shareholders. Written notice by a domestic or foreign corporation to its shareholder, if in a comprehensible form, is effective when:
(1) mailed first class postpaid and correctly addressed to the shareholder’s address as shown in the corporation’s current record of shareholders; or
(2) electronically transmitted to the shareholder in a manner authorized by the shareholder.
Sec. 85. 11A V.S.A. § 6.01 is amended to read:
§ 6.01. AUTHORIZED SHARES
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(d) The description of the designations, preferences, limitations, and relative rights of share classes in subsection (c) of this section is not exhaustive Terms of shares may be made dependent upon facts objectively ascertainable outside the articles of incorporation in accordance with subsection 1.20(k) of this title.
(e) Any of the terms of shares may vary among holders of the same class or series so long as such variations are expressly set forth in the articles of incorporation.
(f) The description of the designations, preferences, limitations, and relative rights of share classes in subsection (c) of this section is not exhaustive.
Sec. 86. 11A V.S.A. § 6.21 is amended to read:
§ 6.21. ISSUANCE OF SHARES
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(b) The board of directors may authorize shares to be issued for consideration consisting of any tangible or intangible property or benefit to the corporation, including cash, promissory notes, services performed, contracts for services performed, or other securities of the corporation. Future services shall not constitute payment or part payment for shares of a corporation.
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(e) The corporation may place in escrow shares issued for a contract for future services or benefits or a promissory note, or make other arrangements to restrict the transfer of the shares, and may credit distributions in respect of the shares against their purchase price, until the services are performed, the note is paid, or the benefits are received. If the services are not performed, the note is not paid, or the benefits are not received, the shares escrowed or restricted and the distributions credited may be cancelled in whole or part.
Sec. 87. 11A V.S.A. § 6.24 is amended to read:
§ 6.24. SHARE OPTIONS
A corporation may issue rights, options, or warrants for the purchase of shares of the corporation. The board of directors shall determine the terms upon which the rights, options, or warrants are issued, their form and content, and the consideration for which the shares are to be issued. The provisions of sections 8.60 through 8.63 of this title apply in accordance with their terms in the case of transactions involving the issuance of rights, options, or warrants for the purchase of shares to directors. Any transactions involving the issuance of options for the purchase of shares to directors, as such, shall be subject to the approval of the shareholders.
(a) A corporation may issue rights, options, or warrants for the purchase of shares or other securities of the corporation. The board of directors shall determine:
(1) the terms upon which the rights, options, or warrants are issued; and
(2) the terms, including the consideration for which the shares or other securities are to be issued.
(b) The authorization by the board of directors for the corporation to issue such rights, options, or warrants constitutes authorization of the issuance of the shares or other securities for which the rights, options, or warrants are exercisable.
(c) The terms and conditions of such rights, options, or warrants, including those outstanding on the effective date of this section, may include, without limitation, restrictions or conditions that:
(1) preclude or limit the exercise, transfer, or receipt of such rights, options, or warrants by any person or persons owning or offering to acquire a specified number or percentage of the outstanding shares or other securities of the corporation or by any transferee or transferees of any such person or persons; or
(2) invalidate or void such rights, options, or warrants held by any such person or persons or any such transferee or transferees.
Sec. 88. 11A V.S.A. § 7.01 is amended to read:
§ 7.01. ANNUAL MEETING
(a) A corporation shall hold a meeting of shareholders annually at a time stated in or fixed in accordance with the bylaws.
(b) Annual shareholders’ meetings shall be held in this state, unless permitted in the bylaws of the corporation to be held out of this state. Annual meetings shall be held at the place stated in or fixed in accordance with the bylaws. If no place is stated in or fixed in accordance with the bylaws, annual meetings shall be held at the corporation’s principal office. An annual meeting may be conducted by means of any telecommunications mechanism, including video-conference telecommunication.
(c) The failure to hold an annual meeting at the time stated in or fixed in accordance with a corporation’s bylaws does not affect the validity of any corporate action, and shall result not in a forfeiture or dissolution of the corporation
Annual shareholders’ meetings shall be held in this state, unless permitted in the bylaws of the corporation to be held outside this state. Annual meetings shall be held at the place stated in or fixed in accordance with the bylaws. If no place is stated in or fixed in accordance with the bylaws, annual meetings shall be held at the corporation’s principal office. An annual meeting may be conducted by means of any electronic or telecommunications mechanism, including video-conference telecommunication. The failure to hold an annual meeting at the time stated or fixed in accordance with a corporation’s bylaws does not affect the validity of any corporate action.
Sec. 89. 11A V.S.A. § 7.02(c) is amended to read:
(c) Special shareholders’ meetings shall be held in this state, unless permitted in the bylaws of the corporation to be held out of this state. Meetings shall be held at the place stated in or fixed in accordance with the bylaws. If no place is stated in or fixed in accordance with the bylaws, annual meetings shall be held at the corporation’s principal office. A special meeting may be conducted by means of any electronic or telecommunications mechanism, including video-conference telecommunication.
Sec. 90. 11A V.S.A. § 7.04(a) is amended to read:
(a) Unless the articles of incorporation preclude the taking of action required or permitted by this title without a shareholders’ meeting, action required or permitted by this title to be taken at a shareholders’ meeting may be taken without a meeting if the action is taken by all the shareholders entitled to vote on the action. Each action must be evidenced by one or more written consents describing the action taken, signed by all the shareholders entitled to vote on the action, and delivered to the corporation for inclusion in the minutes or filed with the corporate records. For purposes of this section, consent evidenced by electronic communications or an electronic record is written consent.
Sec. 91. 11A V.S.A. § 7.32 is added to read:
§ 7.32. SHAREHOLDER AGREEMENTS
(a) An agreement among the shareholders of a corporation that complies with this section is effective among the shareholders and the corporation even though it is inconsistent with one or more other provisions of this title in that it:
(1) eliminates the board of directors or restricts the discretion or powers of the board of directors;
(2) governs the authorization or making of distributions whether or not in proportion to ownership of shares, subject to the limitations in section 6.40 of this title;
(3) establishes who shall be directors or officers of the corporation, or
their terms of office or manner of selection or removal;
(4) governs, in general or in regard to specific matters, the exercise or division of voting power by or between the shareholders and directors or by or among any of them, including the use of weighted voting rights or director proxies;
(5) establishes the terms and conditions of any agreement for the transfer or use of property or the provision of services between the corporation and any shareholder, director, officer, or employee of the corporation or among any of them;
(6) transfers to one or more shareholders or other persons all or part of the authority to exercise the corporate powers or to manage the business and affairs of the corporation, including the resolution of any issue about which there exists a deadlock among directors or shareholders;
(7) requires dissolution of the corporation at the request of one or more of the shareholders or upon the occurrence of a specified event; or
(8) otherwise governs the exercise of the corporate powers or the management of the business and affairs of the corporation or the relationship among the shareholders, the directors, and the corporation, or among any of them, and is not contrary to public policy.
(b) An agreement authorized by this section shall be:
(1) set forth:
(A) in the articles of incorporation or bylaws and approved by all persons who are shareholders at the time of the agreement; or
(B) in a written agreement that is signed by all persons who are shareholders at the time of the agreement and is made known to the corporation;
(2) subject to amendment only by the holders of a majority of each class of the corporation’s issued and outstanding capital stock, with each class voting as a separate group, unless the agreement provides otherwise; and
(3) valid for 10 years, unless the agreement provides otherwise.
(c) The existence of an agreement authorized by this section shall be noted conspicuously on the front or back of each certificate for outstanding shares or on the information statement required by subsection 6.26(b) of this title. If at the time of the agreement the corporation has shares outstanding represented by certificates, the corporation shall recall the outstanding certificates and issue substitute certificates that comply with this subsection. The failure to note the existence of the agreement on the certificate or information statement shall not affect the validity of the agreement or any action taken pursuant to it. Any purchaser of shares who, at the time of purchase, did not have knowledge of the existence of the agreement shall be entitled to rescission of the purchase. A purchaser shall be deemed to have knowledge of the existence of the agreement if its existence is noted on the certificate or information statement for the shares in compliance with this subsection and, if the shares are not represented by a certificate, the information statement is delivered to the purchaser at or prior to the time of the purchase of the shares. An action to enforce the right of rescission authorized by this subsection must be commenced within the earlier of 90 days after discovery of the existence of the agreement or two years after the time of the purchase of the shares.
(d) An agreement authorized by this section shall cease to be effective when the corporation becomes a public corporation. If the agreement ceases to be effective for any reason, the board of directors may, if the agreement is contained or referred to in the corporation’s articles of incorporation or bylaws, adopt an amendment to the articles of incorporation or bylaws, without shareholder action, to delete the agreement and any references to it.
(e) An agreement authorized by this section that limits the discretion or powers of the board of directors shall relieve the directors of, and impose upon the person or persons in whom such discretion or powers are vested, liability for acts or omissions imposed by law on directors to the extent that the discretion or powers of the directors are limited by the agreement.
(f) The existence or performance of an agreement authorized by this section shall not be a ground for imposing personal liability on any shareholder for the acts or debts of the corporation, even if the agreement or its performance treats the corporation as if it were a partnership or results in failure to observe the corporate formalities otherwise applicable to the matters governed by the agreement.
(g) Incorporators or subscribers for shares may act as shareholders with respect to an agreement authorized by this section if no shares have been issued when the agreement is made.
Sec. 92. 11A V.S.A. § 8.03(a) amended to read:
(a) A board of directors of a corporation which is not a close corporation dispensing with a board of directors pursuant to section 20.08 of this title must consist of three one or more individuals, with the number specified in or fixed in accordance with the articles of incorporation or bylaws. If the number of shareholders in any corporation is less than three, the The number of directors may be as few as the number of shareholders increased or decreased from time to time by amendment to, or in the manner provided in, the articles of incorporation or the bylaws.
Sec. 93. 11A V.S.A. § 8.20 is amended to read:
§ 8.20. MEETINGS
(a) The board of directors may hold regular or special meetings, as defined in subdivision 1.40(26) of this title, in or out of outside this state.
(b) The board of directors may permit any or all directors to participate in a regular or special meeting by, or conduct the meeting through the use of, any means of communication, including an electronic, telecommunications, and video- or audio‑conferencing conference telephone call, by which all directors participating may simultaneously hear communicate with each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting.
Sec. 94. 11A V.S.A. § 8.40 is amended to read:
§ 8.40. REQUIRED OFFICERS
(a) A corporation has the officers described in its bylaws or appointed by the board of directors in accordance with the bylaws, provided that a corporation shall have a president and a secretary. Any two or more offices may be held by the same person, except the offices of president and secretary, unless the corporation is a professional corporation organized under chapter 3 or 4 of Title 11.
(b) A duly appointed The board of directors may elect individuals to fill one or more offices of the corporations. An officer may appoint one or more officers or assistant officers if authorized by the bylaws or the board of directors.
(c) The bylaws or the board of directors shall delegate assign to one of the officers responsibility for preparing the minutes of the directors’ and shareholders’ meetings and for authenticating and maintaining the records of the corporation required to be kept under subsections 16.01(a) and 16.10(e) of this title.
* * *
(e) An individual who holds more than one office may execute, acknowledge or verify in more than one capacity any document required to be executed, acknowledged or verified by the holders of two or more officers.
Sec. 95. 11A V.S.A. § 8.60 is amended to read:
§ 8.60. DEFINITIONS
For purposes of this subchapter:
(1) “Conflicting interest” with respect to a corporation means the interest a director of the corporation has respecting a transaction effected or proposed to be effected by the corporation (or by a subsidiary of the corporation or any other entity in which the corporation has a controlling interest) if
(A) whether or not the transaction is brought before the board of directors of the corporation for action, the director knows at the time of commitment that he or she or a related person is a party to the transaction or has a beneficial financial interest in or so closely linked to the transaction and of such financial significance to the director or a related person that the interest would reasonably be expected to exert an influence on the director’s judgment if he or she were called upon to vote on the transaction; or
(B) the transaction is brought (or is of such character and significance to the corporation that it would in the normal course be brought) before the board of directors of the corporation for action, and the director knows at the time of commitment that any of the following persons is either a party to the transaction or has a beneficial financial interest in or so closely linked to the transaction and of such financial significance to the person that the interest would reasonably be expected to exert an influence on the director’s judgment if he or she were called upon to vote on the transaction:
(i) an entity (other than the corporation) of which the director is a director, general partner, agent, or employee;
(ii) a person that controls one or more of the entities specified in subdivision (i) of this subdivision or an entity that is controlled by, or is under common control with, one or more of the entities specified in subdivision (i); or
(iii) an individual who is a general partner, principal, or employer of the director.
(2) “Director’s conflicting interest transaction” with respect to a corporation means a transaction effected or proposed to be effected by the corporation (or by a subsidiary of the corporation or any other entity in which the corporation has a controlling interest) respecting which a director of the corporation has a conflicting interest.
(3) “Related person” of a director means (A) the spouse (or a parent or sibling thereof) of the director, or a child, grandchild, sibling, parent (or spouse of any thereof) of the director, or an individual having the same home as the director, or a trust or estate of which an individual specified in this subdivision (A) is a substantial beneficiary; or (B) a trust, estate, incompetent, conservatee, or minor of which the director is a fiduciary.
(4) “Required disclosure” means disclosure by the director who has a conflicting interest of (A) the existence and nature of his or her conflicting interest, and (B) all facts known to him or her respecting the subject matter of the transaction that an ordinarily prudent person would reasonably believe to be material to a judgment about whether or not to proceed with the transaction.
(5) “Time of commitment” respecting a transaction means the time when the transaction is consummated or, if made pursuant to contract, the time when the corporation (or its subsidiary or the entity in which it has a controlling interest) becomes contractually obligated so that its unilateral withdrawal from the transaction would entail significant loss, liability, or other damage.
(1) “Control” including the term “controlled by” means:
(A) having the power, directly or indirectly, to elect or remove a majority of the members of the board of directors or other governing body of an entity whether through the ownership of voting shares or interests, by contract, or otherwise; or
(B) being subject to a majority of the risk of loss from the entity’s activities or entitled to receive a majority of the entity’s residual returns.
(2) “Director’s conflicting interest transaction” means a transaction effected or proposed to be effected by the corporation or by an entity controlled by the corporation that at the relevant time the director:
(A) was a party to; or
(B) had knowledge of and a material financial interest known to the director; or
(C) knew that a related person was a party or had a material financial interest.
(3) “Fair to the corporation” means, for purposes of subdivision 8.61(b)(3) of this title, that the transaction as a whole was beneficial to the corporation, taking into appropriate account whether it was:
(A) fair in terms of the director’s dealings with the corporation; and
(B) comparable to what might have been obtainable in an arm’s length transaction, given the consideration paid or received by the corporation.
(4) “Material financial interest” means a financial interest in a transaction that would reasonably be expected to impair the objectivity of the director’s judgment when participating in action on the authorization of the transaction.
(5) “Related person” means:
(A) the director’s spouse;
(B) a child, stepchild, grandchild, parent, stepparent, grandparent, sibling, step sibling, half sibling, aunt, uncle, niece, or nephew (or spouse of any thereof) of the director or of the director’s spouse;
(C) an individual living in the same home as the director;
(D) an entity, other than the corporation or an entity controlled by the corporation, controlled by the director or any person specified in this subdivision;
(E) a domestic or foreign:
(i) business or nonprofit corporation (other than the corporation or an entity controlled by the corporation) of which the director is a director;
(ii) unincorporated entity of which the director is a general partner or a member of the governing body; or
(iii) individual, trust, or estate for whom or of which the director is a trustee, guardian, personal representative, or like fiduciary; or
(F) a person that is, or an entity that is controlled by, an employer of the director.
(6) “Relevant time” means:
(A) the time at which the directors’ action respecting the transaction is taken in compliance with section 8.62 of this title; or
(B) if the transaction is not brought before the board of directors of the corporation or its committee for action under section 8.62 of this title, at the time the corporation, or an entity controlled by the corporation, becomes legally obligated to consummate the transaction.
(7) “Required disclosure” means disclosure of:
(A) the existence and nature of the director’s conflicting interest; and
(B) all facts known to the director respecting the subject matter of the transaction that a director free of such conflicting interest would reasonably believe to be material in deciding whether to proceed with the transaction.
Sec. 96. 11A V.S.A. § 8.61 is amended to read:
§ 8.61. JUDICIAL ACTION
(a) A transaction effected or proposed to be effected by a corporation (or by a subsidiary of the corporation or any other entity in which the corporation has a controlling interest) that is not a director’s conflicting interest transaction may not be enjoined, set aside, or give rise to an award of damages or other sanctions, in a proceeding by a shareholder or by or in the right of the corporation, because a director of the corporation, or any person with whom or which he or she has a personal, economic, or other association, has an interest in the transaction.
(b) A director’s conflicting interest transaction may not be enjoined, set aside, or give rise to an award of damages or other sanctions, in a proceeding by a shareholder or by or in the right of the corporation, because the director, or any person with whom or which he or she has a personal, economic, or other association, has an interest in the transaction, if:
(1) directors’ action respecting the transaction was at any time taken in compliance with section 8.62 of this subchapter;
(2) shareholders’ action respecting the transaction was at any time taken in compliance with section 8.63 of this subchapter; or
(3) the transaction, judged according to the circumstances at the time of commitment, is established to have been fair to the corporation.
(a) A transaction effected or proposed to be effected by the corporation, or by an entity controlled by the corporation, may not be the subject of equitable relief, or give rise to an award of damages or other sanctions against a director of the corporation, in a proceeding by a shareholder or by or in the right of the corporation, on the ground that the director has an interest respecting the transaction, if it is not a director’s conflicting interest transaction.
(b) A director’s conflicting interest transaction may not be the subject of equitable relief, or give rise to an award of damages or other sanctions against a director of the corporation, in a proceeding by a shareholder, or by or in the right of the corporation, on the ground that the director has an interest respecting the transaction, if:
(1) the directors’ action respecting the transaction was taken in compliance with section 8.62 of this title at any time; or
(2) the shareholders’ action respecting the transaction was taken in compliance with section 8.63 of this title at any time; or
(3) the transaction, judged according to the circumstances at the relevant time, is established to have been fair to the corporation.
Sec. 97. 11A V.S.A. § 8.62 is amended to read:
§ 8.62. DIRECTORS’ ACTION
(a) Directors’ action respecting a transaction is effective for purposes of section 8.61(b)(1) of this subchapter if the transaction received the affirmative vote of a majority (but no fewer than two) of those qualified directors on the board of directors or on a duly empowered committee of the board who voted on the transaction after either required disclosure to them (to the extent the information was not known by them) or compliance with subsection (b) of this section; provided that action by a committee is so effective only if:
(1) all its members are qualified directors; and
(2) its members are either all the qualified directors on the board or are appointed by the affirmative vote of a majority of the qualified directors on the board.
(b) If a director has a conflicting interest respecting a transaction, but neither he nor she nor a related person of the director specified in section 8.60(3) of this subchapter is a party to the transaction, and if the director has a duty under law or professional canon, or a duty of confidentiality to another person, respecting information relating to the transaction such that the director may not make the disclosure described in section 8.60(4), then disclosure is sufficient for purposes of subsection (a) of this section if the director (1) discloses to the directors voting on the transaction the existence and nature of his or her conflicting interest and informs them of the character and limitations imposed by that duty before their vote on the transaction, and (2) plays no part, directly or indirectly, in their deliberations or vote.
(c) A majority (but no fewer than two) of all the qualified directors on the board of directors, or on the committee, constitutes a quorum for purposes of action that complies with this section. Directors’ action that otherwise complies with this section is not affected by the presence or vote of a director who is not a qualified director.
(d) For purposes of this section, “qualified director” means, with respect to a director’s conflicting interest transaction, any director who does not have either (1) a conflicting interest respecting the transaction, or (2) a familial, financial, professional, or employment relationship with a second director who does have a conflicting interest respecting the transaction, which relationship would, in the circumstances, reasonably be expected to exert an influence on the first director’s judgment when voting on the transaction.
(a) Directors’ action respecting a director’s conflicting interest transaction is effective for purposes of subdivision 8.61(b)(1) of this title if the transaction has been authorized by the affirmative vote of a majority, but no fewer than two, of the qualified directors who voted on the transaction after required disclosure by the conflicted director of information not already known by such qualified directors, or after modified disclosure in compliance with subsection (b) of this section, provided that:
(1) the qualified directors have deliberated and voted outside the
presence of and without the participation by any other director; and
(2) where the action has been taken by a committee, all members of the committee were qualified directors, and either:
(A) the committee was composed of all the qualified directors on the board of directors; or
(B) the members of the committee were appointed by the affirmative vote of a majority of the qualified directors on the board.
(b) Notwithstanding subsection (a) of this section, when a transaction is a director’s conflicting interest transaction only because a related person described in subdivisions 8.60(5)(E) and (F) of this title is a party to or has a material financial interest in the transaction, the conflicted director is not obligated to make required disclosure to the extent that the director reasonably believes that doing so would violate a duty imposed under law, a legally enforceable obligation of confidentiality, or a professional ethics rule, provided that the conflicted director discloses to the qualified directors voting on the transaction:
(1) all information required to be disclosed that is not so violative;
(2) the existence and nature of the director’s conflicting interest; and
(3) the nature of the conflicted director’s duty not to disclose the confidential information.
(c) A majority, but no fewer than two, of all the qualified directors on the board of directors or on the committee constitutes a quorum for purposes of action that complies with this section.
(d) Where directors’ action under this section does not satisfy a quorum or voting requirement applicable to the authorization of the transaction by reason of the articles of incorporation, the bylaws, or a provision of law, independent action to satisfy those authorization requirements must be taken by the board of directors or a committee, in which action directors who are not qualified directors may participate.
Sec. 98. 11A V.S.A. § 8.63 is amended to read:
§ 8.63. SHAREHOLDERS’ ACTION
(a) Shareholders’ action respecting a transaction is effective for purposes of section 8.61(b)(2) of this subchapter if a majority of the votes entitled to be cast by the holders of all qualified shares was cast in favor of the transaction after (1) notice to shareholders describing the director’s conflicting interest transaction, (2) provision of the information referred to in subsection (d) of this section, and (3) required disclosure to the shareholders who voted on the transaction (to the extent the information was not known by them).
(b) For purposes of this section, “qualified shares” mean any shares entitled to vote with respect to the director’s conflicting interest transaction except shares that, to the knowledge, before the vote, of the secretary (or other officer or agent of the corporation authorized to tabulate votes), are beneficially owned (or the voting of which is controlled) by a director who has a conflicting interest respecting the transaction or by a related person of the director, or both.
(c) A majority of the votes entitled to be cast by the holders of all qualified shares constitutes a quorum for purposes of action that complies with this section. Subject to the provisions of subsections (d) and (e) of this section, shareholders’ action that otherwise complies with this section is not affected by the presence of holders, or the voting, of shares that are not qualified shares.
(d) For purposes of compliance with subsection (a) of this section, a director who has a conflicting interest respecting the transaction shall, before the shareholders’ vote, inform the secretary (or other officer or agent of the corporation authorized to tabulate votes) of the number, and the identity of persons holding or controlling the vote, of all shares that the director knows are beneficially owned (or the voting of which is controlled) by the director or by a related person of the director, or both.
(e) If a shareholders’ vote does not comply with subsection (a) of this section solely because of a failure of a director to comply with subsection (d), and if the director establishes that his or her failure did not determine and was not intended by him or her to influence the outcome of the vote, the court may, with or without further proceedings respecting section 8.61(b)(3) of this subchapter, take such action respecting the transaction and the director, and give such effect, if any, to the shareholders’ vote, as it considers appropriate in the circumstances.
(a) Shareholders’ action respecting a director’s conflicting interest transaction is effective for purposes of subdivision 8.61(b)(2) of this title if a majority of the votes cast by the holders of all qualified shares is in favor of the transaction after:
(1) notice to shareholders describing the action to be taken respecting the transaction;
(2) provision to the corporation of the information referred to in subsection (b) of this section; and
(3) communication of the information that is the subject of required disclosure to the shareholders entitled to vote on the transaction, to the extent the information is not known by them.
(b) A director who has a conflicting interest respecting the transaction shall, before the shareholders’ vote, inform the secretary or other officer or agent of the corporation authorized to tabulate votes, in writing, of the number of shares that the director knows are not qualified shares under subsection (c) of this section and the identity of the holders of those shares.
(c) For purposes of this section:
(1) “Holder” means and “held by” refers to shares held by both a record shareholder, as defined in subdivision 13.01(7) of this title, and a beneficial shareholder, as defined in subdivision 13.01(2) of this title;
(2) “Qualified shares” means all shares entitled to be voted with respect to the transaction except for shares that the secretary or other officer or agent of the corporation authorized to tabulate votes either knows, or under subsection (b) of this section is notified, are held by:
(A) a director who has a conflicting interest respecting the transaction; or
(B) a related person of the director, excluding a person described in subdivision 8.60(5)(F) of this title.
(d) A majority of the votes entitled to be cast by the holders of all qualified shares constitutes a quorum for purposes of compliance with this section. Subject to the provisions of subsection (e) of this section, shareholders’ action that otherwise complies with this section is not affected by the presence of holders, or by the voting, of shares that are not qualified shares.
(e) If a shareholders’ vote does not comply with subsection (a) of this section solely because of a director’s failure to comply with subsection (b) of this section, and if the director establishes that the failure was not intended to influence and did not in fact determine the outcome of the vote, the court may take such action respecting the transaction and the director, and may give such effect, if any, to the shareholders’ vote, as the court considers appropriate in the circumstances.
(f) Where shareholders’ action under this section does not satisfy a quorum or voting requirement applicable to the authorization of the transaction by reason of the articles of incorporation, the bylaws, or a provision of law, independent action to satisfy those authorization requirements must be taken by the shareholders, in which action shares that are not qualified shares may participate.
Sec. 99. 11A V.S.A. § 12.02(a) is amended to read:
(a) A corporation may sell, lease, exchange, or otherwise dispose of all, or substantially all, of its property (with or without the good will), otherwise than in the usual and regular course of business, on the terms and conditions and for the consideration determined by the corporation’s board of directors, if the board of directors proposes and its shareholders approve the proposed transaction A sale, lease, exchange, or other disposition of assets, other than a disposition described in section 12.01 of this title, requires approval of the corporation’s shareholders if the disposition would leave the corporation without a significant continuing business activity. If a corporation retains a business activity that represented at least 25 percent of the total assets at the end of the most recently completed fiscal year and 25 percent of either income from continuing operations before taxes or revenues from continuing operations for that fiscal year, in each case of the corporation and its subsidiaries on a consolidated basis, the corporation will conclusively be deemed to have retained a significant continuing business activity.
Sec. 100. 11A V.S.A. § 16.01(d) and (e) are amended to read:
(d) A corporation shall maintain its records in written form or in another form, including electronic form, capable of conversion into written form within a reasonable time.
(e) A corporation shall keep a copy of the following records at its principal office (or, if none in this state, then the registered office):
* * *
(5) all written or electronic communications to shareholders generally within the past three years, including the financial statements furnished for the past three years under section 16.20 of this title;
* * *
Sec. 101. HEALTH CARE REFORM PROPERTY TAX EXEMPTION
In fiscal year 2009 only, the following two properties shall be exempt from education property tax under chapter 135 of Title 32: Buildings and land owned and occupied by a health, recreation, and fitness organization which is exempt under Section 501(c)(3) of the Internal Revenue Code, the income of which is entirely used for its exempt purpose, one of which is designated by the Springfield Hospital and the other designated by the North Country Hospital, to promote exercise and healthy lifestyles for the community and to serve citizens of all income levels in this mission. This exemption shall apply notwithstanding the provisions of subdivision 3832(7) of Title 32.
* * * Effective Dates * * *
Sec. 102. EFFECTIVE DATES
This act shall take effect upon passage, except as follows:
(1) Sec. 10 (property tax bill notice on education spending and rates) shall apply to property tax bills for 2008 and after.
(2) Sec. 11 provisions regarding final date for grand list information used in net education tax calculation shall take effect July 1, 2008; and Sec. 11 provisions regarding town retention of $15.00 late fee for property tax adjustment claims shall apply to claims filed in 2008 and after.
(3) Sec. 12 (increasing amount municipalities may retain to 0.225 of one percent of education taxes collected) shall apply to education property taxes for fiscal years 2009 and after.
(4) Sec. 15 (commissioner does not pay $15.00 late fee to town) shall apply to claims filed in 2008 and after.
(5) Sec. 16 (property tax adjustments allocated to property tax installments) shall apply to property taxes for fiscal years 2009 and after.
(6) Sec. 19 (regarding a limitation on the reduction of taxable income by the capital gains deduction) shall apply to taxable years 2008 and after.
(7) Sec. 26 of this act (update of link to federal income tax laws) shall apply to taxable years beginning on or after January 1, 2007; and Sec. 27 of this act (update of link to federal estate and gift tax laws) shall apply to estates of decedents with a date of death on or after, and gifts made on or after, January 1, 2007.
(8) Sec. 28 of this act (VEGI grace period for first year) shall take effect retroactively as of January 1, 2007.
(9) Sec. 33 ($600,000.00 fire training council assessment) shall apply to fiscal year 2009; and Sec. 34 ($800,000.00 fire training council assessment) shall apply to fiscal years 2010 and after.
(10) Sec. 36 (block of federal bonus depreciation on personal income tax) shall apply to taxable years 2008 and after, and shall apply only to assets placed in service on or after January 1, 2008.
(11) Sec. 42 of this act (amendment of VEGI definitions; “full-time job” at 35 hours and “wages” excluding stock options) shall take effect retroactively from January 1, 2007.
(12) Sec. 45 of this act (interest due on repayment of an excessive property tax adjustment) shall apply to property tax adjustment claims filed in 2008 and after.
(13) Sec. 68 of this act (equal percentage of education tax increment and municipal tax increment required to be used by Town of Milton for tax increment financing) shall take effect July 1, 2008.
(14) The provisions of Sec. 58 of this act pertaining to proportional use of education and municipal tax in TIF financing shall apply to tax increment financing districts approved pursuant to 32 V.S.A. § 5404a.
Approved: June 6, 2008
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Published by:
The Vermont General Assembly
115 State Street
Montpelier, Vermont
www.leg.state.vt.us
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