There has been discussion in the Tax Dept. about electronic filing of property transfer tax returns. Liam Murphy attended the meeting and sent the following email report to the Property Law list serve. In the event you are not on that list, here it is:
As you may have heard the Tax Department is proposing legislation to require electronic filing of the PTTR and electronic payment of the tax directly to the Department. A copy of the proposal legislation is attached and a link to the Department website with the proposal is
http://www.state.vt.us/tax/pttronlineinfo.shtml
The proposal is to make this effective next year in 2010.
The basic reasons for the proposal are: 1) to get the money into the state coffers faster. Currently many town clerks hold onto the checks for a long time before forwarding them to the state; 2) many forms are not currently completed properly or in full. The electronic version will mandate that all appropriate boxes be filled; and 3) electronic filing will mean that the data will be immediately transferred into the state's data base. Until recently the data on the PTTR was retyped into a database. The new electronic forms were designed so that they could be scanned and the information taken from the scanned version (that is why the new forms are 4 pages so that the boxes are big enough for the scanners to read.
I attended a meeting on Monday to hear about the project and provide initial comments. The meeting was attended by Tax Department officials, 3 Town clerks,a representative of the Vt League of Cities and Towns, a representative of the Bankers Association, an assessor and the computer company which is designing and constructing the project.
As I understand the current proposal, upon closing the form would be filed electronically and the tax paid electronically (by an ach transfer or electronic check). A record of filing or a "receipt" would be issued which would be attached to the paper copy filed with the Town Clerk office showing that the tax form was filed. When the deed or document is recorded the Town Clerk would provide recording information electronically to the Tax Dept in connection with the return. In addition an charge of $5 would be made for the privilege of filing electronically.
Some questions raised were
--this system contemplates filing of the form and payment of the tax before recording of the deed and what happens if the deed is not recorded (an intervening lien is found before recording and the deal is stopped) or the deed is rejected. What process will there be to undo the filing and get the tax back in an expeditious manner.
--this system contemplates that a record of filing and payment or receipt be provided to the clerk at the time a document is delivered for recording. Will the clerk be prohibited from recording without such a receipt? If so, what about those without access to a computer system to file electronically, especially those who may not use an attorney? What about transactions where no tax is due? What about Mobile Home transfers which often occur without a PTTR being prepared? What about Timeshares?
--this system contemplates the form being prepared by the Seller's attorney, being filed by the closing agent who would also pay the tax and the town clerk adding recording information to the return after recording. The system will have to provide access by multiple people at different computers at different times. Is this system going to be reasonably and technically possible? What protections would there be to insure the form is not changed between the various steps. Since the forms will include SSN, how will the privacy of such information be protected?
--what will be the additional costs in terms of setting up an electronic payment system?
--what happens if the system is down and therefore you cannot obtain a receipt?
--what about the signing of the electronic form by the sellers and buyers which would be required to obtain the certifications required in the form?
--is this going to be mandatory for everyone? just for closing agents? just for attorneys?
Since this was my introduction to the proposal, I told the group that I am sure my colleagues would have many more questions and issues. Therefore I would appreciate your sharing your thoughts and questions which I will forward to the Department for consideration. Of most immediate concern is the legislation since the Department is trying to get this passed this legislative session.
After receiving further comments from the Bar and the other parties, the Department intends to hold another meeting to discuss the questions and issues and I will keep you informed of the date and time in the event you wish to come and comment.
Fire away!
Liam
Now, of course, is the time to weigh in on this if you have an opinion to share.
Also, I want to remind readers that the Commission on Judicial Operations wants to hear from us on our ideas to make the judiciary more efficient. It's no surprise that a 19th century model needs some updating in order to deliver justice in the 21st century. You should have received from the VBA a letter from Eileen Blackwood and me on Tuesday March 10. If you need another copy contact the VBA. Basically it is a call from Eileen and from me for you to contact either of us with your suggestions.
Thanks. Have a nice weekend. I'll be back next week.
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