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Vermont Composting Interests Challenge Tax

Kessner Photography/Wikimedia Commons

A commercial composter in Vermont who has been billed more than 100-thousand dollars in back taxes is appealing the audit. He’s supported by organic farmers and some state legislators who question why commercial fertilizers and pesticides are non-taxable, while the more environmentally friendly compost is taxed.

Karl Hammer has operated the Vermont Compost Company since 1994. Because compost is an agricultural product used to grow food, it was not subject to sales tax. But in 2007, the tax law changed, and in 2009 a new rule was issued making compost subject to sales tax. Hammer’s operation was audited recently and billed more than 100-thousand dollars by the state tax department for back taxes. Hammer was in Montpelier Monday to appeal the bill and call on legislators to clarify the tax status of compost. He says compost should be a non-taxable item, especially following the recent passage of Act 148, the state’s new solid waste law mandating that by 2020 all compostable materials must be diverted from landfills.

Northeast Organic Farming Association of Vermont Policy Advisor Dave Rogers says the situation with Hammer’s tax bill reflects a high level of confusion in the composting community.

Rogers notes that NOFA, through its sister organization Vermont Organic Farmers, certifies hundreds of farms in the state, including 142 fruit and vegetable operations. He calls compost the lynchpin of organic production on those farms.

Officials from the Vermont Tax Department cannot discuss individual cases. Tax Commissioner Mary Peterson says they must follow the policies set by the state legislature.

Hammer is appealing his tax bill under statutory rules and hopes to reach an agreement with the tax department. He also believes that legislative clarification is needed and is working with several state representatives.

Vermont’s House Agriculture Committee began reviewing a bill to clarify that compost should not be subject to sales tax, but details were not worked out before the session adjourned in May.

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