(a) An S corporation which engages in activities in Vermont which would subject a C corporation to the requirement to file a return under section 5862 of this title shall file with the Commissioner an annual return, in the form prescribed by the Commissioner, on or before the due date prescribed for the filing of S corporation returns under subsection 6072(b) of the Internal Revenue Code. The return shall set forth the name, address, and Social Security or federal identification number of each shareholder; the income attributable to Vermont and income not attributable to Vermont with respect to each shareholder as determined under this subchapter; and such other information as the Commissioner may by regulation prescribe. The S corporation shall, on or before the day on which such return is filed, furnish to each person who was a shareholder during the year a copy of such information shown on the return as the Commissioner may by regulation prescribe.

(b) The Commissioner may upon request and for ease of administration permit S corporations to file composite returns and to make composite payments of tax on behalf of some or all of its nonresident shareholders. In addition, the Commissioner may require an S corporation that has in excess of 50 nonresident shareholders to file composite returns and to make composite payments at the middle marginal rate on behalf of all of its nonresident shareholders.

(c) With respect to each of its nonresident shareholders, an S corporation shall for each taxable period be liable for all income taxes, together with related interest and penalties, imposed on the shareholder by Vermont with respect to the income of the S corporation. An S corporation shall declare estimated tax, and shall pay estimated tax, including applicable interest and penalties, on such liability in the manner and at the times specified for individuals in subchapter 5 of this chapter; provided, however, that an S corporation with a single shareholder and a tax liability under this section of $250.00 or less in the prior year, and an S corporation with two or more shareholders and a tax liability under this section of $500.00 or less in the prior year, may file the entire estimated amount on or before the fourth payment date, January 15. As used in this subsection, "estimated tax" means an amount equal to the next-to-lowest marginal tax rate prescribed under section 5822 of this title multiplied by the shareholder's pro rata share of the income attributable to Vermont.

(d) If interest or penalty is imposed on an S corporation for any underpayment of estimated tax under subsection (c) of this section, no interest or penalty shall be imposed upon a shareholder for underpayment of estimated taxes relating to the shareholder's pro rata share of the income attributable to Vermont to which the interest or penalty relates. If an S corporation shows to the satisfaction of the Commissioner that interest or penalties have been assessed against it in excess of the interest or penalties which would have been applied against the combined, actual tax liabilities of all nonresident shareholders, the Commissioner shall abate such excess interest and penalties. Nothing in this subsection shall be construed as authorizing a corporation to reduce its estimated tax payments.

(e) Any amount paid by the corporation to Vermont pursuant to this section shall be considered to be a payment by the shareholder of the income tax imposed on the shareholder for the taxable period pursuant to section 5822 of this title. An S corporation shall be entitled to recover a payment made pursuant to this section from the shareholder on whose behalf the payment was made. (Added 1995, No. 169 (Adj. Sess.), § 21, eff. May 15, 1996; amended 1999, No. 119 (Adj. Sess.), § 3a, eff. May 18, 2000; 2005, No. 14, § 3, eff. May 3, 2005; 2005, No. 207 (Adj. Sess.), § 1, eff. May 31, 2006; 2011, No. 45, § 20, eff. May 24, 2011; 2017, No. 73, § 4, eff. June 13, 2017.)