Federal Taxation of Interest

V.S.A. tit. 32, ch. 13, subch. 7

in effect

32 V.S.A. § 995 Agreements for the exemption of interest

995. Agreements for the exemption of interest (a) It is hereby found and determined that proposed amendments to the Internal Revenue Code of 1986, including, particularly, 26 U.S.C. § 103, and the relevant regulations of the U.S. Treasury Department, require the State, municipal corporations, and agencies and instrumentalities thereof, collectively referred to as “Issuers,” to enter into agreements, make covenants with the holders of their respective obligations, or take other actions as a condition to the noninclusion of interest on their respective obligations in gross income of recipients for federal income tax purposes. It is hereby further found and determined that it is in the best interests of the issuers to leave no ambiguity as to whether the issuers have the authority to enter into such agreements, make the covenants, or take other actions. (b) Issuers are hereby authorized and empowered to enter into any agreement, make any covenant, or take any other action required to assure that interest on their respective bonds is not included in gross income of the recipients for federal income tax purposes. (c) Notwithstanding the provisions of 24 V.S.A. §§ 4648 and 1753 and section 954 of this title, or any other general, special, or local law to the contrary, issuers are hereby authorized to appropriate and pay to the U.S. Treasury Department, or any other agency of the United States, all or a portion of the income received by the issuers from the investment or reinvestment of the proceeds of their respective bonds, in the amount and to the extent necessary to assure that interest on their respective bonds is not included in gross income of the recipients for federal income tax purposes. Added 1985, No. 125 (Adj. Sess.), § 4, eff. April 18, 1986; amended 1987, No. 36, § 3, eff. May 11, 1987; 2021, No. 105 (Adj. Sess.), § 476, eff. July 1, 2022.

32 V.S.A. § 996 Delegation authorized

996. Delegation authorized The legislative branch of a municipality or county, however defined, may delegate to the treasurer or chief fiscal officer of a municipal corporation the power to enter into any agreement, make any covenant, or take any other action described in section 995 of this title. The State Treasurer may delegate to the treasurer or chief financial officer of any State instrumentality the power to enter into any agreement, make any covenant, or take any other action described in section 995 of this title. Added 1985, No. 125 (Adj. Sess.), § 4, eff. April 18, 1986; amended 1987, No. 36, § 4, eff. May 11, 1987.

32 V.S.A. § 997 State covenant

997. State covenant To the extent that an issuer has entered into an agreement, covenanted, or acted to assure that interest on its obligations is not included in the gross income of the recipients for federal income tax purposes pursuant to this chapter, the State will not limit or alter the power to perform the agreement or covenant or take action or in any way impair the rights and remedies of any holders, until the bonds, together with the interest on the bonds, and all costs and expenses in connection with any action or proceeding by or on behalf of the holders, are fully paid and discharged. Issuers are hereby authorized to include this pledge and agreement of the State in any agreement with the holders of their respective obligations. Added 1985, No. 125 (Adj. Sess.), § 4, eff. April 18, 1986; amended 1987, No. 36, § 5, eff. May 11, 1987; 2021, No. 105 (Adj. Sess.), § 477, eff. July 1, 2022.

32 V.S.A. § 998 Loans and grants

998. Loans and grants In the event the State Treasurer issues bonds the interest on which is not to be included in gross income for federal income tax purposes, to the extent that such funds are made available to any municipal corporation, any instrumentality thereof or of the State, or to any other person, the State Treasurer may require the recipients of the funds to enter into agreements regulating the use and investments of funds made available to them, requiring them to account to the State for the investment of such funds, and requiring them to pay to the State earnings on such funds which the State is required to rebate to the federal government. Recipients are authorized to enter into such agreements with the State which shall be valid and enforceable against them. Added 1987, No. 36, § 6, eff. May 11, 1987.

32 V.S.A. § 999 Interest remittance and payments

999. Interest remittance and payments The State Treasurer may remit to the U.S. Treasury Department or any other agency of the United States funds earned on investments as necessary in order to maintain the noninclusion of interest on the General Fund obligations and the Transportation Fund obligations authorized by the General Assembly in the gross income of recipients thereof. Such remittances may be made from funds appropriated for debt service interest. If those appropriations become insufficient to meet interest and other related payments, subject to the approval of the Emergency Board, there is appropriated such amounts as may be necessary to eliminate the insufficiency in the State appropriations for interest. Added 1995, No. 178 (Adj. Sess.), § 267.

Source: Vermont General Assembly (legislature.vermont.gov)URL: https://legislature.vermont.gov/statutes/chapter/32/013Fetched: 10/21/2026