Topic: Is a $1,000 rental license fee for real?
Topic type:
On the topic of whether there is a $1,000 application fee to become a "rental" car company.
We have heard that to rent a car in Vermont requires a license from the Agency of Transportation (AOT) as well as a $1000 license fee. I took a quick look into the license fee.
A rental car company in Vermont is "any person offering pleasure cars for rent on a short-term basis." 32 V.S.A. sec. 8902(10). A 9% use tax is imposed on the rental charge of a car. 32 V.S.A. sec. 8903(d). The rental company is required to collect the tax and pay it. 32 V.S.A. sec. 8905(e). Under 32 V.S.A. sec. 8916, the AOT may require, and evidently does, a bond to ensure payment of up to the "total potential liability of the rental company." The "bond" just means that a third party, a surety, is on the hook to pay if the rental company fails to, protecting revenues owed to the State. The amount of the bond is based on past tax liability, and may be adjusted as the AOT sees fit. However, a new aplicant, with no history on which to calculate a bond requirement, defaults to a required $1,000 bond. So states the AOT's required bond form. In lieu of a bond, however, a rental company may substitute a letter of credit or cash.
Thus, a new applicant for a rental company license may well simply pay the $1,000.00 when submitting the rental license application and consider it a license fee, which it is not.
In so far as I can tell, this probably is the source of the rumor that there is a $1,000.00 application fee. It really is not a fee, because, if paid in cash, this ought to remain the funds of the company, not the State. If business is good (meaning the bond requirement goes up a lot), an actual bond or letter of credit would become a much more efficient way to square up with the AOT--it would free up the principal for a small annual fee.
If there is a license fee otherwise, I did not find it. I did not call the AOT and ask them about this, so if anyone wants to pursue it, that I think would be the first thing to do.
