How to Get Vermont Form E-2A Tax Clearance (Step-by-Step)

Form E-2A is the document that unlocks the end of Vermont probate. Under 32 V.S.A. Section 7454, the probate court cannot discharge the executor, waive the final accounting, or approve any distribution of estate assets to beneficiaries until the Vermont Commissioner of Taxes issues this clearance confirming that all state taxes have been assessed and fully settled. It is not a form you file at any point in the process — it is the last step, applied for after every preceding tax obligation is complete. Many Vermont executors spend months managing probate without knowing Form E-2A exists until the probate court's closing checklist mentions it. The result is delays, because the clearance cannot be issued retroactively while other returns remain unfiled.

This guide maps the exact prerequisite sequence, explains what the E-2A application requires, and describes the common reasons clearance is delayed so you can avoid them.

What Form E-2A Is

Form E-2A is titled "Vermont Estate Tax Information and Application for Tax Clearance." Despite the name, it applies to all Vermont estates — not just those with a Vermont estate tax liability. Even if the estate is well under the $5 million estate tax threshold and owes no estate tax, the executor must still submit Form E-2A and receive the clearance before the probate court closes the estate.

The form asks for:

• Basic identifying information about the decedent and estate
• Confirmation of all tax returns filed during the administration period
• Confirmation that all balances have been paid
• Information about asset types and values sufficient for the Department to assess whether any outstanding obligations exist

The Vermont Department of Taxes reviews the submission against their records. If every return is filed and every balance is paid, they issue the clearance. If any return is missing or any balance is outstanding, the clearance is withheld and you must resolve the deficiency before reapplying.

The Prerequisites: What Must Be Done Before You Apply

The E-2A clearance will not be issued until all of these are complete:

Prerequisite 1: File Form IN-111 (Final Individual Income Tax Return)

This return covers all income earned by the decedent from January 1 of the year of death through the exact date of death. It must be filed and any balance paid before the Department will process an E-2A application.

Deadline: April 15 of the year following the death. If death occurred in January or February, this deadline arrives within a few months.

Common issue: If the deceased is owed a refund, the refund claim requires federal Form 1310 (Statement of a Person Claiming Refund Due a Deceased Taxpayer) attached to the IN-111. Without it, the return processes but the refund is held, which can leave the IN-111 in a technically unresolved state from the Department's perspective.

Prerequisite 2: File Form FIT-161 (Fiduciary Return of Income) for Every Applicable Period

The estate becomes a separate Vermont taxpayer on the date of death. Vermont requires Form FIT-161 to be filed if:

• The estate earns more than $100 in Vermont income, OR
• The estate receives $1,000 or more in gross income from Vermont sources, OR
• The estate is required to file a federal Form 1041

The $100 threshold means almost every estate with a Vermont bank account or investment account will need at least one FIT-161 filing. If the estate administration spans more than one fiscal year, a separate FIT-161 is required for each period.

Estimated payments: If the estate generates ongoing income, estimated quarterly payments are required using Form FIT-165. Unpaid estimated payment balances must be reconciled before the E-2A clearance is issued.

IRS adjustment trap: If the IRS later adjusts the federal Form 1041 for any reason — even after the estate appears to be fully closed — Vermont law requires an amended FIT-161 within 60 days of that adjustment. This can reopen the E-2A process if the clearance was issued before the adjustment.

Prerequisite 3: File Form EST-191 (Vermont Estate Tax Return) If Applicable

If the gross estate — all property owned at death plus any taxable gifts made within two years of death — exceeds $5 million, Form EST-191 is required and any tax owed must be paid. Vermont applies a flat 16% rate to the amount above $5 million.

Deadline: Nine months from the date of death. A six-month extension is available using Form EST-195, but the extension defers only the filing — any tax owed must be paid by the original nine-month deadline.

If the estate is under $5 million: No EST-191 is required, but the E-2A application must still confirm this and the Department must verify it matches their records.

Prerequisite 4: Pay All Outstanding Balances

The clearance requires that all tax balances — including interest and penalties — are fully paid. Vermont's 2026 interest rate on unpaid balances is 7.75% annually. Penalties for late filing (5% per month, capped at 25%) and late payment (1% per month) can add substantially to a balance that started small. All of these must be settled before applying.

How to Submit Form E-2A

Form E-2A is available from the Vermont Department of Taxes at tax.vermont.gov. Submit it to the Vermont Department of Taxes, not to the probate court. The probate court does not process tax filings — it waits to receive the issued clearance from the Department.

When you submit, include:

• The completed Form E-2A
• Copies of all filed returns (IN-111, FIT-161 for each period, EST-191 if applicable)
• Confirmation of all payments made (payment confirmation numbers, canceled checks, or account transcripts)
• Any correspondence with the Department about prior adjustments or amendments

The more complete and organized the submission, the faster the Department can verify and issue the clearance.

How Long Does It Take?

Processing time depends on the completeness of your submission and the Department's current workload. Executors who submit with all returns filed, all balances paid, and organized documentation report clearance in several weeks. Cases with missing returns, outstanding balances, or IRS adjustments that require amended Vermont filings can take months.

The most common cause of delay is an executor applying for the E-2A before all FIT-161 filings are complete — often because they did not realize the $100 income threshold triggered a filing requirement. The second most common cause is an unresolved balance, including interest or penalties the executor was not aware had accrued.

What Happens After the Clearance Is Issued

The Vermont Department of Taxes sends the clearance to you — the executor — not directly to the probate court. You then submit the clearance to the probate court as part of the final closing filings:

• Motion for Decree of Final Distribution (Form 700-00057PEm): Requests the court's approval to distribute remaining assets to beneficiaries
• Fiduciary's Closing Report and Discharge (Form 700-00152): The executor's formal accounting of all assets, debts, taxes, and distributions
• Affidavit of Administration (Form 700-00401): Certifies that administration is complete
• Receipts from Beneficiaries (Form 700-00153): Signed acknowledgment from each beneficiary of what they received

Once these are filed and accepted, the probate judge closes the estate and formally releases the executor's bond. This is the legal end of your fiduciary responsibility.

E-2A and Real Estate: The Lien Connection

Under 32 V.S.A. Section 7497, a Vermont estate tax lien arises upon the assessment and notice of a tax deficiency — not automatically at death (unlike the federal system's automatic "secret lien"). This means a title examiner reviewing Vermont real estate can generally presume there is no estate tax lien unless a specific lien notice has been filed in the town clerk's office where the property is located.

However, the probate court still requires the E-2A clearance before it will approve any real estate distribution. And town clerks record lien release requests through the state's myVTax portal when a lien has been filed. For estates with real property, getting the E-2A clearance is a prerequisite for clean title, regardless of whether a physical lien was recorded.

Who Needs to Know About This Process

• Executors of any Vermont estate: The E-2A is required to close probate, regardless of estate size or tax liability
• Beneficiaries waiting on distributions: Distributions cannot be legally approved until the E-2A clearance is issued — this is not the executor's discretion, it is a statutory requirement
• Out-of-state executors: Remote administration does not change the sequence; every filing must be completed and verified before applying
• CPAs filing for Vermont decedents: The E-2A application requires confirming all Vermont-specific returns are filed — the IN-111, FIT-161 for each period, and EST-191 if applicable — in addition to federal filings

Who Does NOT Need to Read This Further

If the estate has a contested will, insolvent estate, or adversarial Medicaid estate recovery claim, the E-2A clearance process is one part of a larger contested proceeding — you need Vermont legal counsel managing the full picture, not just the tax clearance sequence. This guide addresses the administrative and tax filing path to the E-2A for uncontested estates where the primary challenge is knowing what to file and in what order.

The Vermont Final Tax & Estate Tax Guide was built around the E-2A clearance as the organizing principle — every chapter, every checklist, and every form walkthrough leads to that single document. It includes a dedicated E-2A Clearance Sequence Checklist with every prerequisite step, checkboxes, and date fields to track your progress toward the clearance.

Get the Vermont Final Tax & Estate Tax Guide

Frequently Asked Questions

Can the probate court close without the E-2A tax clearance?

No. Under 32 V.S.A. Section 7454, the Vermont Commissioner of Taxes must issue a receipt — Form E-2A — confirming all state taxes are settled before the probate court can discharge the executor, waive the final accounting, or approve the final distribution. There is no procedural workaround or waiver for this requirement. If the clearance is not in hand, the estate cannot close.

How do I know if my estate needs to file Form FIT-161?

If the estate earns more than $100 in Vermont income after the date of death — from any source, including interest on a bank account, dividends, rental payments, or IRA distributions — the estate must file Form FIT-161. This threshold is far lower than the federal $600 threshold for Form 1041. Most Vermont estates with any active accounts during administration will cross it.

What if the Department of Taxes says there is an outstanding balance I don't know about?

Contact the Department directly to request a transcript of all filings and payments associated with the estate's EIN and the decedent's Social Security Number. Discrepancies between what you filed and what the Department has on record are the most common reason E-2A clearance is delayed. Resolve discrepancies in writing with copies of payment confirmations and return acknowledgment receipts.

Does the E-2A apply to small estates under $45,000?

Yes. Even Vermont small estates — those under $45,000 with no real property, administered under a simplified procedure — must satisfy the tax clearance requirement before the estate can formally close. The tax filing obligations for a small estate may be limited to just the final Form IN-111 if the estate generates negligible income, but the E-2A is still required.

What is the Vermont estate tax interest rate if I miss a payment deadline?

Vermont's interest rate on unpaid tax balances for 2026 is 7.75% annually. This rate is set each January 1 based on the Federal Reserve average prime loan rate from the prior year. Interest compounds on unpaid balances from the original payment due date, not from when you discover the balance. For the EST-191 estate tax return, the payment due date is nine months from the date of death — the extension deadline for filing does not extend the payment deadline.

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