Lawmakers protested that the Gables' dining room wasn't like a restaurant, because it served residents of the facility, and people aren't taxed when they eat at home.
As lawmakers changed the law affecting the Gables going into the future, the state canceled its past tax bill.
"We were obviously flabbergasted to get a tax bill like this the week before Christmas," said Grimes, executive director at the Gables. "It was absolutely crazy."
But Grimes said he was pleased with the outcome after local legislators intervened.
Lowe, the landscaper, hasn't been so lucky. He operated his landscaping business for nearly all of its 36 years with the understanding that bark mulch, soil additives and similar products he sells were exempt from Vermont's 6 percent sales tax.
That changed in 2006, but no one told him, Lowe said, until he got past-due tax bills for $18,000 last year, which he is now fighting.
"You don't just change the taxes and laws and not tell somebody," he said.
Steve Jones, owner of the Metowee Mill Nursery in Dorset, said he also missed the 2006 tax law changes that removed the agricultural exemption from sales tax for several of the products he sells. Vermont's tax department sent out a letter at the time talking about changes affecting beer and footwear, he said, nothing about garden products.
He said he didn't realize there was a tax until he got a letter demanding $41,000 in back taxes, interest and penalties in December.
"Just educate me, tell me. I want to pay my fair share," said Jones, who is appealing the bill.
State Tax Commissioner Mary Peterson acknowledged some taxpayers might be confused about the changes, and she said her agency is working on improving how it educates the public about tax policy. But she also defended the tougher tax collections.
"It certainly is your responsibility when you have a business to be keeping up on the rules," she said.
Associated Press Writers John Miller in Boise, Idaho; Sean Murphy in Oklahoma City; Judy Lin in Sacramento, Calif.; and Michael Virtanen in Albany, N.Y., contributed to this report.
The latest installment in a joint project by The Associated Press and Associated Press Media Editors on the fiscal crisis facing U.S. states and cities and how American lives will change because of it.
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