In Haines, it will soon be impossible to escape sales tax, even online.
On Tuesday, Jan. 28, the Haines Borough Assembly introduced an ordinance that would adopt the Alaska remote sellers sales tax code. The code, created by the Alaska Remote Sellers Tax commission, applies Haines sales tax rates to online sellers (like Amazon and Netflix) who have met a least one of the following criteria in the past year: the seller’s gross sales for the state were at least $100,000 or the seller completed at least 200 separate transactions within the state.
The code came about after the U.S. Supreme Court ruled in South Dakota v. Wayfair, Inc. (2018) that states could collect sales tax on items sold by remote vendors with no physical presence in the state. While Alaska has no sales tax at the state level, this decision meant local communities could start collecting sales tax from items sold by remote vendors. “Remote tax will be based on the point of delivery,” Haines Borough finance director Jila Stuart said. In Haines, this means that all packages delivered at the post office will be taxed at a 5.5% rate.
South Dakota v. Wayfair, Inc. specified that states could not place an undue administrative burden on retailers attempting to comply with their tax codes. This created the need for a statewide commission and uniform laws governing collection in communities across Alaska, Stuart said. “Alaska has over 100 different taxing jurisdictions each with their own rates, exemptions, and due dates. The Commission will lessen the administrative burden on retailers by creating uniformity and commissioning a database to enable online retailers instant access to rates and exemptions for any given transaction.”
Even without laws governing the collection of sales tax from remote transactions, in the first 11 months of 2019, the borough brought in $70,000 in sales tax from remote vendors, Stuart said. It was a marked increase from 2018, she said. She attributes this to the South Dakota v. Wayfair, Inc. ruling, which resulted in Amazon beginning to collect and remit sales tax to the borough. At the start of 2019, the borough also created a separate category in its sales tax database to better track revenue generated from remote sellers.
“I think the adoption of the Alaska Remote Sellers Sales Tax Code will increase the remote sales tax revenue to Haines,” Stuart said. “There are hundreds, if not thousands, of retailers selling to Alaska. Currently only a handful are collecting and remitting tax. Also, Amazon currently… (does) not collect and remit tax on third party transactions sold on their website.” She said she expects the commission will force remote vendors not currently in compliance to collect and remit tax.
Haines joined the Alaska Remote Sellers Tax Commission in 2019. On Jan. 6, the commission approved the Alaska remote sellers sales tax code. As one of the 25 communities that make up the commission’s membership, Haines has 120 days to adopt the code.