(Claire Stremple for KHNS)
The state of Alaska doesn’t have sales tax. It was stricken from the books under Governor Jay Hammond in 1980. Municipalities do levy taxes. So far, online sales have been exempt. But a recent Supreme Court ruling means online retailers may begin to start charging local taxes in the next year or so–once a statewide system is in place. But without any warning one online retailer has started collecting those taxes already. Claire Stremple has more.
Skagway residents report that Amazon charged sales tax on their purchases. But neither the state nor the municipality gave them permission to do so.
“It appeared to me that without any notice from municipality, from the state, or from Amazon, they started adding sales tax as of the first of this year,” said Gary Hisman.
Hisman has lived in Skagway for decades. He says he was charged 3% sales tax–that’s the municipal winter rate–on a recent Amazon purchase. Hisman reached out to customer service who passed him to the tax division.
“She explained that they had received word from the state of Alaska to start collecting sales tax on our community because we were an outlying community,” said Hisman. “I asked who was collecting the tax. She couldn’t tell me or refer me to anyone higher up in the company. That was the end of the call with Amazon.”
The company did not respond to KHNS’ request for comment.
Alaska State Assessor Marty McGee says he’s been getting calls from a number of Alaskans who heard the same thing as Hisman. He says “no one asked or granted permission” to collect sales tax from the state. But there is a municipality that lets Amazon collect sales tax: Juneau.
Bob Bartholomew is Juneau’s Finance Director. He has been dealing with this issue for awhile. In order to remit municipal sales tax, businesses need to register with the municipality. Amazon is registered in Juneau.
“The first question is to find out if Amazon was registered with Skagway before and if they have a liability,” said Bartholomew.
Skagway Treasurer Heather Rodig says Amazon doesn’t have a business license in Skagway. Both Haines and Skagway are currently researching the Amazon issue and are working to resolve it.
Haines Finance Director Jila Stuart says Amazon requested a Haines Borough business license application earlier this week. The Borough hasn’t received a completed registration, but they know Amazon is charging customers municipal sales tax. According to Stuart, any tax Amazon collected from consumers in January is due to the Borough March 10.
Bartholomew said the company is likely getting out in front of a recent Supreme court case that opens the door for online retailers to collect taxes.
“Some companies, even though they are not liable to collect and remit, have just started doing that. In Juneau, if they wanna start we say, ‘No, wait until we have an adequate program in place.'”
Ultimately, he says all online sales will collect and remit sales tax at the local rate. The Alaska Municipal League is working to create streamlined financial infrastructure so all online retailers can start collecting it. Bartholomew says creating that program should take 12-18 months. Until then, he says tax collection is at local discretion.
“Citizens may say, “Hey you don’t have the authority to tax me. Stop.” That’s where it’s going to become messy,” he said.
Amazon started charging municipal tax on online purchases January 1st of this year. The retailer does not charge local taxes on third party sales. That is, private sellers who use Amazon’s platform.
Upper Lynn Canal communities have discussed collecting sales tax on online sales from Amazon before. Some believe the tax could level the playing field for local merchants that otherwise struggle to compete with the online giant.
But Hisman says that isn’t the point: “The issue for me is who’s getting this money?”
So far, that remains a mystery.
I have Amazon Prime, and have recently made several orders…I just checked, and NONE of them are charging sales tax. So is Amazon only charging non-Prime members the local tax?
So we have taxation without representation. Hey that sounds familiar! Was that not one of the key points that led to the revolutionary war against the British in the 1700’s? And now here we are in the 21st century doing the very same thing to our own people. Here is a tip for our local communities; the more you tax people the more they will find ways around it and in turn the more local businesses will have reduced sales. And that means less cash from local taxes.