Business/Economy

Sales tax on Outside purchases projected to raise up to $10 million for Alaska towns

FAIRBANKS - A group of Alaska communities collecting tax on purchases from Outside vendors is projected to take in between $8 million and $10 million in new revenue this year, KTVF-TV reported.

The 33 communities are part of the Alaska Remote Sellers Sales Tax Commission formed by the Alaska Municipal League in November 2019.

The league was formed to help local governments statewide collect sales tax from purchases made from outside Alaska. Most of the taxes are collected from online sales but can also be applied to phone purchases.

The U.S. Supreme Court granted states authority to collect the revenue in 2018. More than 40 states have since started collecting remote sales tax.

Participating sellers including Amazon, Walmart, Target, Lowe’s and Home Depot.

The remote sales tax is not new but an extension of an existing tax to online sales, Alaska Municipal League Executive Director Nils Andreassen said.

The remote sales tax has provided more stability for participating communities during the pandemic, Andreassen said.

The Alaska commission reports 665 vendors have joined and there are 106 other communities that could join because they have sales tax mechanisms in place, Andreassen said.

The projection of up to $10 million to be collected statewide in 2020 could be doubled as more communities and vendors sign up, Commission President Jeff Rogers said.

The effort is about leveling the playing field for so-called brick and mortar stores - physical businesses rather than online-only entities - where customers would normally pay sales tax.

“If you are not collecting remote sales tax, you are effectively subsidizing those sales,” Rogers added.

The Small Business Development Center reported online shopping has gone up by 100% across every age demographic in Alaska during the coronavirus pandemic.

The commission requires companies operating remotely and making more than $100,000 in sales annually, or with more than 200 annual sales across Alaska, to remit tax revenue to communities. The amount each company pays is confidential.

Sponsored