Alaska seeks taxes from Turo car sharing platform in long-running dispute

JUNEAU — The state of Alaska wants to collect taxes from Turo, the online platform where people can advertise and rent their cars, after multiple legislative efforts and a trip to the courts have failed to resolve a long-running dispute.

The dispute raises questions about how e-commerce is regulated in Alaska — and the state’s power to enforce its laws.

The state has said that transactions made through Turo, and other peer-to-peer car rental websites, should incur the state’s 10% vehicle rental tax, which has been imposed on sales by brick-and-mortar rental car agencies since 2003. Turo has argued it is not a car rental firm that owns a fleet of vehicles, meaning it should not be liable for that tax.

Deputy Revenue Commissioner Fadil Limani said Turo accounts for the vast majority of online car rentals in Alaska, and the state could be missing out on millions of dollars per year.

Without data from the San Francisco-based company, it’s not possible to estimate how much tax revenue the state is failing to receive from Alaskans who rent their cars through Turo, called “hosts.”

In March of 2018, the state sued Turo for refusing to comply with subpoenas that required the company to show its financial records going back to 2009. Former Juneau Superior Court Judge Louis James Menendez dismissed the case later that year, and said the subpoena was overly broad and unduly burdensome.

The state Tax Division issued its subpoenas “for the express purpose” of securing information to determine if Turo was liable for state taxes, Menendez said. Because the subpoenas were unsuccessful, the judge said that he could not answer the underlying question in the case: whether Alaska’s rental vehicle tax should apply to Turo.


Since the state’s lawsuit was dismissed, the Department of Revenue has sought a legislative fix, supporting measures to clearly spell out in state law that Turo is responsible for collecting the state’s 10% vehicle rental tax from renters. A bill supported by the Dunleavy administration stalled in the Senate before the end of the first regular legislative session last month.

In the intervening years, the state has collected taxes directly from hosts — including, until recently, by garnishing some of their bank accounts.

But there have been challenges.

Turo manages all financial transactions itself and pays hosts directly after subtracting fees, meaning hosts have no method to collect taxes from renters. That means hosts have needed to pay their tax liabilities out of pocket, sometimes months after a transaction has been made.

‘Level playing field’

The number of Alaska Turo hosts has grown exponentially in recent years, particularly at the end of the pandemic when rental cars were scarce and prices skyrocketed.

Rental car agencies estimate that there are more than 3,000 vehicles listed on Turo in Anchorage and Mat-Su, making the platform the largest single source of rental vehicles in the state.

Turo declined to share with the Daily News how many Alaska-based hosts there are or how much revenue it generates locally per year.

For traditional rental car companies, levying state taxes on Turo is about fairness. Carrigan Grigsby, executive vice president of Avis Alaska — the state’s largest brick-and-mortar rental car company — said that hosting platforms should not get preferential treatment and effectively be allowed to charge lower fees for customers.

“Obviously, we believe that business should operate on a level playing field,” he said to a state Senate committee in April.

Grigsby said that some Turo hosts effectively operate like small businesses, and the state should tax them like that. Turo has three categories of hosts and considers a “professional host” to typically have 10 or more cars, often using the platform as their primary income source.

Turo’s business has also experienced strong growth in recent years. By the end of 2022, the billion-dollar company reported having 160,000 active hosts and 320,000 active vehicles across 11,000 cities in the U.S., Europe and Australia. The privately held company, which filed an updated initial public offering with the U.S. Securities and Exchange Commission in March, reported generating $746.6 million in revenue in 2022 — a 59% increase from the year before.

‘Collect an old tax’

Senate Bill 127, introduced in April by Sen. Matt Claman, D-Anchorage, is the latest attempt to resolve the Turo tax dispute with the state after two previous legislative efforts fell short. It is supported by the rental car industry.

Under Claman’s bill, Turo would impose the 10% vehicle-rental tax on the renter at the point of sale through its app or website, and the company would then remit tax revenue to the state quarterly.

“We’re not imposing a new tax and trying to apply it retroactively. We’re just trying to collect an old tax, or an existing tax,” he said.

Limani said it would be easy for Turo to enable the tax collection feature on its website and app, which it already does in 40 states. And there is precedent for Turo collecting taxes in Alaska.

In 2020, the Anchorage Assembly passed an ordinance to extend its own 8% vehicle rental tax to include platforms like Turo. The Municipality of Anchorage estimated at the time that change would raise an additional $760,000 per year, increasing by 5% annually.

The municipality does not distinguish between hosting platforms and rental car agencies when calculating vehicle rental tax revenue, a spokesperson for the mayor’s office said. City data shows Anchorage rental car companies made more than $63 million in the third quarter of last year, and paid $4.2 million in taxes — a 36% increase from the same period in 2019, before the COVID-19 pandemic and when municipal taxes were first imposed on Turo.


Unfruitful meetings

The Turo tax dispute has largely gone on behind closed doors, involving meetings late last year between members of the Dunleavy administration and Turo representatives. But those meetings were not fruitful, with a Department of Revenue memorandum attached to SB 127 stating that Turo has been “unwilling to find a workable solution.”

“I just don’t see them working in good faith,” Limani said. “And they’re just trying to ride this for as long as they can, anticipating that it may or may not happen sometime in the near future.”

Catherine Mejia, a Turo spokeswoman, disputes that account. She said the state and the rental car industry have blocked any compromise tax figure being approved, but that Turo users should not be required to pay the full 10% state tax.

“We believe that is wildly unfair to local residents,” she said, arguing that hosting platforms and rental car agencies are fundamentally different businesses. “So we’re willing to come to the table with anything between zero and 9%.”

Limani acknowledged that Alaska lobbyist Ted Popely, who has been on a $5,000-per-month contract with Turo since January, suggested to him that the company could accept a lower tax figure. But the Dunleavy administration was not prepared to support that, he said.

Grigsby with Avis Alaska said that rental car agencies would insist that any new vehicle rental tax rate be applied equally to themselves and peer-to-peer car rental services.

Host accounts garnished

Some Alaska hosts report having their bank accounts garnished by the state for failing to pay the vehicle rental tax. Kyla Dinkel, an Anchorage financial adviser who currently has 15 cars listed on Turo, estimates that she will make between $22,000 to $24,000 per month in June, July and August.

After discussing the issue with fellow Turo users online, Dinkel said she stopped paying state taxes, adding, “there’s no legislation showing us that as Turo hosts, we should be personally liable for those taxes.”


Dinkel said that the state twice garnished her bank account, but one amount was refunded, she said, after the state had “guesstimated” how much she had earned.

In April, the Department of Revenue said that 25 Alaska Turo hosts collectively owed over $470,000 in back taxes — or an average of $19,000 each.

The state’s delinquency figures represent just some of the hosts who had paid taxes in the past; there are likely hundreds more who have never paid taxes to the state and are effectively unknown to auditors, Limani said, adding that the state’s delinquency figures were estimates extrapolated from previous filings.

By email, Limani said that due to taxpayer confidentiality, the Dunleavy administration was unable to comment on specifics about how many Alaska Turo hosts had their accounts garnished and how many have subsequently been refunded.

The governor quietly ended direct tax collections from Turo hosts late last year, instead anticipating a legislative fix, according to a Department of Revenue memorandum posted online in April alongside Claman’s bill, which failed to pass this year.

The Legislature had been focused on passing a budget and other bills, and there was simply not enough time, Limani said, adding that the plan now is to revive the measure during next year’s regular legislative session.

Sean Maguire

Sean Maguire is a politics and general assignment reporter for the Anchorage Daily News based in Juneau. He previously reported from Juneau for Alaska's News Source. Contact him at