By Larry Persily
Skagway is not among the 15 founding members of a statewide municipal organization created to boost tax collections from online merchants, but that doesn’t mean it has decided against joining.
“It needs a lot more research, in my opinion,” MayorAndrew Cremata said. The cost is high, the mayor said Dec. 4. Participating cities and boroughs would need to pay for the tax collection start-up expenses and ongoing services through the Alaska Municipal League, and Skagway’s cost could be as much as 25 percent of tax receipts collectedfrom online merchants, the mayor said.
The borough already receives some sales tax revenues from Amazon, but the amount is not public information — sales tax returns are confidential. “That is the only online entity that we’re getting money from,” Cremata said.
The Alaska Municipal League started looking at what it could do to help cities and boroughs collect their local salestaxes from remote merchants — online sellers — after a 2018 U.S. Supreme Court case gave states the go-ahead to require that out-of-state sellers collect and remit sales taxes on orders delivered into the local jurisdiction.
Without a state sales tax office to lead the effort in Alaska, the municipal league focused on the 106 cities and boroughs with a local sales tax to work together to build a statewide organization for administering each community’s tax on remote merchants.
Municipalities without a local sales tax, such as Anchorage and Fairbanks, may not collect the tax on online orders unless they also charge the tax on local sales.
The 15 founding municipalities signed the agreement at the league’s annual conference in Anchorage on Nov. 21. The new Alaska Intergovernmental Remote Sellers Sales Tax Com-mission has contracted with a tax administration software company to set up the system for online merchants to determine the correct tax rate and rules for sales in Alaska, then remit the payments for distribution to the cities and boroughs.
Juneau, Haines and Wrangell are among the 15 original signers. Juneau expects it could receive $1 million a year in additional sales tax revenues from collecting on online orders delivered into town.
Skagway is budgeted to receive $8 million in sales tax revenues this fiscal year. Of that, $2.3 million is appropriated for the school. The sales tax rate in Skagway is 3 percent Oct. 1 to March 31, increasing to 5 percent April 1 to Sept. 30 to catch the heavy influx of visitor spending.
Participating municipalities need to adopt an ordinance to bring their tax code into compliance with the league’s streamlined system for out-of-state merchants at the same tax rateas local businesses.
The commission hopes to be up and running — and collecting — early in 2020.
“The urgency to move on this is the longstanding inequity of the past system … (where) local businesses and brick-and-mortar stores were disadvantaged by having to collect local taxes while online vendors did not,” the municipal league said in a prepared statement.
“This effort will level the playing eld and ensure that all business have the same responsibility. At the same time, this is revenue for local governments that hasn’t been collected previously,” the statement said.
“Online sales have impacted us quite a bit,” said Andy Miller, manager at Grizzly’s General and Skagway Radio Shack. “It does take a toll.”
Requiring remote merchants to collect tax the same as local stores would generate additional revenues to help the community, Miller said.
Amazon started collecting sales tax on many of its deliveries into Alaska cities and boroughs last year, but not on everything ordered from its website. It generally excluded collecting tax on goods sold by third-party vendors, even if the items are advertised and sold through the Amazon site.
Most of the 45 states with a sales tax have been at work since the 2018 Supreme Court decision to expand collections on online sales, including such ful llment order-takers as Am-azon.