Non-city residents urged to check phone bills for sales tax errors

WASILLA — If you live outside Wasilla and Palmer limits but share a ZIP code with those cities, you might want to check your telecommunications bills to make sure you’re not paying sales tax you don’t actually owe.

Although the amounts might be minimal — averaging less than $3 a month for each bill — at least two Mat-Su Borough residents who live just outside Wasilla city limits say Alaska law requires companies like AT&T, ACS, GCI and Dish Network to figure out a way to determine who actually lives within the cities and only charge those customers city sales taxes, which are then paid to the municipalities each month.

“I call it taxation without representation,” former Wasilla city councilwoman Laura Chase said from her home off Church Road. “The companies consider me a Wasilla resident because of my ZIP code, but I can’t vote in city elections and I can’t run for mayor. If I lived inside the city I probably would run for mayor. I was on city council and the planning commission at one point, and to watch the kind of stuff that’s going on now I just shake my head. If I could vote, people definitely would hear my voice.”

Two years ago, Chase teamed up with another borough resident who lives off Bogard Road to try to help bring about changes in the way non-city residents are taxed for telecommunications services. Although the Bogard Road resident’s name is all over correspondence to Wasilla Mayor Verne Rupright and State Assessor Steve Van Sant, she asked to remain anonymous for this story because she feared her employment would be affected.

“AT&T and GCI are my clients at my job,” the Wasilla businesswoman said. “It’s hard for me to bring this issue forward in a more public way myself, but people need to know that these companies owe non-city residents two years’ worth of sales taxes. Most people don’t know that they can go to the city and get a letter of exemption to take to local companies. But the companies should be able to figure this out — like MTA did — so they wouldn’t collect those taxes in the first place.”

The two women argue that federal communications law puts the burden on the communications companies to make sure they are not taxing those who shouldn’t be taxed. They said they applaud Matanuska Telephone Association for having the wherewithal to separate non-city residents from city residents without requiring proof of residency from the cities.

“If MTA can figure it out, the other companies should be able to,” Chase said, before adding up Wasilla sales taxes she paid through AT&T alone between July 2009 and October 2009 and discovering she was out $15.24 in those four months. “It adds up fast.”

State Assessor Van Sant, who has helped the two women sort through regulations and communicate with local companies over the past couple of years, said the complaint was thoroughly researched.

“GCI, MTA, ACS and AT&T all said that it’s possible for taxing mistakes to be made, but that all a customer has to do is contact them about it and the mistake will be corrected and a refund issued,” he said.

Wasilla City Finance Director Troy Tankersley said the city has no idea how much is being collected in sales taxes from non-city residents — even from those living in the city of Houston who have Wasilla’s ZIP code — because the local companies pass those taxes to the city in one lump sum each month.

“This information is not asked for from businesses and as such is not tracked by the city,” Tankersley said in an email explaining that the city asks for gross sales and various non-taxable sales, such as those outside the city to determine taxable sales, before applying the 2 percent sales tax due the city.

Tankersley said he did not know how many non-city residents have come in asking for proof of residency letters to take to telecommunications companies.

“The city tries to assist its taxpayers by validating where they reside and providing necessary documentation to assist the taxpayer and the business in an effort to tax correctly,” he said. “This is a taxpayer initiative because the city can’t alter business sales tax accounts without proper documentation and authorization.”

Palmer Finance Director Kelli Veech said non-residents with a Palmer ZIP code who are being charged sales taxes by telecommunications companies are welcome to come to city hall with proof of address and pick up a letter to take to those companies to rectify the situation.

She also had no idea how much in city sales taxes have been collected from Butte residents or others living outside city limits.

“I’ll be sure to prepare my staff for the flurry of people who might be coming in now,” Veech said.

Chase said she worries about all the sales tax monies Houston is missing out on because the telecommunications companies are charging Houston residents Wasilla sales tax because of their Wasilla ZIP.

“Houston is about to go bankrupt,” Chase said. “If any city needs that money, it’s Houston. If the city of Wasilla is such a fat cat that it can reduce its property taxes and live on its sales taxes, something is really wrong with this picture.”

Houston Mayor Virgie Thompson said her city has been trying to figure out how to address the issue and is frustrated to be missing out on those funds.

She said those with a Houston Post Office box have a Houston ZIP, so sales taxes from those customers does go to Houston. It’s all the rural routes out there with Wasilla ZIP codes that are the issue.

“Do you send a flyer out to residents or go door-to-door asking them who their carrier is?” Thompson said. “The city is probably losing out on a lot of tax dollars. I’ve had the 99654 zip for 20 years and a cellphone for the last 15.”

The women said they hope the fact that all non-Wasilla residents from Church Road north through Meadow Lakes, Big Lake and Houston will begin using a new 99623 ZIP code beginning July 1 will help local companies better determine who should be taxed.

But since Meadow Lakes residents are neither part of Wasilla nor Houston, the new ZIP code might confuse the issue even more and cause some Meadow Lakes residents to be charged Houston sales tax instead.

Chase said she just hopes it gets straightened out so non-city residents will stop being taxed unfairly and will file to receive reimbursement for the taxes they’ve already paid.

“I am not against taxes,” said Chase, who served on the Wasilla Planning Commission from 1992 to 1994 and on city council from 1994 until she went to work for Sen. Lyda Green in 1996. “I worked my butt off to make sure we had a sales tax so we could have a police department. I spent a lot of time doing that when I worked for the Wasilla Chamber of Commerce. I believe in services for the people, but I don’t believe in undue taxation without having a voice in the kinds of services you get. It’s wrong, and I think the people really, really need to know what’s going on.”

Contact K.T. McKee at kate.mckee@frontiersman.com or 352-2252.