Valley AML members prepare to discuss online sales tax at meeting

MAT-SU — Elected officials serving in the Valley will be traveling to Juneau next week for the Alaska Municipal League Conference where they will discuss the progress of the study to determine how municipalities throughout the state can efficiently collect sales taxes from retailers delivering goods within city limits.

The February AML meeting may offer a clearer look at the study that has not yet been conducted, but legislation for an amendment to state statute allowing for municipalities is likely years away.

“By the time all the bugs are worked out, I won’t even be in office. It’s two to three years away,” Wasilla Mayor Bert Cottle said.

Both Palmer and Wasilla have chosen to buy in to the study. Based on Palmer’s revenue bracket, they voted to donate $5,000 to the study. Wasilla voted to pay their $10,000, both cities choosing to donate the maximum amount to result in the highest quality study on how to craft a marketplace facilitator law for Alaska. Wasilla Finance Director Troy Tankersly has been working with Alaskan cities dealing with taxation since the 1990’s, and was requested to assist due to his expertise.

“Really what it is is it’s a research project and it’s akin to the streamlined sales tax system in the lower 48, primarily on the East coast. They have 23 states that belong to it. It’s through a participation agreement and it’s where the states have come together,” Tankersly said. “Many of theses stores are taking it upon themselves.”

The difference between states that already have a similar law in place and the Last Frontier is that Alaska does not currently have a sales tax. Palmer City Manager Nathan Wallace’s office looks out over Cobb Street in downtown Palmer.

“There’s a lot of business transactions that are happening that aren’t paying for that street. That’s the worst street in town and where does the traffic go, to the post office. Huge trucks are going down the road to the post office. What’s in the back of those things? I would say probably half of those trucks are Amazon packages or some other online business,” Wallace said. “There’s significant revenues that can be gained to support stuff being done outside the cities as far as businesses.”

Elected officials from each city stressed that this is not a new tax. Sales tax codes exist and online retailers have already begun paying sales tax on goods delivered inside city limits.

“How that transaction was facilitated has changed, but the transaction in or outside the city that’s been going on since 1978 when we had a sales tax instituted,” Wallace said.

However, the state has struggled in using identification of property outside the city limits but within the city’s zip code.

“I want to understand the capability of zip code versus GIS boundaries. We have a serious problem when we’re taxing taxpayers in the state of Alaska that have the same zip code… If that item is being delivered at your house, not a post office but your house that has the same zip code It’s a non taxable transaction,” Tankersly said. “I would love to be able to figure out a way to not tax folks outside the city that are clearly getting delivered to outside the city.”

Tankersly hopes to employ GIS systems rather than zip code software, which has failed in the past.

“The difference is is that Wayfair took the physical presence out so it’s in my eyes fair treatment between a brick and mortar store that’s operating and the guy that’s operating via the net selling the same thing,” Tankersly said. “I think by removal of Wayfair it created an even playing field but sales tax is still the same. You’re still operating inside the boundaries you just don’t have the physical component here and it creates that fairness. Why wouldn’t we want that fairness? Why wouldn’t we want the vendors that have the brick and mortar stores and the small businesses especially, why wouldn’t we create an even playing field?”

An AML committee has been in discussions over the study since November and meets frequently. Cities would have to opt in once the legislation is finally crafted.

“What we’ll see in May is the framework on how we’re going to approach that, here’s who we’ve designated to do the research and study, here’s what they’re going to look at and then by November we should have the first look at the fruits of our labor,” Wallace said.

Potential revenues from incoming online sales tax are yet to be accurately predicted. Until the study is completed and Alaskan Municipalities determine how to move forward, cities will anxiously await the findings.

“Our responsibility is to protect the city. I can’t protect the city if I’m not at the table,” Cottle said. “In light of what just happened down in Juneau, who knows what’s going to happen?”

Contact Frontiersman reporter Tim Rockey at tim.rockey@frontiersman.com.