Amazon.com is among the first online vendors collecting sales tax for the Kenai Peninsula Borough since the borough progressed efforts to establish a system of collecting sales taxes from online merchants.
At the Jan. 22 assembly meeting, the borough passed an ordinance appropriating $10,000 to support the Alaska Municipal League in setting up a workgroup, which would find efficient ways of collecting sales tax from online sellers. The borough estimates online tax collection could produce an annual $1.5 million in additional sales tax revenue.
A recent decision by the United States Supreme Court known as the Wayfair Case allows municipalities that fulfill certain requirements to tax remote vendors through online sales.
At Tuesday’s assembly meeting, assembly member Willy Dunne said concerned constituents have been reaching out to him after Amazon began collecting taxes on purchases
“Folks want to know if the tax being collected by amazon is being transferred back to the borough,” Dunne said.
Borough Financial Director Brandi Harbaugh said Amazon voluntarily registered with the borough.
“We have contacted and discussed, with (Amazon), our code and the intricacies of it, our cap and the various rates throughout the jurisdictions in the borough,” Harbaugh said. “They are registered and they will be filing on a quarterly basis. We will have more information probably in the month of May.”
Amazon is only collecting sales tax on products sold by Amazon.com or through Amazon warehouses, not on products through independent vendors or third party entities.
Harbaugh said some residents have concerns about being charged incorrect rates based on their zip code. Individuals outside of city limits, and exempt from a higher sales tax rate, can contact the borough for a letter confirming the resident’s physical address and correct tax rate. Once sent to Amazon, the letter will be associated with the resident’s Amazon account to ensure the correct sales tax.
Not everyone is welcoming the borough’s efforts to collect sales tax through internet sales. George Pierce of Kasilof used his public comment to voice his frustrations at Tuesday’s assembly meeting.
“Now you’re paying somebody some money to figure out how we can take advantage of the people who don’t want to pay taxes,” Pierce said. “Pretty schemey I think. Shame on all of you.”
Harbaugh said several online vendors, such as Netflix, Overstock.com and others, have been registered with the borough and collecting sales tax voluntarily, long before the Wayfair case.