Borough works toward collecting sales tax on online purchases

Borough works toward collecting sales tax on online purchases

An ordinance introduced at the Kenai Peninsula Borough Assembly meeting would appropriate $10,000 to help set up a work group, which would establish a system for Alaska municipalities to impose a sales tax on online purchases. Once set up, the borough could gain an estimated annual $1.5 million in additional sales tax revenue, according to the ordinance.

The Alaska Municipal League, a nonprofit organization of 165 cities, boroughs, and unified municipalities, is spearheading the effort to collect sales tax from remote sellers, who are vendors not within the borough or state.

At Tuesday’s assembly meeting, borough Mayor Charlie Pierce said he met with city officials from around the borough on Dec. 20, to discuss collecting sales tax through online sales. Pierce said borough attorneys will be involved with the process as it evolves.

“It is coming — it’s the change of the times,” Pierce said at the meeting.

The Alaska Municipal League is requesting contributions from Alaska cities and boroughs to support efforts in establishing an initial working group that will hire a contractor who will implement a statewide, independent online sales tax administration system for sales by remote sellers. The borough plans to make $10,000 available for the Alaska Municipal League.

“(The Alaska Municipal League) has asked us all to pay to play, so we are,” Pierce said at the meeting.

The ordinance states that by contributing to the working group, the borough will be a part of the initial group have direct input on the structure and process.

A recent decision by the United States Supreme Court known as the Wayfair Case now allows municipalities that fulfill certain requirements to tax remote vendors through online sales.

The ordinance will have a public hearing at the Jan. 22 borough assembly meeting.

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