A sign welcomes employees and visitors at the Kenai Peninsula Borough administration building on Tuesday, March 17, 2020, in Soldotna, Alaska. (Photo by Victoria Petersen/Peninsula Clarion)

A sign welcomes employees and visitors at the Kenai Peninsula Borough administration building on Tuesday, March 17, 2020, in Soldotna, Alaska. (Photo by Victoria Petersen/Peninsula Clarion)

Cyber Monday sales taxes to boost local government budgets

The ability of taxing entities to collect sales tax from online, or e-commerce, sellers is a new phenomenon

Several Kenai Peninsula municipalities were set to collect remote sales tax Monday during the biggest online shopping day of the year, also known as Cyber Monday.

In 2021, an estimated 77 million people spent $10.7 billion on the Monday following Thanksgiving weekend, according to estimates from Adobe Analytics. The same group estimates that consumers would spend more than $11.2 billion on Cyber Monday this year. Depending on where they live,shoppers in Alaska were expected to pay local taxes on those online purchases.

The ability of taxing entities to collect sales tax from online, or e-commerce, sellers is a new phenomenon. The U.S. Supreme Court in 2018 ruled in South Dakota v. Wayfair that states could require e-commerce sellers to tax residents even if that seller doesn’t have a physical presence in that state.

In Alaska, where no statewide sales tax exists, the ability to collect sales tax and, as of 2020, online or remote sales tax, falls to local governments.

On the Kenai Peninsula, the cities of Kenai, Soldotna, Seward, Homer and Seldovia, as well as the Kenai Peninsula Borough, all collect remote sales tax as part of the Alaska Remote Seller Sales Tax Commission. That commission, established in 2019, coordinates the collection of remote sales tax in Alaska for its more than 40 participating jurisdictions.

Per a quarterly update from the Alaska Remote Seller Sales Tax Commission dated Aug. 25, there are more than 2,300 registered sellers through which Alaska’s taxing jurisdictions collect remote sales tax. Among the top online sellers for the second quarter of 2022 were Amazon.com Services, LLC (MPF), Apple, Inc. and eBay, Inc., according to the same update.

The Kenai Peninsula Borough recorded about $2.6 million in remote sales tax revenues for Fiscal Year 2022, which began on July 1, 2021, and ended on June 30, 2022. That’s according to Borough Finance Director Brandi Harbaugh, who said it was a 40% increase from Fiscal Year 2021.

In the roughly two-and-a-half fiscal years during which the City of Soldotna has collected remote sales tax, the city has netted about $670,000, according to Finance Director Melanie Imholte. The total sales tax collected is closer to $800,000, but the city has paid about $130,000 in fees to the Alaska Remote Seller Sales Tax Commission to administer the program.

Those numbers are higher in the City of Kenai, where Finance Director Terry Eubank said the city has collected more than $900,000 since joining the commission in Fiscal Year 2020. During Fiscal Year 2022, which ended on June 30, the City of Kenai collected about $450,000 in remote sales tax, representing about 4.87% of the city’s total sales tax collections that year.

Adobe Analytics’ Holiday Shopping Report, which is being updated throughout the holiday season, can be accessed at business.adobe.com/resources/holiday-shopping-report.

Reach reporter Ashlyn O’Hara at ashlyn.ohara@peninsulaclarion.com.

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