Leveling the playing field between local & online sellers when it comes to sales tax
Since the beginning of this year, Amazon has been collecting local sales tax on a majority of its sales to Juneau and remitting that revenue to the City and Borough of Juneau. Now, there’s an effort to require other remote sellers to collect sales tax on goods delivered to Juneau. CBJ has entered into an agreement with 14 other Alaska communities that paves the way for this. As of November 1, 43 states and the District of Columbia already require remote sales tax collection.
“This change would resolve the systemic inequity between local and remote sellers. It’s simply not fair that our small local businesses are required to collect sales tax but big multi-national companies are not. The city will receive additional revenue, but the big winner is local business,” CBJ Finance Director Jeff Rogers said.
Rogers has been elected President of the Alaska Remote Sellers Sales Tax Commission, the entity that will be in charge of administering a system for collecting and remitting sales tax revenues on remote sales. The requirement would apply to online sales, as well as phone or catalogue orders, through any seller outside of Juneau that sells more than $100,000 or does more than 100 transactions in Alaska.
Amazon started collecting and remitting CBJ sales tax when it determined it had a legal nexus to the community. This new effort to collect tax on other remote sales follows the Supreme Court ruling in the Wayfair case, which found that a physical presence in a locale was not required for a government entity to mandate sales tax collection by remote sellers. The Supreme Court decision required governments to establish a sales tax collection system that was not unduly burdensome to businesses. The agreement that CBJ has signed with other Alaskan communities meets that test by establishing a single-level statewide platform for sales tax collection. That platform will be governed by the newly-formed commission.
To initiate collection of sales tax on remote sellers, the Juneau Assembly must still pass an amendment to the CBJ Sales Tax code requiring sales tax collection on remote sales. If that ordinance passes, Juneau residents should expect to see remote sellers begin to collect sales tax within 30 days of the ordinance passing. Based on data from other states, CBJ could see in excess of $1 million in tax revenue collected on remote sales. Sales tax pays for roughly half of CBJ‘s services and infrastructure improvements.
For more information, contact Finance Director Jeff Rogers at 723-6907 or [email protected].