Alaskans could face internet sales tax

A new ruling by the U.S. Supreme Court may put sales taxes on internet purchases across Alaska and bring millions of dollars to local coffers.

The decision is not likely to result in any quick changes, however. On Thursday, the court in Washington, D.C. ruled that an internet sales tax levied by South Dakota does not violate the Commerce Clause of the U.S. Constitution. The ruling, in Wayfair v. South Dakota, opens the door for similar taxes nationwide.

“It’s a big deal. It’s a big deal for online sales and local retailers,” said Pat Branson, president of the Alaska Muncipal League board of directors and mayor of Kodiak.

While Alaska doesn’t have a statewide sales tax, cities and boroughs rely heavily on sales taxes to fund local services. Branson doesn’t believe the ruling applies to municipalities.

“It will be interesting to see what the state does with this because it has to be a state sales tax,” Branson said.

Mike Barnhill, deputy commission of the Alaska Department of Revenue, isn’t so sure. In a phone call with the Empire on Thursday morning, he pointed to a dissent written by Chief Justice John Roberts, who noted that retailers will now be required to deal with different sales taxes applied in “over 10,000 jursidictions” nationwide.

“It may be some time until we figure it out,” he said.

Bob Bartholomew, finance director for the City and Borough of Juneau, said by email that “working hard, we are 1-2 years from being able to capitalize this. I expect federal legislation to also impact how the ruling gets implemented.”

He isn’t sure how much money the city could raise by extending its sales tax online; according to the city’s just-approved FY19-20 budget, it expects to earn about $47 million from existing physical sales taxes each year (excluding marijuana and alcohol). The city expects $338 million in revenue altogether each year.

Bartholomew said he had been expecting the ruling and has discussed it on a preliminary basis with the AML and Department of Revenue, but not in any depth.

He further said that he hopes “we can create a standardized local sales tax program centrally administered by the state (as a way to help local governments without costing the state money).”

If state involvement is necessary, Legislative approval would be required.

The last attempt at a statewide Alaska sales tax was in 2016, when Gov. Bill Walker proposed a 3 percent sales tax as a means to clear a legislative impasse that kept lawmakers in session through June. The idea was not seriously considered and never received a hearing.

The last major vote on a statewide sales tax was in 2004, when the Alaska Senate voted 7-12 against a 3 percent sales tax proposed by the Senate’s minority Republicans. A similar proposal in the House that year never reached a floor vote.

In South Dakota, which brought the lawsuit to the Supreme Court, legislators approved their sales tax in 2016 and devoted its proceeds toward teacher salaries. They also created a structure that reduces the sales tax for businesses with a physical presence inside the state. That reduction will be paid for with new money from businesses beyond its borders.

Until Thursday, states had been allowed to levy sales taxes only on internet companies with a physical presence, such as a warehouse, within the state. In those states, it is the responsibility of the seller to collect taxes and remit them to the state. The buyer might pay a slightly higher price, but it’s the responsibility of the seller to follow the law.


• Contact reporter James Brooks at jbrooks@juneauempire.com or 523-2258.


More in News

A Princess Cruise Line ship is docked in Juneau on Aug. 25, 2021. (Michael Lockett / Juneau Empire File)
Ships in Port for the week of Aug. 7

Here’s what to expect this week.

(Juneau Empire File / Michael Penn)
Police calls for Saturday, Aug. 6, 2022

This report contains public information from law enforcement and public safety agencies.

Ice fog, a phrase in Russell Tabbert’s Dictionary of Alaskan English, is not uttered in many other places because to form it takes a sustained temperature of minus 35 F. (Courtesy Photo / Ned Rozell)
Alaska Science Forum: Alaska lexicon sinks in over the years

When my little Ford pickup chugged into Alaska 36 years ago this… Continue reading

Mimi Israelah, center, cheers for Donald Trump inside the Alaska Airlines Center in Anchorage, Alaska, during a rally Saturday July 9, 2022. Two Anchorage police officers violated department policy during a traffic stop last month when Israelah, in town for a rally by former President Donald Trump showed a "white privilege card" instead of a driver's license and was not ticketed. (Bill Roth / Anchorage Daily News)
Alaska officers violated policy in ‘white privilege’ stop

It’s unclear what policy was violated or what disciplinary actions the two officers faced.

(Juneau Empire File / Michael Penn)
Police calls for Wednesday, Aug. 5, 2022

This report contains public information from law enforcement and public safety agencies.

Capital City Fire/Rescue vehicles form a line at Juneau International Airport for a drill. (Ben Hohenstatt / Juneau Empire File)
Women arrested after Monday morning structure fire

Arrest does not appear related to two other recent fires, per fire marshal.

(Juneau Empire File / Michael Penn)
Police calls for Wednesday, Aug. 4, 2022

This report contains public information from law enforcement and public safety agencies.

Keke Tian Ke is the featured artist for the month of August at the Juneau Artists Gallery. Her new works on display are an exploration of the landscapes and natural wonders Juneau has to offer. She’ll be at the First Friday event on Aug. 5 from 4:30 to 8 p.m. on the ground floor of the Senate Building, 175 South Franklin.
Here’s what’s happening for First Friday

Keke Tian Ke featured artist for August at Juneau Artists Gallery

Select North Douglas residents are expected to experience an emergency water line shut down Thursday.
Some North Douglas residents set to experience emergency water line shutdown Thursday

The line shut down will occur between 9 a.m. and 3 p.m. Thursday.

Most Read