BETHEL — The city of Bethel will soon begin requiring nonprofit organizations to pay sales taxes after a 15-year delay in enforcing the change.
City officials sent a letter to Bethel businesses this month saying nonprofits are not exempt from sales taxes. Any business not paying taxes will be held liable starting Aug. 1, KYUK-AM reported (http://bit.ly/28OZXSz).
Officials have never enforced a 2001 law mandating sales taxes for nonprofits. City Manager Ann Capela says now is the time to start.
“Just because we’ve done something wrong for 20 years does not mean we should continue to be doing it wrong,” she said.
Eileen Arnold, executive director of the nonprofit Tundra Women’s Coalition, said the tax will force the group to “make really difficult decisions” and result in a loss between $15,000 and $16,000.
“That would make us have to choose between fixing something in our building versus providing travel for somebody to leave a domestic violence situation or food for the pantry,” Arnold said.
Several nonprofits are asking the City Council to amend the law’s rules on exemptions before enforcement begins later this summer. Under city law, nonprofits can be exempt from sales taxes if they are a 501(c) with the IRS, use whatever it purchases for its organization, and receive Alaska Revenue Sharing.
The problem with the city’s criteria is that Alaska Revenue Sharing is not a real program, but Capela said she is still required to enforce the law as written.
Even if there was a program called Alaska Revenue Sharing, Bethel nonprofits do not qualify for state revenue sharing, according to Danielle Lindoff with the Alaska Department of Commerce, Community, and Economic Development.
Capela said the city does not have estimates for how much revenue it expects to collect from nonprofit sales taxes.
