SB 366: "An Act relating to the levy and collection of sales and use taxes, to the levy and collection of municipal sales and use taxes, and to municipal sales and use taxes on alcoholic beverages; and providing for an effective date."
00 SENATE BILL NO. 366 01 "An Act relating to the levy and collection of sales and use taxes, to the levy and 02 collection of municipal sales and use taxes, and to municipal sales and use taxes on 03 alcoholic beverages; and providing for an effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 04.21.010(c) is amended to read: 06 (c) A municipality may not impose taxes on alcoholic beverages except a 07 (1) property tax on alcoholic beverage inventories; 08 (2) sales and use tax levied under AS 29.45.650 or 29.45.700 [TAX 09 ON ALCOHOLIC BEVERAGE SALES IF SALES TAXES ARE IMPOSED ON 10 OTHER SALES WITHIN THE MUNICIPALITY]; 11 (3) sales tax on alcoholic beverage sales that was in effect before 12 July 1, 1985 [; AND 13 (4) SALES AND USE TAX ON ALCOHOLIC BEVERAGES IF THE 14 SALE OF ALCOHOLIC BEVERAGES WITHIN THE MUNICIPALITY HAS
01 BEEN PROHIBITED UNDER AS 04.11.491(a)(1), (4), OR (5)]. 02 * Sec. 2. AS 29.05.210(b) is amended to read: 03 (b) The department shall provide assistance to each borough and unified 04 municipality incorporated after December 31, 1985, in 05 (1) establishing the initial sales and use tax assessment [AND 06 COLLECTION DEPARTMENT] if the borough or unified municipality has adopted a 07 sales or use tax; 08 (2) determining the initial property tax assessment roll if the borough 09 or unified municipality has adopted a property tax, including contracting for appraisals 10 of property needed to complete the initial assessment. 11 * Sec. 3. AS 29.10.200(51) is amended to read: 12 (51) AS 29.45.650 [AS 29.45.650(c), (d), (e), (f), (i), AND (j)] (sales 13 and use tax); 14 * Sec. 4. AS 29.10.200(52) is amended to read: 15 (52) AS 29.45.700 [AS 29.45.700(d) AND (e)] (sales and use tax); 16 * Sec. 5. AS 29.35.110(a) is amended to read: 17 (a) Borough revenues received through taxes levied [COLLECTED] on an 18 areawide basis by the borough may be expended on general administrative costs and 19 on areawide functions only. Borough revenues received through taxes levied 20 [COLLECTED] on a nonareawide basis may be expended on general administrative 21 costs and functions that render service only to the area outside all cities in the 22 borough. 23 * Sec. 6. AS 29.35.170 is amended to read: 24 Sec. 29.35.170. Assessment and collection of taxes. (a) A borough shall 25 assess [AND COLLECT] property [, SALES, AND USE] taxes and collect taxes, 26 other than sales and use taxes, that are levied in its boundaries, subject to AS 29.45. 27 (b) Taxes, other than sales and use taxes, levied by a city shall be collected 28 by a borough and returned in full to the levying city. This subsection applies to home 29 rule and general law municipalities. 30 * Sec. 7. AS 29.45.650 is repealed and reenacted to read: 31 Sec. 29.45.650. Sales and use tax. (a) Except as provided in AS 29.45.750, a
01 borough may levy a sales and use tax. If a borough levies a sales and use tax, it must 02 conform exactly to the statewide sales and use tax levied and collected under 03 AS 43.44, except that the municipal sales and use tax may be levied at any rate. 04 (b) The Department of Revenue shall collect a sales and use tax levied under 05 this section and remit the proceeds to the municipality. The Department of Revenue 06 may use its administrative authority under AS 43.05 and its enforcement and 07 collection authority under AS 43.10 to collect a sales and use tax levied under this 08 section. 09 * Sec. 8. AS 29.45.660(a) is amended to read: 10 (a) If the borough levies [AND COLLECTS] only a sales tax and use tax, the 11 assembly shall provide a notice substantially in the form set out in AS 29.45.020. In 12 providing notice under this subsection, the assembly shall substitute for the millage 13 equivalency its estimate of the equivalent sales tax rate for each of the categories of 14 financial assistance set out in AS 29.45.020. Notice shall be provided 15 (1) by publishing in a newspaper of general circulation in the borough 16 a copy of the notice once each week for a period of three successive weeks, with 17 publication to occur not later than 45 days after the final adoption of the borough's 18 budget; or 19 (2) if there is no newspaper of general circulation in the borough, by 20 posting a copy of the notice for at least 20 days in at least two public places in the 21 borough, with posting to occur not later than 45 days after the final adoption of the 22 borough's budget. 23 * Sec. 9. AS 29.45.670 is amended to read: 24 Sec. 29.45.670. Referendum, adoption, and modification. A new sales and 25 use tax or an increase in the rate of levy of a sales tax approved by ordinance does not 26 take effect until ratified by a majority of the voters at an election. A municipality 27 may not require that a new sales and use tax or an increase in the rate of levy of a 28 sales tax approved by ordinance be ratified by more than 50 percent plus one of 29 the voters voting on the issue. 30 * Sec. 10. AS 29.45.700 is repealed and reenacted to read: 31 Sec. 29.45.700. Power of levy. A city may levy a sales and use tax in the
01 manner provided for boroughs under AS 29.45.650. 02 * Sec. 11. AS 29.45.750(b) is amended to read: 03 (b) A municipality that levies [AND COLLECTS] a sales tax on mobile 04 telecommunications services shall do so in accordance with the provisions of 4 U.S.C. 05 116 - 126 (Mobile Telecommunications Sourcing Act). 06 * Sec. 12. AS 29.45.810(a) is amended to read: 07 (a) A party to a contract approved by the legislature as a result of submission 08 of a proposed contract developed under AS 43.82 or as a result of acts by the 09 legislature in implementing the purposes of AS 43.82, and the property, gas, products, 10 and activities associated with the approved qualified project that is subject to the 11 contract, are exempt, as specified in the contract, from all taxes identified in the 12 contract that would be levied [AND COLLECTED] by a municipality under state law 13 as a consequence of the participation by the party in the approved qualified project. 14 * Sec. 13. AS 43 is amended by adding a new chapter to read: 15 Chapter 44. Sales and Use Tax. 16 Sec. 43.44.010. Levy of sales and use tax; tax rate. (a) A sales tax is levied 17 on the sale, lease, or rental of tangible personal property and on the sale of services. 18 (b) A use tax is levied on the privilege of using in the state tangible personal 19 property or services. The use tax is not levied if the sales tax levied in (a) of this 20 section has been paid. 21 (c) The rate of the sales tax is four percent of the sales price. The rate of the 22 use tax is four percent of the purchase price. 23 Sec. 43.44.020. Exemptions. The tax levied under AS 43.44.010 does not 24 apply to 25 (1) tangible personal property or services that are 26 (A) explicitly exempted from taxation under another provision 27 of state law; or 28 (B) exempt from taxation under federal law, including sales to 29 the federal government, and purchases made with 30 (i) food coupons, food stamps, or other types of 31 certificates issued under 7 U.S.C. 2011 - 2036 (Food Stamp Program);
01 and 02 (ii) food instruments, food vouchers, or other types of 03 certificates issued under 42 U.S.C. 1786 (Special Supplemental 04 Nutrition Program for Women, Infants, and Children); 05 (2) medical care, including 06 (A) health care services provided by a person licensed or 07 certified to provide those services under AS 08 or a "health care facility" as 08 that term is defined in AS 08.68.395(g); 09 (B) drugs, durable medical equipment, mobility enhancing 10 equipment, and prosthetic devices obtained on prescription from a person 11 licensed to prescribe those goods under AS 08 or from a health care facility, as 12 that term is defined in AS 08.68.395(g); 13 (3) isolated or occasional sales, leases, or rentals of tangible personal 14 property or sales of services by a person who is not regularly engaged in the business 15 of selling, leasing, or renting similar personal property or services; 16 (4) sales, leases, or rentals of tangible personal property and sales of 17 services by or to the state or a political subdivision of the state; 18 (5) the sale of natural gas, water, electricity, steam, or refuse and 19 garbage collection service. 20 Sec. 43.44.030. Collection of sales and use tax. (a) A seller shall add the 21 amount of the sales tax levied by this chapter and the amount of any municipal sales 22 tax levied under AS 29.45 to the sales price of personal property or services subject to 23 the tax. The tax shall be stated separately on any receipt, invoice, or other record of 24 the transaction. 25 (b) A seller shall collect the sales tax levied by this chapter and any municipal 26 sales tax levied under AS 29.45 from the buyer and remit the tax collected to the 27 department not later than 30 days following the last day of the month in which the tax 28 was collected. 29 (c) A seller remitting the sales tax collected under this chapter to the 30 department within 30 days following the last day of the month in which the tax was 31 collected may retain one percent of the amount collected to cover expenses associated
01 with collecting and remitting the tax. 02 (d) To the fullest extent permitted under the Constitution of the United States, 03 a person whose sales are not subject to the sales tax is required to collect the use tax 04 from the purchaser and pay the tax collected to the department. 05 Sec. 43.44.040. Payment of use tax. A user subject to the use tax shall remit 06 the tax levied under this chapter and any municipal use tax levied under AS 29.45 to 07 the department not later than 30 days following the last day of the month in which the 08 taxable use occurs. 09 Sec. 43.44.050. Accounting. The department shall deposit the proceeds of the 10 tax levied under this chapter in the general fund of the state and remit the proceeds of 11 any municipal sales and use tax collected under AS 43.44.030(b) and 43.44.040 to the 12 municipality levying the tax. 13 Sec. 43.44.060. Relationship to municipal levies. (a) A municipality may 14 not levy a sales and use tax except as provided in AS 04.21.010(c), AS 29.45.650, or 15 29.45.700. The department shall collect sales and use taxes levied under 16 AS 29.45.650 or 29.45.700. A municipality may not collect a sales and use tax levied 17 under AS 29.45.650 or 29.45.700. 18 (b) From the total combined state and municipal sales and use taxes collected 19 within the boundaries of a municipality, the department shall remit to the municipality 20 the amount described under this subsection. If the rate of a sales and use tax levied by 21 a municipality is 22 (1) less than three percent, the department shall remit the amount of 23 the tax levied by the municipality; 24 (2) at least three percent but less than four percent, the department 25 shall remit the amount that would have been collected in the municipality if the sales 26 and use tax levy had been four percent; 27 (3) at least four percent but less than five percent, the department shall 28 remit the amount that would have been collected in the municipality if the sales and 29 use tax levy had been five percent; 30 (4) five percent or more, the department shall round up to the next 31 whole number and remit the amount that would have been collected in the
01 municipality if the sales and use tax levy had been that whole number; for example, if 02 a municipality levied a sales and use tax at the rate of five percent, the department 03 shall remit the amount that would have been collected under a six percent levy. 04 Sec. 43.44.070. Computation of tax. (a) The taxes levied under this chapter 05 may be computed on an item or an invoice basis. 06 (b) The tax computation shall be 07 (1) carried to the third decimal place; 08 (2) rounded to a whole cent using a method that rounds up to the next 09 cent whenever the third decimal place is greater than four; and 10 (3) made according to a rounding algorithm prescribed by the 11 department. 12 Sec. 43.44.080. Tax credit for sales or use tax paid to another state. (a) A 13 buyer liable for use tax on tangible personal property or services is entitled to a full 14 credit for the amount of sales or use tax paid on the tangible personal property or 15 services to another state. 16 (b) The credit shall be applied first against the amount of use tax levied under 17 this chapter. Any unused portion of the credit shall then be applied against the amount 18 of use tax levied by a municipality under AS 29.45.650 or 29.45.700. 19 Sec. 43.44.090. Liability for tax. (a) Except as provided in (d) and (e) of this 20 section, a seller is liable for the sales tax on tangible personal property or services sold 21 by the seller. 22 (b) A buyer is secondarily liable for the tax on tangible personal property or 23 services sold to the buyer. 24 (c) A user is liable for the use tax. 25 (d) A seller that receives and accepts in good faith from a buyer a prescription 26 for tangible personal property or services exempt from the tax under AS 43.44.020 is 27 not liable for the sales tax on the tangible personal property or services prescribed. 28 (e) A seller that receives and accepts in good faith from a buyer a copy of the 29 buyer's direct payment permit is not liable for the sales tax on the tangible personal 30 property or services sold, leased, or rented to the buyer. 31 Sec. 43.44.100. Registration. A seller shall register with the department
01 before making a sale, lease, or rental of tangible personal property or a sale of services 02 that is taxable under this chapter. 03 Sec. 43.44.110. Direct pay permit. (a) The department may issue a direct 04 pay permit allowing the permit holder to purchase, lease, or rent taxable goods and 05 services without payment of tax to the seller at the time of purchase. 06 (b) The holder of a direct pay permit shall determine the tax due under this 07 chapter, and report and pay the tax directly to the department on a form and in a 08 format prescribed by the department. 09 Sec. 43.44.199. Definitions. In this chapter, 10 (1) "lease or rental" means any transfer of possession or control of 11 tangible personal property for a fixed or indeterminate term for consideration; a lease 12 or rental may include future options to purchase or extend; lease or rental 13 (A) does not include 14 (i) a transfer of possession or control of property under 15 a security agreement or deferred payment plan that requires the transfer 16 of title upon completion of the required payments; 17 (ii) a transfer of possession or control of property under 18 an agreement that requires the transfer of title upon completion of 19 required payments if payment of an option price does not exceed the 20 greater of $100 or one percent of the total required payments; or 21 (iii) providing tangible personal property along with an 22 operator for a fixed or indeterminate period of time; a condition of this 23 exclusion is that the operator is necessary for the equipment to perform 24 as designed; for the purpose of this sub-subparagraph, an operator must 25 do more than maintain, inspect, or set up the tangible personal property; 26 (B) includes agreements covering motor vehicles and trailers 27 where the amount of consideration may be increased or decreased by reference 28 to the amount realized upon sale or disposition of the property as defined in 26 29 U.S.C. 7701(h)(1); this definition shall be used for sales and use tax purposes 30 regardless if a transaction is characterized as a lease or rental under generally 31 accepted accounting principles, the Internal Revenue Code, AS 45.29, or other
01 provisions of federal, state, or local law; this definition shall be applied only 02 prospectively from the date of adoption and may not have a retroactive effect 03 on existing leases or rentals; 04 (2) "purchase price" applies to the measure subject to use tax and has 05 the same meaning as sales price; 06 (3) "sales price" 07 (A) applies to the measure subject to sales tax and means the 08 total amount of consideration, including cash, credit, property, and services, for 09 which personal property or services are sold, leased, or rented, valued in 10 money, whether received in money or otherwise, without any deduction for the 11 following: 12 (i) the seller's cost of the property sold; 13 (ii) the cost of materials used, labor or service cost, 14 interest, losses, all costs of transportation to the seller, all taxes 15 imposed on the seller, and any other expense of the seller; 16 (iii) charges by the seller for any services necessary to 17 complete the sale, rental, or lease, other than delivery and installation 18 charges; 19 (iv) delivery charges; 20 (v) installation charges; 21 (vi) the value of exempt personal property given to the 22 purchaser where taxable and exempt personal property have been 23 bundled together and sold, leased, or rented by the seller as a single 24 product or piece of merchandise; and 25 (vii) credit for any trade-in; 26 (B) does not include 27 (i) discounts, including cash, term, or coupons that are 28 not reimbursed by a third party that are allowed by a seller and taken by 29 a purchaser on a sale; 30 (ii) interest, financing, and carrying charges from credit 31 extended on the sale of personal property or services if the amount is
01 separately stated on the invoice, bill of sale, or similar document given 02 to the purchaser; and 03 (iii) taxes legally imposed directly on a consumer that 04 are separately stated on the invoice, bill of sale, or similar document 05 given to the purchaser; 06 (4) "seller" means a person making sales, leases, or rentals of tangible 07 personal property or services; 08 (5) "tangible personal property" means personal property that can be 09 seen, weighed, measured, felt, or touched, or that is in any other manner perceptible to 10 the senses; "tangible personal property" includes electricity, water, gas, steam, and 11 prewritten computer software. 12 * Sec. 14. AS 43.56.030 is amended to read: 13 Sec. 43.56.030. In place of other taxes. Except for those taxes imposed 14 under AS 43.55, the taxes levied or authorized under AS 43.56.010(b) are in place of 15 (1) all other ad valorem taxes or other taxes imposed by a municipality 16 on property subject to tax under this chapter or exempted from taxation by 17 AS 43.56.020; and 18 (2) all other taxes imposed by a municipality on or with respect to the 19 property subject to tax under this chapter or exempted from taxation by AS 43.56.020, 20 including, but not limited to, 21 (A) taxes on the retail sale or use of the property except for the 22 retail sales tax levied under AS 29.45.650 or 29.45.700 on the first $1,000 of 23 each sale; 24 (B) taxes on the sale or use of gas or unrefined oil; 25 (C) taxes on the sale or use of services used in or associated 26 with the property or in its maintenance or operation except for the sales tax 27 levied under AS 29.45.650 or 29.45.700 on the first $1,000 of each sale; 28 (D) taxes on or measured by gross or net income from the 29 property, including income from the exploration for, production of, or pipeline 30 transportation of gas or unrefined oil or property; and 31 (E) any license, excise, fee, charge or other tax on or pertaining
01 to the property or services. 02 * Sec. 15. Section 4, ch. 100, SLA 2002, as amended by sec. 9, ch. 117, SLA 2003, is 03 repealed and reenacted to read: 04 Sec. 4. AS 29.45.650(a) is amended to read: 05 (a) A [EXCEPT AS PROVIDED IN AS 29.45.750, A] borough may levy a 06 sales and use tax. If a borough levies a sales and use tax, it must conform exactly to 07 the statewide sales and use tax levied and collected under AS 43.44, except that the 08 municipal sales and use tax may be levied at any rate. 09 * Sec. 16. The uncodified law of the State of Alaska is amended by adding a new section to 10 read: 11 TRANSITION: REGULATIONS. The Department of Revenue may proceed to adopt 12 regulations necessary to implement the provisions of this Act. The regulations take effect 13 under AS 44.62 (Administrative Procedure Act), but not before the effective date of the 14 provision being implemented. 15 * Sec. 17. The uncodified law of the State of Alaska is amended by adding a new section to 16 read: 17 TRANSITION PROVISIONS. (a) A municipal sales and use tax rate ratified before 18 the effective date of the amendments to AS 29.45.650 and 29.45.700 made in this Act remains 19 in effect despite the amendments to AS 29.45 made by this Act. To the extent the provisions 20 of a municipal ordinance are inconsistent with the provisions of this Act, the provisions of the 21 municipal ordinance are superseded by this Act. 22 (b) A specific sales and use tax levied by a municipality that was in effect before the 23 effective date of the statewide sales and use tax levied in this Act and that applies only to one 24 group of products or services, including bed taxes and alcohol taxes, may continue in effect, 25 notwithstanding the provisions of this Act, subject to the provisions of AS 29.45 as they 26 existed immediately before the effective date of this Act. 27 * Sec. 18. Section 16 of this Act takes effect immediately under AS 01.10.070(c). 28 * Sec. 19. Except as provided in sec. 18 of this Act, this Act takes effect July 1, 2005.