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HB 5004: "An Act establishing a state sales and use tax; relating to taxes levied by cities and boroughs; providing authority to the Department of Revenue to enter into the Streamlined Sales and Use Tax Agreement; and providing for an effective date."

00                             HOUSE BILL NO. 5004                                                                         
01 "An Act establishing a state sales and use tax; relating to taxes levied by cities and                                  
02 boroughs; providing authority to the Department of Revenue to enter into the                                            
03 Streamlined Sales and Use Tax Agreement; and providing for an effective date."                                          
04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
05    * Section 1. AS 28.10.021(a) is amended to read:                                                                   
06            (a)  The owner of a vehicle subject to registration shall apply for registration                             
07       under this chapter by properly completing the form prescribed by the commissioner                                 
08       under AS 28.05.041. Before the issuance of a certificate of registration by the                                   
09       department, the owner shall                                                                                       
10                 (1)  pay all registration fees and taxes required under this chapter,                               
11       [AND] federal heavy vehicle use taxes required under 26 U.S.C. 4481 (Internal                                     
12       Revenue Code of 1954), and the tax levied under AS 43.44.010;                                                 
13                 (2)  unless the owner qualifies as a self-insurer under AS 28.20.400 or                                 
14       is exempted from obtaining liability insurance under AS 28.22.011, certify to the                                 
01       department the existence of a motor vehicle liability policy that complies with                                   
02       AS 28.22.011 for the vehicle being registered; in this paragraph, "certify" means to                              
03       indicate by check-off on the vehicle registration form prescribed by the department the                           
04       existence of a policy of insurance, if a policy is required at that time, and the intention                       
05       to continue the policy or obtain a policy as required by this subsection; and                                     
06                 (3)  comply with other applicable statutes and regulations.                                             
07    * Sec. 2. AS 29.10.200(54) is amended to read:                                                                     
08                 (54)  AS 29.45.650 [AS 29.45.650(c), (d), (e), (f), (i), (j), AND (k)]                              
09       (sales and use tax);                                                                                              
10    * Sec. 3. AS 29.10.200(55) is amended to read:                                                                     
11                 (55)  AS 29.45.700 [AS 29.45.700(d), (e), AND (g)] (sales and use                                   
12       tax);                                                                                                             
13    * Sec. 4. AS 29.10.200 is amended by adding a new paragraph to read:                                               
14                 (66)  AS 29.45.655 (specific taxes on property and services).                                           
15    * Sec. 5. AS 29.35.110(a) is amended to read:                                                                      
16            (a)  Borough revenues received through taxes levied [COLLECTED] on an                                    
17       areawide basis by the borough may be expended on general administrative costs and                                 
18       on areawide functions only. Borough revenues received through taxes levied                                    
19       [COLLECTED] on a nonareawide basis may be expended on general administrative                                      
20       costs and functions that render service only to the area outside all cities in the                                
21       borough.                                                                                                          
22    * Sec. 6. AS 29.35.170 is amended to read:                                                                         
23            Sec. 29.35.170. Assessment and collection of taxes. (a) A borough shall                                    
24       assess [AND COLLECT] property [, SALES, AND USE] taxes and collect taxes,                                     
25       other than a general sales and use tax under AS 29.45.650, that are levied in its                             
26       boundaries, subject to AS 29.45.                                                                                  
27            (b)  Taxes, other than a general sales and use tax under AS 29.45.700,                                   
28       levied by a city shall be collected by a borough and returned in full to the levying city.                        
29       This subsection applies to home rule and general law municipalities.                                              
30    * Sec. 7. AS 29.35.170 is amended by adding a new subsection to read:                                              
31            (c)  Notwithstanding (a) and (b) of this section, AS 29.45.650(c), and                                       
01       AS 43.44.015, a municipality that levies a general sales and use tax may collect the                              
02       municipality's general sales and use tax through December 31, 2021. The state shall                               
03       assume responsibility for administering a municipal general sales and use tax on                                  
04       January 1, 2022, unless requested to do so earlier by a municipality that has                                     
05       conformed its tax base, including exemptions, definitions, and sourcing rules, to                                 
06       AS 43.44.                                                                                                         
07    * Sec. 8. AS 29.45.650 is repealed and reenacted to read:                                                          
08            Sec. 29.45.650. General sales and use tax. (a) Except as provided in                                       
09       AS 04.21.010(c) and AS 29.45.750, a borough may levy a general sales tax on the sale                              
10       and rental of tangible or intangible property and on services provided in the borough.                            
11            (b)  A borough levying a general sales tax also may levy a use tax on the                                    
12       storage, use, or consumption of tangible personal property and on the use of services                             
13       in the borough. The use tax rate must equal the sales tax rate.                                                   
14            (c)  A tax levied under (a) or (b) of this section shall be levied only on a                                 
15       purchaser.                                                                                                        
16            (d)  A tax authorized under this section shall be administered and collected by                              
17       the state under AS 43.44. The tax base, including exemptions, definitions, and                                    
18       sourcing rules for a tax authorized under this section shall be identical to those                                
19       provided in AS 43.44.                                                                                             
20    * Sec. 9. AS 29.45 is amended by adding a new section to read:                                                     
21            Sec. 29.45.655. Specific taxes on property and services. Unless otherwise                                  
22       prohibited by law, a municipality may levy and collect specific sales or excise taxes on                        
23       single categories of tangible or intangible property or services, such as bed taxes, car                          
24       rental taxes, liquor taxes, cigarette taxes, motor fuel taxes, and fish taxes.                                    
25    * Sec. 10. AS 29.45.660(a) is amended to read:                                                                     
26            (a)  If the borough levies [AND COLLECTS] only a general sales tax and use                               
27       tax, the assembly shall provide a notice substantially in the form set out in                                     
28       AS 29.45.020. In providing notice under this subsection, the assembly shall substitute                            
29       for the millage equivalency its estimate of the equivalent sales tax rate for each of the                         
30       categories of financial assistance set out in AS 29.45.020. Notice shall be provided                              
31                 (1)  by publishing in a newspaper of general circulation in the borough                                 
01       a copy of the notice once each week for a period of three successive weeks, with                                  
02       publication to occur not later than 45 days after the final adoption of the borough's                             
03       budget; or                                                                                                        
04                 (2)  if there is no newspaper of general circulation in the borough, by                                 
05       posting a copy of the notice for at least 20 days in at least two public places in the                            
06       borough, with posting to occur not later than 45 days after the final adoption of the                             
07       borough's budget.                                                                                                 
08    * Sec. 11. AS 29.45.700 is repealed and reenacted to read:                                                         
09            Sec. 29.45.700. Power of levy. A city may levy a general sales and use tax in                              
10       the manner and subject to the same limitations provided for boroughs under                                        
11       AS 29.45.650 and 29.45.660.                                                                                       
12    * Sec. 12. AS 29.45.810(a) is amended to read:                                                                     
13            (a)  A party to a contract approved by the legislature as a result of submission                             
14       of a proposed contract developed under AS 43.82 or as a result of acts by the                                     
15       legislature in implementing the purposes of AS 43.82, and the property, gas, products,                            
16       and activities associated with the approved qualified project that is subject to the                              
17       contract, are exempt, as specified in the contract, from all taxes identified in the                              
18       contract that would be levied [AND COLLECTED] by a municipality under state law                                   
19       as a consequence of the participation by the party in the approved qualified project.                             
20    * Sec. 13. AS 43.05.241 is amended to read:                                                                        
21            Sec. 43.05.241. Administrative appeal. For a matter within the jurisdiction of                             
22       the office of administrative hearings (AS 44.64) under AS 43.05.405, the taxpayer                                 
23       aggrieved by an informal conference decision entered under AS 43.05.240 or                                    
24       AS 43.44.280 may file with the office of administrative hearings a notice of appeal for                       
25       formal hearing, as provided in AS 43.05.430, not [NO] later than 30 days after service                        
26       of the decision resulting from an informal conference.                                                            
27    * Sec. 14. AS 43.05.499(11) is amended to read:                                                                    
28                 (11)  "taxpayer" means a person required to pay or collect a tax,                                   
29       including a person required to pay a seafood marketing assessment under AS 16.51.                                 
30    * Sec. 15. AS 43 is amended by adding a new chapter to read:                                                       
31                       Chapter 44. Sales and Use Tax.                                                                  
01                   Article 1. Levy and Collection of the Tax.                                                          
02            Sec. 43.44.010. Levy of sales and use tax. (a) There is levied a sales tax on                              
03       sales and rents of tangible personal property and on sales of services.                                           
04            (b)  For the privilege of using tangible personal property in this state, there is                           
05       levied a use tax on the person using tangible personal property acquired on or after                              
06       January 1, 2018, that was                                                                                         
07                 (1)  manufactured by the person using the property in this state; or                                    
08                 (2)  acquired outside this state as the result of a transaction that would                              
09       have been subject to the sales tax had it occurred in this state;                                                 
10                 (3) acquired by a purchaser for use in an exempt manner but later                                       
11       converted to a use that would have been subject to sales tax.                                                     
12            (c)  For the privilege of using services in this state that would be subject to a                            
13       sales tax if purchased in this state, there is levied a use tax on the person using                               
14       services.                                                                                                         
15            (d)  The rate of levy of the sales tax levied under (a) of this section and of the                           
16       use taxes levied under (b) and (c) of this section is three percent of the sales price or                         
17       purchase price of the tangible personal property or service.                                                      
18            Sec. 43.44.015. Collection of sales and use tax. The department shall collect                              
19       municipal sales and use taxes levied under AS 29.45.650 or 29.45.700 and remit the                                
20       proceeds to the municipality.  Under AS 43.05 and AS 43.10, the department shall                                  
21       administer, collect, and enforce a sales tax and use tax levied under AS 29.45.650 or                             
22       29.45.700.                                                                                                        
23            Sec. 43.44.020. Collection of tax. (a) The tax described in AS 43.44.010(a) is                             
24       imposed on the purchaser and must be collected by the seller and paid to the                                      
25       department by the seller as provided in AS 43.44.340. The seller holds all taxes                                  
26       collected in trust for the state. The tax must be applied to the sales price.                                     
27            (b)  The purchaser of property subject to the tax described in AS 43.44.010(b)                               
28       is responsible for payment of the tax as provided in AS 43.44.340.                                                
29            (c)  The purchaser of services subject to the tax described in AS 43.44.010(c)                               
30       is responsible for payment of the tax as provided in AS 43.44.340.                                                
31            Sec. 43.44.030. Presumption of taxability; sales price and purchase price.                                 
01       (a) In order to prevent evasion of the sales tax and to aid in its administration, it is                          
02       presumed that                                                                                                     
03                 (1)  all sales by a person engaging in business are subject to the sales                                
04       tax or use tax; and                                                                                               
05                 (2)  all property purchased or sold by any person for delivery into this                                
06       state is purchased or sold for a taxable use in this state.                                                       
07            (b)  In a sale in which the amount of money paid does not represent the value                                
08       of the property or service purchased, the use tax must be imposed on the value of the                             
09       property or service purchased.                                                                                    
10            (c)  For purposes of this section, the sales price or purchase price of property                             
11       must be determined as of the time of acquisition, introduction into this state, or                                
12       conversion to use, whichever is latest.                                                                           
13            Sec. 43.44.040. Separate statement of tax; no advertising to absorb or                                     
14       refund tax. (a) If any person collects a tax in excess of the tax imposed by                                    
15       AS 43.44.010(a), both the tax and the excess tax must be remitted to the department.                              
16            (b)  The sales tax must be stated separately for all sales, except for sales from                            
17       vending machines, sales of drinks in a bar, sales from street vending carts, games of                             
18       chance, admission fees, taxi fares, and other sales as determined by regulation by the                            
19       department.                                                                                                       
20            (c)  A person may not advertise, hold out, or state to the public or to a person                             
21       that the tax imposed by AS 44.43.010(a) will be absorbed or refunded.                                             
22            Sec. 43.44.050.  Liability of user for payment of use tax.  (a)  A person in                               
23       this state who uses property is liable to the state for payment of the use tax if the tax is                      
24       payable on the purchase price of the property but has not been paid.                                              
25            (b)  The liability imposed by this section is discharged if the purchaser has paid                           
26       the sales or use tax to the seller for payment to the department.                                                 
27            Sec. 43.44.060.  Nexus.  To the fullest extent permitted under the Constitution                            
28       of the United States, a person who has nexus with the State of Alaska and whose sales                             
29       are not subject to the sales tax shall collect the use tax from the purchaser and pay the                         
30       tax collected to the department.                                                                                  
31                          Article 2. Exemptions.                                                                       
01            Sec. 43.44.090. Exemption: government agencies; licenses; permits. (a)                                     
02       Sales by, sales to, or uses by the United States are exempt from the sales tax and use                            
03       tax.                                                                                                              
04            (b)  Sales to or uses by the state or an instrumentality of the state, as that term                          
05       is defined in AS 39.52.960, other than a municipality; an unincorporated community;                               
06       an Indian tribe included on the list published under 25 U.S.C. 479a-1; or a foreign                               
07       government are exempt from the sales tax and use tax.                                                             
08            (c)  Sales by, sales to, or uses by a municipality, other than sales of utilities, are                       
09       exempt from the sales tax and use tax.                                                                            
10            (d)  Sales of state licenses or permits are exempt from the sales tax and use tax.                           
11            Sec. 43.44.095. Exemption for corporations exempt from taxation under                                      
12       26 U.S.C. 501(c)(3). (a) Sales by a corporation that is exempt from taxation under 26                           
13       U.S.C. 501(c)(3) (Internal Revenue Code) are exempt from the sales tax and use tax,                               
14       unless the income from the sales is unrelated business taxable income as defined in 26                            
15       U.S.C. 512.                                                                                                       
16            (b)  Sales of property or services to, or use by, a corporation that is exempt                               
17       from taxation under 26 U.S.C. 501(c)(3) (Internal Revenue Code), unless the property                              
18       or service is used in the generation of unrelated business taxable income as defined in                           
19       26 U.S.C. 512.                                                                                                    
20            Sec. 43.44.097. Exemption for dues paid to an organization exempt from                                     
21       taxation under 26 U.S.C. 501(c)(5). Union dues paid to an organization that is                                  
22       exempt under 26 U.S.C. 501(c)(5) are exempt from the sales tax and use tax.                                       
23            Sec. 43.44.100. Exemption for food. (a) Sales of food for human consumption                                
24       off the premises where sold are exempt from the sales tax and use tax.                                            
25            (b)  This exemption does not apply to prepared foods sold by a business if the                               
26       majority of food sold by the business is consumed on premises.                                                    
27            (c)  In this section, "food" means substances, whether in liquid, concentrated,                              
28       solid, frozen, dried, or dehydrated form, that are sold for ingestion or chewing by                               
29       humans and are consumed for their taste or nutritional value; "food" does not include                             
30       alcoholic beverages, tobacco, marijuana, or products containing marijuana.                                        
31            Sec. 43.44.110. Exemption for intangibles. The following are exempt from                                   
01       the sales tax and use tax, even if they are construed to be tangible personal property or                         
02       a service:                                                                                                        
03                 (1)  wages, salaries, commissions, tips, and any other form of                                          
04       remuneration for personal services if paid by an employer to an employee; the terms                               
05       used in this section have the meanings given in 26 U.S.C. 3121 (Internal Revenue                                  
06       Code);                                                                                                            
07                 (2)  interest on money loaned or deposited;                                                             
08                 (3)  dividends or interest from stocks, bonds, or securities;                                           
09                 (4)  proceeds from the sale of stocks, bonds, or securities; and                                        
10                 (5)  other intangibles as defined by regulation.                                                        
11            Sec. 43.44.120. Financial services. The following are exempt from the sales                                
12       tax and use tax:                                                                                                  
13                 (1)  fees for services associated with a deposit account;                                               
14                 (2)  fees for purchases of cashier's checks, money orders, traveler's                                   
15       checks, currency, and similar products used for payment and transfer of funds;                                    
16                 (3)  loan transaction pass-through charges that include sales tax;                                      
17                 (4)  loan fees;                                                                                         
18                 (5)  services related to the sale or purchase of financial instruments                                  
19       including stocks, bonds, and securities; and                                                                      
20                 (6) other financial services as defined by regulation.                                                  
21            Sec. 43.44.140. Exemption for isolated or occasional sale or lease of                                      
22       property or services. The isolated or occasional sale or lease of property or the                               
23       performance of a service by a person who is not regularly engaged in or who does not                              
24       intend to engage in the business of selling or leasing the same or a similar property or                          
25       service is exempt from the sales tax and use tax. Isolated or occasional sales include                            
26       sales that are occasional but not continuous and that are made for the purpose of                                 
27       fundraising by nonprofit organizations, including youth clubs, service clubs, and                                 
28       fraternal organizations.                                                                                          
29            Sec. 43.44.150. Exemption for personal effects. The use by an individual of                                
30       personal or household effects brought into the state for the establishment by the                                 
31       individual of an initial residence in this state and the use of property brought into the                         
01       state by a nonresident for the nonresident's own nonbusiness use while temporarily                                
02       within this state is exempt from the use tax.                                                                     
03            Sec. 43.44.160. Sales for resale. A sale for resale and associated transportation                          
04       is exempt from the sales tax and use tax if the subsequent sale is made                                           
05                 (1)  in the ordinary course of business and subject to tax under                                        
06       AS 43.44.010(a); or                                                                                               
07                 (2)  to a purchaser who delivers to the reseller an exemption certificate                               
08       for that sale.                                                                                                    
09            Sec. 43.44.165. Transactions between certain persons. (a) Services among                                   
10       affiliated persons that report their income under 26 U.S.C. on a single consolidated                              
11       return are exempt from the sales tax and use tax.                                                                 
12            (b)  A transaction that relates to a joint interest or partnership and that occurs                           
13       between the holders of the interests, or between the partners, is exempt from the sales                           
14       tax and use tax.                                                                                                  
15            Sec. 43.44.170. Exemption for real property. The sale, lease, rental, and                                  
16       construction of real property are exempt from the sales tax and use tax. For purposes                             
17       of this section, the sale and transportation of tangible personal property that is                                
18       subsequently converted to real property is taxable unless the conversion is part of the                           
19       construction of real property or construction of an addition to real property.                                    
20            Sec. 43.44.175. Exemption for certain fuel sold for use in jet propulsion                                  
21       aircraft. Fuel sold for use in jet propulsion aircraft operating in flights to or from                          
22       foreign countries is exempt from the sales tax and use tax.                                                       
23            Sec. 43.44.190. Exemption for property held for lease. The sale, use, lease,                               
24       or rental of property held for lease is exempt from the sales tax and use tax if the                              
25       person holding the property for lease, or purchasing, leasing, or renting the property                            
26       for the purpose of holding the property for lease                                                                 
27                 (1)  is engaged in the business of leasing or selling property of the type                              
28       held;                                                                                                             
29                 (2)  does not use the property in any manner other than holding it for                                  
30       lease or sale or leasing or selling it either by itself or in combination with other                              
31       tangible personal property in the ordinary course of business;                                                    
01                 (3)  does not use the property in a manner incidental to the performance                                
02       of a service; and                                                                                                 
03                 (4)  the subsequent lease or rental is subject to the tax imposed by                                    
04       AS 43.44.010(a).                                                                                                
05            Sec. 43.44.200. Exemption for insurance premiums subject to other taxes.                                   
06       Insurance premiums subject to tax under AS 21.09.210 are exempt from the sales tax                                
07       and use tax.                                                                                                      
08            Sec. 43.44.210. Exemption for certain intrastate transportation and                                        
09       services in interstate commerce. (a) The transport of property from one point within                            
10       this state to another point within this state is exempt from the sales tax and use tax if                         
11       the property, including any reasonably necessary services, is being transported in                                
12       interstate or foreign commerce.                                                                                   
13            (b)  Handling, storage, drayage, or packing of property or another accessorial                               
14       service on property is exempt from the sales tax and use tax if the                                               
15                 (1)  property has been or will be moved in interstate or foreign                                        
16       commerce;                                                                                                         
17                 (2)  services are performed by a local agent for a carrier or by a carrier.                             
18            Sec. 43.44.220. Exemption for health care. The following are exempt from                                   
19       the sales tax and use tax:                                                                                        
20                 (1)  health care services provided by a person licensed or certified to                                 
21       provide those services or a "health care facility" as that term is defined in                                     
22       AS 08.68.395(g);                                                                                                  
23                 (2)  drugs, durable medical equipment, mobility enhancing equipment,                                    
24       and prosthetic devices obtained on prescription from a person licensed to prescribe                               
25       those goods or from a "health care facility" as that term is defined in AS 08.68.395(g).                          
26            Sec. 43.44.230. Exemption for child care services. Child care services are                                 
27       exempt from the sales tax and use tax.                                                                            
28                  Article 3. Collection and Payment Provisions.                                                        
29            Sec. 43.44.240. Tax credit for sales or use tax paid to another state. A                                   
30       buyer liable for use tax on tangible personal property or services is entitled to a full                          
31       credit for the amount of sales or use tax paid on the same tangible personal property or                          
01       same services to another state.                                                                                   
02            Sec. 43.44.250. Exempt sales. All exempt sales under AS 43.44.090 -                                      
03       43.44.230 must be documented with an exemption certificate.                                                       
04            Sec. 43.44.252. Exemption certificate: form. (a) The department shall                                      
05       provide for a uniform exemption certificate in a format that a person may use in hard                             
06       copy or electronic format. A purchaser shall use the certificate when purchasing goods                            
07       or services for resale or for other exempt transactions.                                                          
08            (b)  The certificate must include the                                                                        
09                 (1)  number of the seller's permit issued to the purchaser as provided in                               
10       AS 43.44.260 or the number of the direct pay permit issued to the purchaser as                                    
11       provided in AS 43.44.255, as applicable;                                                                          
12                 (2)  general character of property or service sold by the purchaser in the                              
13       regular course of business;                                                                                       
14                 (3)  name and address of the purchaser; and                                                             
15                 (4)  signature or electronic signature of the purchaser.                                                
16            Sec. 43.44.254. Exemption certificate: requirements. (a) An exemption                                      
17       certificate executed by a purchaser or lessee must be in the possession of the seller or                          
18       lessor at the time that an exempt transaction occurs.                                                             
19            (b)  An exemption certificate must contain the information and be in a format                                
20       prescribed by the department.                                                                                     
21            (c)  If the seller or lessor accepts an exemption certificate and believes in good                           
22       faith that the purchaser or lessee will employ the property or service transferred in an                          
23       exempt manner, the properly executed exemption certificate is considered conclusive                               
24       evidence, as to the seller and lessor, that the sale is exempt.                                                   
25            Sec. 43.44.255. Direct pay permit. A direct pay permit authorizes its holder to                            
26       purchase tangible personal property and services without paying tax to the seller and                             
27       authorizes the seller to not collect any tax on a sale to the permit holder. A person who                         
28       purchases tangible personal property or services under a direct pay permit issued                                 
29       under this section is liable for any sales and use tax due. The tax due must be paid by                           
30       the permit holder on a quarterly basis on a schedule established by the department. To                            
31       obtain a direct pay permit, a person must apply to the department and satisfy criteria                            
01       for direct pay permit holders established by the department by regulation.                                        
02            Sec. 43.44.260. Seller's permit. (a) A person wishing to engage in business in                             
03       this state shall obtain a seller's permit before engaging in business in this state.                              
04            (b)  Upon an applicant's compliance with this chapter, the department shall                                  
05       issue to the applicant a numbered seller's permit in a format that a person may use in                            
06       hard copy or electronic format. A permit is valid until revoked or suspended but is not                           
07       assignable. A permit is valid only for the person in whose name it is issued. A copy of                           
08       the permit must be conspicuously displayed at all times at the place for which it is                              
09       issued.                                                                                                           
10            Sec. 43.44.270. Permit application: requirements; place of business; form.                                 
11       (a) A person wishing to engage in business in this state shall file with the department                           
12       an application for a seller's permit. If the person has more than one location in which                           
13       the person maintains an office or other place of business, an application may include                             
14       multiple locations. A vending machine operator who has more than one vending                                      
15       machine location is considered to have only one place of business for purposes of this                            
16       section. An applicant who does not maintain an office or other place of business and                              
17       who moves from place to place is considered to have only one place of business and                                
18       shall attach the permit to the applicant's cart, stand, truck, or other merchandising                             
19       device.                                                                                                           
20            (b)  Each application for a permit must be in a format prescribed by the                                     
21       department and must set out the name under which the applicant intends to transact                                
22       business, the location of the applicant's place or places of business, and other                                  
23       information that the department may require. The application must be filed by the                                 
24       owner if the owner is a natural person, by a member or partner if the owner is an                                 
25       association or partnership, or by a person authorized to sign the application if the                              
26       owner is a corporation.                                                                                           
27            Sec. 43.44.280. Revocation or suspension of permit: hearing; notice;                                       
28       appeal. (a) Subject to the provisions of (b) of this section, the department may revoke                         
29       or suspend a permit held by a person who fails to comply with the provisions of this                              
30       chapter.                                                                                                          
31            (b)  A person aggrieved by the revocation or suspension of a permit under (a)                                
01       of this section may, not later than 60 days after department revokes or suspends a                                
02       permit, request an informal conference with an appeals officer. The aggrieved person                              
03       shall be given access to the person's file in the department in the matter for preparation                        
04       for the informal conference. At the informal conference, the person may present to the                            
05       appeals officer arguments and evidence relevant to the department's decision to revoke                            
06       or suspend the person's permit. The department shall give written notice of its                                   
07       decision; this shall be the final administrative decision of the department. In its                               
08       decision, the department may uphold the revocation or suspension, or, subject to (c) of                           
09       this section, issue a new permit or reinstate a suspended permit.                                                 
10            (c)  If a permit is revoked, the department may not issue a new permit except                                
11       upon application accompanied by reasonable evidence of the intention of the applicant                             
12       to comply with the provisions of this chapter. The department may, as a condition for                             
13       the issuance of a new permit to the applicant, require security in addition to that                               
14       authorized by AS 43.44.370 in an amount reasonably necessary to ensure compliance                                 
15       with this chapter.                                                                                                
16            (d)  A person aggrieved by the department's final decision to revoke a permit                                
17       as provided in (a) of this section may appeal the decision to the office of                                       
18       administrative hearings.                                                                                          
19            Sec. 43.44.290. Improper use of subject of purchase obtained with                                          
20       exemption certificate; penalty. (a) If a purchaser who uses an exemption certificate                            
21       uses the subject of the purchase for a purpose other than one allowed as exempt under                             
22       this chapter, the sale is considered a taxable sale as of the time of first use by the                            
23       purchaser, and the sales price is the price that the purchaser paid. If the sole                                  
24       nonexempt use is rental while holding for sale, the purchaser shall include in the sales                          
25       price the amount of the rental charged. Upon subsequent sale of the property, the seller                          
26       shall include the entire amount of the sales price, without deduction of amounts                                  
27       previously received as rentals.                                                                                   
28            (b)  A person who uses an exemption certificate for property that will be used                               
29       for purposes other than the purpose claimed is subject to a penalty, payable to the                               
30       department, of $100 or 100 percent of the tax due, whichever is greater, for each                                 
31       transaction in which an improper use of a certificate has occurred. The penalty is in                             
01       addition to tax, interest, or other penalties due.                                                                
02            Sec. 43.44.300. Commingling exemption certificate property. If a purchaser                                 
03       uses an exemption certificate with respect to the purchase of fungible tangible                                   
04       personal property and commingles the property with fungible property that was not                                 
05       purchased with an exemption certificate but that is so similar that the identity of the                           
06       property in the commingled mass cannot be determined, sales from the mass of                                      
07       commingled property are considered to be sales of the property purchased with the                                 
08       certificate until the quantity of commingled property sold equals the quantity of                                 
09       property originally purchased under the certificate.                                                              
10            Sec. 43.44.310. Liability for payment of tax; security for retailer without                                
11       place of business; penalty. (a) Liability for the payment of the sales tax and use tax is                       
12       not extinguished until the taxes have been paid to the department.                                                
13            (b)  A retailer who does not maintain an office or other place of business in this                           
14       state is liable for the sales tax or use tax on all property sold or leased and services                          
15       provided in this state in accordance with this chapter and may be required to furnish                             
16       adequate security as provided in AS 43.44.370 to ensure collection and payment of the                             
17       taxes. When authorized and except as otherwise provided in this chapter, the retailer is                          
18       liable for the taxes on all property sold and services provided in this state in the same                         
19       manner as a retailer who maintains an office or other place of business in this state.                            
20       After notice and hearing, a seller's permit provided for in AS 43.44.260 may be                                   
21       canceled at any time if the department considers the security inadequate.                                         
22            (c)  An agent, canvasser, or employee of a retailer doing business in this state                             
23       who does not possess a seller's permit issued by the department may not sell, solicit                             
24       orders for, or deliver property or services in Alaska. If an agent, canvasser, or                                 
25       employee violates the provisions of this chapter, the person is subject to a penalty of                           
26       not more than $100, or 100 percent of the tax due, whichever is greater, for each                                 
27       separate transaction or event.                                                                                    
28            Sec. 43.44.330. Method of accounting. A person who has a seller's permit or                                
29       direct pay permit shall report and pay the sales and use tax using the same method of                             
30       accounting that the person uses for federal tax purposes.                                                         
31            Sec. 43.44.340. Returns: payment; authority of department. (a) A person                                    
01       who has a tax liability under AS 43.44.010 shall file a return and pay the tax due                                
02       monthly. The return shall be filed and the tax paid on or before the last day following                           
03       the end of the month for which the tax is due. Each person engaged in business in this                            
04       state or using property in this state that is subject to taxation under AS 43.44.010 shall                        
05       file a return.                                                                                                    
06            (b)  For the purposes of the sales tax or use tax, a return must be filed by                                 
07                 (1)  a retailer required to collect the tax; and                                                        
08                 (2)  a person who                                                                                       
09                      (A)  purchases an item the storage, use, or other consumption of                                   
10            which is subject to the sales tax or use tax; and                                                            
11                      (B)  has not paid the tax to a retailer required to pay the tax.                                   
12            Sec. 43.44.345. Methods. (a) The department shall adopt regulations providing                              
13       for payment of the sales and use tax based on a rounding method.                                                  
14            (b)  The department may use sampling principles or methods in lieu of 100                                    
15       percent examination of records in conducting a sales tax or use tax audit.                                        
16            Sec. 43.44.350. Deduction for bad debts. (a) A person filing a return under                                
17       AS 43.44.340 may deduct sales found to be worthless. The bad debt may be deducted                                 
18       when it                                                                                                           
19                 (1)  is written off as uncollectable in the person's books and records;                                 
20       and                                                                                                               
21                 (2)  qualifies as a deduction for federal income tax purposes under 26                                  
22       U.S.C. (Internal Revenue Code).                                                                                   
23            (b)  If the amount of bad debt exceeds the amount of taxable sales during the                                
24       period that the bad debt is written off, a person may file a refund claim with the                                
25       department.                                                                                                       
26            (c)  If a bad debt deducted under (a) of this section is subsequently collected,                             
27       the person who claimed the deduction shall pay the tax levied under AS 43.44.010 on                               
28       the amount collected. For purposes of this subsection, any payments made on a debt or                             
29       account are applied                                                                                               
30                 (1)  first to the taxable price of the property or service and the tax                                  
31       levied under AS 43.44.010 on the property or service, then                                                        
01                 (2)  to interest, service charges, and any other charges.                                               
02            Sec. 43.44.360. Timely filing allowance. (a) A person filing a return under                                
03       AS 43.44.340 may claim an allowance in the amount of one percent of the tax                                       
04       determined to be payable to the state or $75 a month, whichever is less, if the return is                         
05       timely filed and the tax is timely paid.                                                                          
06            (b)  The allowance may be deducted on the return. The allowance may not be                                   
07       greater than the tax determined to be payable to the state.                                                       
08            Sec. 43.44.370. Security: limitations; sale of security deposit at auction;                                
09       bond. (a) The department may require a retailer to deposit with the department                                  
10       security in a form and amount that the department determines is appropriate. The                                  
11       deposit may not be more than twice the estimated average liability for the period for                             
12       which the return is required to be filed or $10,000, whichever is less. The amount of                             
13       security may be increased or decreased by the department, subject to the limitations                              
14       provided in this section.                                                                                         
15            (b)  In addition to remedies under AS 43.10, the department may sell at public                               
16       auction property deposited as security to recover a sales tax or use tax amount required                          
17       to be collected, including interest and penalties. Notice of the sale must be given not                           
18       later than 30 days before a sale and must be served personally on or sent by certified                            
19       mail to the last known address of the person who deposited the security. After the sale,                          
20       any surplus above the amount due that is not required as security under this section                              
21       must be returned to the person who deposited the security.                                                        
22            (c)  In lieu of security, the department may require a retailer to file a bond                               
23       issued by a surety company authorized to transact business in this state to guarantee                             
24       solvency and responsibility.                                                                                      
25            (d)  In addition to the other requirements of this section, the department may                               
26       require the corporate officers, directors, or shareholders of a corporation to provide a                          
27       personal guaranty and assumption of liability for the payment of the tax due under this                           
28       chapter.                                                                                                          
29            Sec. 43.44.380. Taxpayer quitting business; liability of successor. (a) All                                
30       taxes payable under this chapter are due and payable immediately whenever a                                       
31       taxpayer quits business, sells, exchanges, or otherwise disposes of the business or                               
01       disposes of the stock of goods. The taxpayer shall make a return and pay the taxes due                            
02       within 10 days after the taxpayer quits business, sells, exchanges, or otherwise                                  
03       disposes of the business or disposes of the stock of goods.                                                       
04            (b)  Except as provided in (d) of this section, a person who becomes a                                       
05       successor in the taxpayer's business or stock of goods is liable for the full amount of                           
06       the tax and shall withhold from the sales price payable to the taxpayer a sum sufficient                          
07       to pay any tax due until the taxpayer produces either a receipt from the department                               
08       showing payment in full of any tax due or a statement from the department that tax is                             
09       not due.                                                                                                          
10            (c)  If a tax is due but has not been paid as provided in (a) of this section, the                           
11       successor is liable for the payment of the full amount of tax. The payment of the tax                             
12       by the successor is considered to be a payment on the sales price and, if the payment is                          
13       greater in amount than the sales price, the amount of the difference becomes a debt                               
14       due to the successor from the taxpayer owing the tax under (a) of this section.                                   
15            (d)  A successor is not liable for any tax due from the person from whom the                                 
16       successor acquired a business or stock of goods if (1) the successor gives written                                
17       notice to the department of the acquisition; and (2) an assessment is not issued by the                           
18       department against the former operator of the business within six months after receipt                            
19       of the notice from the successor. If an assessment is issued by the department and a                              
20       copy of the assessment is not mailed to the successor, the successor is not liable for the                        
21       tax due.                                                                                                          
22            Sec. 43.44.390. Tax as debt. (a) The tax imposed by this chapter and related                               
23       interest and penalties become a personal debt of the person required to file a return                             
24       from the time the liability arises, regardless of when the time for payment of the                                
25       liability occurs.                                                                                                 
26            (b)  If the personal representative of an estate has voluntarily distributed the                             
27       assets held in that capacity without reserving sufficient assets to pay the taxes, interest,                      
28       and penalties, the personal representative is personally liable for any deficiency, to the                        
29       extent permitted under AS 13.16.                                                                                  
30            (c)  This section applies to corporate officers, directors, or shareholders                                  
31       required by the department to personally guarantee the payment of the taxes for their                             
01       corporation. The officer or employee of a corporation whose duty it is to collect,                                
02       truthfully account for, and pay to the state the taxes imposed by this chapter and who                            
03       fails to pay the taxes is liable to the state for the taxes imposed by this chapter and the                       
04       penalty and interest due on the taxes.                                                                            
05            Sec. 43.44.400. Refunds and credits. The department may credit or refund                                   
06       overpayments of taxes, taxes erroneously or illegally assessed or collected, penalties                            
07       collected without authority, and taxes that are found unjustly assessed or excessive in                           
08       amount, or otherwise wrongfully collected. The department shall set limitations,                                  
09       specify the manner in which claims for credits or refunds are made, and give notice of                            
10       allowance or disallowance. When a refund is allowed to a taxpayer, it shall be paid out                           
11       of the general fund on a warrant issued under a voucher approved by the department.                               
12                       Article 4. General Provisions.                                                                  
13            Sec. 43.44.450. Electronic registration, filing, and forms. (a) The                                        
14       department may participate in any electronic sales and use tax registration system                                
15       made available in cooperation with other states through the Streamlined Sales and Use                             
16       Tax Agreement.                                                                                                  
17            (b)  The department may use and accept a standard electronic exemption form                                  
18       made available in cooperation with other states through the Streamlined Sales and Use                             
19       Tax Agreement.                                                                                                    
20            (c)  The department may prescribe and provide for use of forms, certificates,                                
21       permits, and other documents required under this chapter in electronic format,                                    
22       including the use of electronic signatures and authentications.                                                 
23            Sec. 43.44.460. Field offices. The department may contract with a                                          
24       municipality that, on the effective date of this section, levies a sales and use tax to                           
25       provide a field office for that municipality's geographical area of the state.                                    
26            Sec. 43.44.500. Definitions. In this chapter,                                                              
27                 (1)  "consideration" means a valuable inducement and includes, without                                  
28       limitation, money, property, and services;                                                                        
29                 (2)  "electronic signature" has the meaning given in AS 09.25.520(a);                                   
30                 (3)  "engaging in business" means carrying on or causing to be carried                                  
31       on any activity with the purpose of direct or indirect benefit;                                                   
01                 (4)  "lease," "leasing," or "rental," regardless of whether a transaction is                            
02       characterized as a lease or rental under generally accepted accounting principles, 26                             
03       U.S.C. (Internal Revenue Code), AS 45.01 - AS 45.08, AS 45.12, AS 45.14, and                                      
04       AS 45.29 (Uniform Commercial Code), or other provisions of federal, state, or local                               
05       law,                                                                                                              
06                      (A)  means a transfer of possession or control of tangible                                         
07            personal property for a fixed or indeterminate term for consideration; a lease or                            
08            rental may include future options to purchase or extend;                                                     
09                      (B)  does not include                                                                              
10                           (i)  a transfer of possession or control of property under                                    
11                 a security agreement or deferred payment plan that requires the transfer                                
12                 of title upon completion of the required payments;                                                      
13                           (ii)  a transfer of possession or control of property under                                   
14                 an agreement that requires the transfer of title upon completion of                                     
15                 required payments if payment of an option price does not exceed the                                     
16                 greater of one hundred dollars or one percent of the total required                                     
17                 payments; or                                                                                            
18                           (iii)  providing tangible personal property along with an                                     
19                 operator for a fixed or indeterminate period of time; a condition of this                               
20                 exclusion is that the operator is necessary for the equipment to perform                                
21                 as designed; for the purpose of this sub-subparagraph, an operator must                                 
22                 do more than maintain, inspect, or set up the tangible personal property;                               
23                      (C)  includes agreements covering motor vehicles and trailers if                                   
24            the amount of consideration may be increased or decreased by reference to the                                
25            amount realized upon sale or disposition of the property as defined in 26                                    
26            U.S.C. 7701(h)(1);                                                                                           
27                 (5)  "maintain an office or other place of business" means                                              
28                      (A)  a person's having or maintaining in this state, directly or by                                
29            an affiliate, an office, distribution house, sales house, warehouse, or place of                             
30            business; or                                                                                                 
31                      (B)  an agent's operating within this state under the authority of                                 
01            the person or its affiliate, whether the place of business or agent is located in                            
02            the state permanently or temporarily or whether the person or affiliate is                                   
03            authorized to do business in the state;                                                                      
04                 (6)  "manufacturing" means combining or processing components or                                        
05       materials, including the processing of ores in a mill, smelter, refinery, or reduction                            
06       facility, to increase the value of the components or materials for sale in the ordinary                           
07       course of business; "manufacturing" does not include construction;                                                
08                 (7)  "permit" or "seller's permit" means a seller's permit as described in                              
09       AS 43.44.260;                                                                                                     
10                 (8)  "person" means an individual, estate, trust, receiver, cooperative                                 
11       association, club, corporation, company, firm, partnership, joint venture, syndicate, or                          
12       other entity, including a gas, water, or electric utility owned or operated by a borough,                         
13       municipality, or other political subdivision of the state;                                                        
14                 (9)  "purchase price" means "sales price" and applies to the measure                                    
15       subject to use tax;                                                                                               
16                 (10)  "sale," "selling," or "purchasing" means the transfer of title or                                 
17       possession, or both, of property, or a leasehold in property for consideration or the                             
18       performance of a service for consideration;                                                                       
19                 (11)  "sales price"                                                                                     
20                      (A)  means the total amount of consideration, including cash,                                      
21            credit, property, and services, for which personal property or services are sold,                            
22            leased, or rented, valued in money, whether received in money or otherwise,                                  
23            without any deduction for the following:                                                                     
24                           (i)  the seller's cost of the property sold;                                                  
25                           (ii)  the cost of materials used, labor or service cost,                                      
26                 interest, losses, all costs of transportation to the seller, all taxes                                  
27                 imposed on the seller, and any other expense of the seller;                                             
28                           (iii)  charges by the seller for any services necessary to                                    
29                 complete the sale, other than delivery and installation charges;                                        
30                           (iv)  delivery charges;                                                                       
31                           (v)  installation charges;                                                                    
01                           (vi)  the value of exempt personal property given to the                                      
02                 purchaser where taxable and exempt personal property have been                                          
03                 bundled together and sold by the seller as a single product or piece of                                 
04                 merchandise;                                                                                            
05                       (B)  does not include                                                                             
06                           (i)  discounts, including cash, term, or coupons that are                                     
07                 not reimbursed by a third party that are allowed by a seller and taken by                               
08                 a purchaser on a sale;                                                                                  
09                           (ii)  interest, financing, and carrying charges from credit                                   
10                 extended on the sale of personal property or services if the amount is                                  
11                 separately stated on the invoice, bill of sale, or similar document given                               
12                 to the purchaser; and                                                                                   
13                           (iii)  taxes legally imposed directly on the consumer that                                    
14                 are separately stated on the invoice, bill of sale, or similar document                                 
15                 given to the purchaser;                                                                                 
16                 (12)  "sales tax" and "use tax" means the applicable tax imposed by                                     
17       AS 43.44.010;                                                                                                     
18                 (13)  "service" means an activity that is engaged in for another person                                 
19       for consideration and that is distinguished from the sale or lease of property; in                                
20       determining what a service is, the intended use, principal objective, or ultimate                                 
21       objective of the contracting parties is irrelevant; "service" includes                                            
22                      (A)  activities performed by a person for its members or                                           
23            shareholders;                                                                                                
24                      (B)  construction activities and all tangible personal property                                    
25            that will become an ingredient or component part of a construction project; and                              
26                      (C)  labor; professional services; transportation; telephone or                                    
27            other communications service; entertainment, including cable, subscription, or                               
28            pay television or other telecommunications service; the supplying of food,                                   
29            lodging, or other accommodations in hotels, restaurants, or elsewhere;                                       
30            admission to exhibitions; the use of a computer, computer time, a computer                                   
31            system, a computer program, a computer network, or any part of a computer                                    
01            system or network; and the supplying of equipment for use;                                                   
02                      (D)  admission to places of entertainment;                                                         
03                 (14)  "tangible personal property" means personal property that can be                                  
04       seen, weighed, measured, felt, or touched, or that is in any other manner perceptible to                          
05       the senses; "tangible personal property" includes electricity, water, gas, steam, and                             
06       prewritten computer software;                                                                                     
07                 (15)  "tax" means the tax levied by AS 43.44.010;                                                       
08                 (16)  "unincorporated community" means a place that is not                                              
09       incorporated as a city and in which 25 or more persons reside as a social unit;                                   
10                 (17)  "use" or "using" includes use, consumption, or storage, other than                                
11       storage for resale or for use solely outside this state in the ordinary course of business.                       
12    * Sec. 16. AS 44.64.030(a) is amended by adding a new paragraph to read:                                           
13                 (51)  AS 43.44 (sales and use tax).                                                                     
14    * Sec. 17. Section 4, ch. 100, SLA 2002, as amended by sec. 9, ch. 117, SLA 2003, and sec.                         
15 2, ch. 30, SLA 2005, is repealed and reenacted to read:                                                                 
16            Sec. 4. AS 29.45.650(a) is amended to read:                                                                  
17            (a)  Except as provided in AS 04.21.010(c) [AND AS 29.45.750], a borough                                     
18       may levy a general sales tax on the sale and rental of tangible or intangible property                            
19       and on services provided in the borough.                                                                          
20    * Sec. 18. AS 29.05.210(b)(1) is repealed December 31, 2021.                                                       
21    * Sec. 19. AS 29.35.170(c) is repealed January 1, 2022.                                                            
22    * Sec. 20.  The uncodified law of the State of Alaska is amended by adding a new section to                        
23 read:                                                                                                                   
24       AUTHORITY TO ENTER STREAMLINED SALES AND USE TAX                                                                  
25 AGREEMENT. (a) The Department of Revenue is authorized to enter into the Streamlined                                    
26 Sales and Use Tax Agreement, approved by the Streamlined Sales Tax Governing Board, Inc.,                               
27 with one or more states to simplify and modernize sales and use tax administration in order to                          
28 substantially reduce the burden of tax compliance for all sellers and for all types of                                  
29 commerce. In furtherance of the Streamlined Sales and Use Tax Agreement, the department is                              
30 authorized to act jointly with other states that are members of the Streamlined Sales and Use                           
31 Tax Agreement to establish standards for certification of a certified service provider and                              
01 certified automated system and establish performance standards for multistate sellers.                                  
02       (b)  The department shall adopt regulations implementing sec. 15 of this Act                                      
03 consistent with the Streamlined Sales and Use Tax Agreement.                                                            
04       (c)  The department is authorized to take other actions reasonably required to                                    
05 implement the provisions set out in this section. Other actions authorized by this section                              
06 include the joint procurement, with other member states, of goods and services in furtherance                           
07 of the cooperative agreement.                                                                                           
08       (d)  The department or the department's designee is authorized to represent this state                            
09 before the other states that are signatories to the Streamlined Sales and Use Tax Agreement.                            
10    * Sec. 21. The uncodified law of the State of Alaska is amended by adding a new section to                         
11 read:                                                                                                                   
12       TRANSITIONAL PROVISIONS. (a) The Department of Revenue may proceed to                                             
13 adopt regulations necessary to implement this Act. The regulations take effect under AS 44.62                           
14 (Administrative Procedure Act), but not before the effective date of the provision being                                
15 implemented.                                                                                                            
16       (b)  Notwithstanding AS 29.45.650(c), as amended by sec. 8 of this Act, a                                         
17 municipality that imposes a general sales and use tax is not required to conform its tax base,                          
18 including exemptions, definitions, and sourcing rules, to AS 43.44 until January 1, 2020.                               
19       (c)  Notwithstanding any other provision of state law, actions taken by the Department                            
20 of Revenue and any other department, division, or office in the executive branch of state                               
21 government before July 1, 2018, to implement the provisions of this Act are exempt from the                             
22 requirements of AS 36.30 (State Procurement Code).                                                                      
23       (d)  Before the first day of the Second Session of the Thirtieth Alaska State                                     
24 Legislature, the department shall provide a written report to the legislature and the office of                         
25 management and budget describing                                                                                        
26            (1)  regulations adopted by the department to implement the sales tax and use                                
27 tax;                                                                                                                    
28            (2)  issues that need to be addressed through legislation in order for the sales                             
29 tax and use tax to be effective; and                                                                                    
30            (3)  an estimate of the amount of revenue attributable to the sales tax and use                              
31 tax.                                                                                                                    
01       (e)  Services under a contract executed and paid in full before the effective date of sec.                        
02 15 of this Act and performed within 12 months after the effective date of sec. 15 of this Act                           
03 are exempt from the sales tax and use tax.                                                                              
04       (f)  A person may apply for, and the Department of Revenue may issue, a sellers                                   
05 permit under AS 43.44.260 before the effective date of sec. 15 of this Act to be effective on or                        
06 after the effective date of sec. 15 of this Act.                                                                        
07    * Sec. 22. Section 21 of this Act takes effect immediately under AS 01.10.070(c).                                  
08    * Sec. 23. Except as provided in sec. 22 of this Act, this Act takes effect January 1, 2018.