Legislature(2013 - 2014)
2014-04-08 Senate Journal
Full Journal pdf2014-04-08 Senate Journal Page 2339 SB 178 The Finance Committee considered SENATE BILL NO. 178 "An Act relating to the application of the passenger vehicle rental tax; and providing for an effective date" and recommended it be replaced with 2014-04-08 Senate Journal Page 2340 CS FOR SENATE BILL NO. 178(FIN) "An Act relating to the passenger and recreational vehicle rental taxes; and providing for an effective date." and further recommended the adoption of two Finance Committee Letters of Intent: Letter of Intent April 7, 2014 The Honorable Kevin Meyer, Co-Chair The Honorable Click Bishop, Member Senate Finance Committee State Capitol, Room 532 Juneau, AK 99801 Re: Question on Vehicle Rental Tax Dear Senators Meyer and Bishop: The purpose of this letter is to clarify the Department's position and interpretation of the definition of "passenger vehicle" in AS 43.52.099(2) for the purposes of our vehicle rental tax. Specifically, the Department has been asked how it interprets the phrase: "a motor vehicle ... that is driven or moved on a highway or public right-of-way in the state" contained in the definition. For vehicle rental tax purposes, the Department's interpretation of this definition is based on access. If a member of the general public can freely drive on the road system without breaking any laws or having someone stop them and tell them they cannot go any further, they are on a highway or public right-ofway. For example, an individual can rent a vehicle in Anchorage, drive to Deadhorse via the Dalton Highway, and travel many places around Deadhorse and the North Slope in general. However, there are areas of 2014-04-08 Senate Journal Page 2341 the North Slope that are private or restricted that a member of the general public would not be able to drive to. Vehicle rental tax would apply to that transaction because the individual drove the rented vehicle on different highways and public rights-of-way. If an Alaska business rents to another Alaska business located in an area of the state that is not accessible by the general public, and all of the vehicles the business rents, regardless of rental period, are never driven on a road that can be accessed by the general public, then under our interpretation of the current statutes, those transactions would not be taxable. However, once that vehicle is driven on a highway or public right-of-way that is open to and accessible by the general public, and the rental period is less than 90 days, it becomes a taxable transaction under the current definition. I hope that this helps clarify the questions that have recently arisen on this bill. If you have further questions, do not hesitate to contact me. Sincerely, /s/ Angela Rodell Commissioner Letter of Intent It is the intent of the Senate Finance Committee that the passenger vehicle rental tax described in SB 178, including the original law and the changes made by the committee substitute, should not be applied to Alaskan businesses doing business with other Alaskan businesses. The Department of Revenue (DOR) should not apply the tax retroactively to businesses it determines should be, or should have been, collecting the tax. However, if DOR is able to determine a business collected the tax but did not remit the tax to DOR, then DOR should charge back taxes, penalties and/or interest on those unpaid taxes. 2014-04-08 Senate Journal Page 2342 In 2003, the legislature passed House Bill 271, a passenger vehicle rental tax intended to raise revenue from tourists renting passenger vehicles so that they could help pay for the wear and tear they inflict on the State's publicly-maintained roads. Since the passage of HB 271, AS 43.52 has been amended three times; two of which were to exempt Alaskan businesses doing business with other Alaskan businesses. The third time was to exempt motorcycles. The intent of SB 178 is to clarify, once again, which rental vehicles are to be covered by the tax and which are not. It is the committee's intent that only passenger rental cars, as described in AS 43.52.010, should be taxed. Signing do pass: Senator Meyer, Cochair; Senators Bishop, Hoffman. Signing no recommendation: Senators Dunleavy, Olson. Signing amend: Senator Fairclough. The following fiscal information was published today: Fiscal Note No. 2, indeterminate, Department of Revenue The bill was referred to the Rules Committee.