HB 102-RENTAL VEHICLE BY PRIVATE OWNER  4:12:42 PM CO-CHAIR LEDOUX announced that the final order of business would be HOUSE BILL NO. 102, "An Act relating to rental vehicles; relating to vehicle rental networks; relating to liability for vehicle rental taxes; and providing for an effective date." 4:12:57 PM CO-CHAIR WOOL, as prime sponsor of HB 102, introduced the bill and read the following sponsor statement [original punctuation provided]: The ways that Alaskans procure transportation services have changed over time. In the past, getting off a commercial flight and heading to the nearest rental car agency was common practice. Now, consumers are turning increasingly to ridesharing, car pooling, and rental vehicle network options to get around. Vehicle rental networks are rental car businesses that arrange or execute personal passenger vehicle rentals through a network of individual private vehicle owners, and are becoming a common alternative to traditional rental car options. HB 102 adds a definition for the new service of providing private vehicle rental programs, including these services into existing statutes that regulate car rental providers to reflect changes in how people secure transport in Alaska. It also extends the same laws and regulations which apply to rental car companies to private vehicle rental networks, including the payment of the State's Vehicle Rental Tax. Therefore, HB 102 brings equity to the rental industry for motor vehicles, and will generate additional income for the State's general fund as the private vehicle rental network industry continues to grow and diversify in the Alaskan economy. Please join me in supporting House Bill 102 to bring our statutes up to date and to incorporate this new industry into the existing language governing vehicle rentals in Alaska. 4:15:48 PM REPRESENTATIVE FIELDS asked if internet-based car rental companies pay taxes. CO-CHAIR WOOL said they do not. 4:16:08 PM REPRESENTATIVE STUTES questioned whether any "peer-to-peer groups" have bricks-and-mortar buildings in Alaska. CO-CHAIR WOOL answered no. REPRESENTATIVE STUTES said she presumes their headquarters are out of state. CO-CHAIR WOOL confirmed that. REPRESENTATIVE STUTES asked where they are headquartered out of. 4:16:50 PM ASHLEY STRAUCH, Staff, Representative Adam Wool, Alaska State Legislature, on behalf of Representative Wool, prime sponsor of HB 102, stated that the largest [peer-to-peer] vehicle rental network is Turo, which is headquartered out of San Francisco, California. REPRESENTATIVE STUTES said it sounds like these companies, which operate out of state, do the bookkeeping for the rental of other people's vehicles within the state while paying no revenue to the state of Alaska; however, the rental car companies do pay taxes. She asked if this was correct. MS. STRAUCH affirmed that. REPRESENTATIVE STUTES surmised that the current bill "levels the playing field so everyone is playing the same game." MS. STRAUCH answered that is correct. 4:17:57 PM REPRESENTATIVE FIELDS asked if the Department of Revenue (DOR) has tried to collect taxes from these [peer-to-peer] digitally based car rental companies. 4:18:35 PM BRANDON SPANOS, Deputy Director, Tax Division, Department of Revenue, noted that it's difficult to talk about specifics because of confidentiality statutes. Nonetheless, he stated that the statute does make it clear that the rental of a vehicle is taxable. He added that the current bill would clarify who is taxable. He divulged that the DOR has sent a request for records to some of the peer-to-peer companies to determine who is renting the vehicles, adding that one of those requests has turned into a subpoena. He explained that their subpoena language is lacking and doesn't allow the enforcement of tax subpoenas outside of Alaska; therefore, in order to enforce it they will have to take it to the other state's court unless there is a statute change. He further noted that other states that have bed taxes have dealt with the same issues with companies like Airbnb. 4:20:12 PM REPRESENTATIVE FIELDS questioned whether the companies are refusing to share information and pay taxes even though they continue to operate in Alaska. MR. SPANOS clarified that they asked for records, not taxes, because its clear that the person renting the vehicle is the taxpayer and does owe the tax; however, they do not know who that person is. He added that peer-to-peer didn't exist when the statute was drafted so it doesn't implicitly state that those companies are the taxpayer, which makes it a grey area. REPRESENTATIVE FIELDS commented that its extraordinary that these companies are operating here and enabling car rentals without paying taxes. He opined that it sounds like tax evasion and the only remedy for that would be this bill. 4:21:36 PM REPRESENTATIVE STUTES said it appears that HB 102 closes a loophole since this situation didn't exist when the statute was written. She asked if this is correct. 4:22:01 PM MS. STRAUCH acknowledged that this bill clarifies the language in statute of what constitutes a vehicle rental by including vehicle rental networks in the definition. CO-CHAIR LEDOUX sought clarification on whether it's the entity that does the bookkeeping or the consumer who rents the car that owes taxes. 4:22:30 PM MR. SPANOS replied that the statute currently reads, "there is imposed an excise tax on the charge for the lease of the rental vehicle," adding that it's assessed on the person who is renting out their vehicle. 4:23:31 PM REPRESENTATIVE HANNAN asked Mr. Spanos if he worked for the DOR when Alaska established taxes for Airbnb and similar entities. MR. SPANOS said the state doesn't have a statewide bed tax. He explained that there are no state taxes on them unless the company is a corporation and the corporate income tax applies. He added that other states have dealt with this issue and created statutes to implicitly state that they are taxable. 4:24:16 PM CO-CHAIR LEDOUX questioned whether there is a statewide hotel bed tax in Alaska. MR. SPANOS stated that there is not a statewide bed tax; however, municipalities do have them. CO-CHAIR LEDOUX sought clarification on whether the municipalities tax Airbnb the same as hotels. MR. SPANOS offered that he has been told they are having trouble collecting taxes on those types of companies. Some, he said, have sought to change their ordinances to create an economic nexus for those companies. 4:25:42 PM REPRESENTATIVE TALERICO recounted his experience with the Denali Borough tax structure and the overnight accommodations tax. He explained that everyone who provides nightly rentals is required to register with the Denali Borough and provide the overnight accommodations tax on their rack rate; whether that be a single cabin or a hotel campus with 400-500 rooms, they are all required to register and fulfill that. 4:26:21 PM REPRESENTATIVE FIELDS offered his belief that Anchorage has a 12 percent bed tax that applies to Airbnb. 4:26:33 PM CO-CHAIR WOOL explained that the intention is to implement the tax into the [peer-to-peer] app itself, making it so the person renting the car will pay the rental fee plus the tax that will go to Turo, who in turn, will keep some of the rental fee for operating costs plus the tax, which they will then pay to the state. This would simplify the process for the state, because instead of taxing each individual renter they would only have to go after several companies. 4:28:16 PM REPRESENTATIVE FIELDS noted that the existence of a bed tax has not inhibited Airbnb's growth. 4:28:35 PM CO-CHAIR WOOL added that this "centralized" system would be no different than Uber. He said that, instead of each individual driver paying tax to the city of Juneau, it all gets payed through the company itself. 4:29:17 PM CO-CHAIR LEDOUX announced that HB 102 was held over. 4:29:32 PM CO-CHAIR LEDOUX ADJOURNMENT  There being no further business before the committee, the House Labor and Commerce Standing Committee meeting was adjourned at 4:29 p.m.