Legislature(2021 - 2022)GRUENBERG 120
04/09/2021 08:00 AM House LABOR & COMMERCE
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| HB61 | |
| HB90 | |
| HB110 | |
| Occupational Safety & Health Review Board | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 110 | TELECONFERENCED | |
| += | HB 146 | TELECONFERENCED | |
| *+ | HB 61 | TELECONFERENCED | |
| *+ | HB 90 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
HB 90-VEHICLE RENTALS & VEHICLE RENTAL NETWORKS
8:22:24 AM
CO-CHAIR SPOHNHOLZ announced that the next order of business
would be HOUSE BILL NO. 90, "An Act relating to rental vehicles;
relating to vehicle rental networks; relating to liability for
vehicle rental taxes; and providing for an effective date."
8:22:48 AM
REPRESENTATIVE ADAM WOOL, Alaska State Legislature, introduced
HB 90 as prime sponsor. He described peer-to-peer car rental as
a platform through which an individual can rent out their car to
someone without using a traditional car rental service. He said
Alaska currently has a statewide vehicle rental tax of 10
percent, and the municipality of Anchorage has a car rental tax
of 8 percent; therefore, renting a car at the airport in
Anchorage carries a total tax of 18 percent. Peer-to-peer
rental, he said, is taxed in 29 other states but not in Alaska.
He said the municipality of Anchorage recently passed an
ordinance to tax transactions on peer-to-peer car rental
platforms at the same tax rate as traditional car rental
companies. He said that in a typical year, vehicle rental tax
revenues total approximately $10 million, and that it's
estimated that business conducted through the peer-to-peer
platforms could amount to as much as 20 to 30 percent of the
rental market. He stated that the tax would be paid by the
renter, collected through the application platform, and remitted
by the company, in the same manner as practiced by rideshare
services such as Uber or Lyft.
8:27:45 AM
ASHLEY CARRICK, Staff, Representative Adam Wool, Alaska State
Legislature, on behalf of Representative Wool, prime sponsor,
presented a PowerPoint titled, "HB 90: Private Vehicle Rental
Networks." She presented slide 2, "Definitions," which read as
follows [original punctuation provided]:
Vehicle Rental Business:
Traditional car rental Examples: Alamo, Enterprise,
Thrifty, etc.
Vehicle Rental Network (AKA Peer-to-Peer):
Peer-to-Peer and Traditional car rental Examples:
Turo, Getaround, Enterprise CarShare
MS. CARRICK presented slide 3, "States where DOR have determined
Vehicle Rental Networks to be Taxable," which highlighted
Alaska, Arizona, Arkansas, Colorado, Florida, Hawaii, Idaho,
Illinois, Maryland, Mississippi, Montana, Nebraska, North
Dakota, Oklahoma, and Wyoming. The slide read as follows
[original punctuation provided]:
? 16 States including Alaska have a Department of
Revenue with a position supporting Vehicle Rental
Network Taxation
? Anchorage Ordinance 2020-55 has begun to collect tax
on P2P car rental:
logicalnot 8% tax on BOTH vehicle rentals and P2P
logicalnot Adds a new definition for hosting platform
MS. CARRICK presented slide 4, "States where Vehicle Rental
Networks are Collecting Tax," which read as follows [original
punctuation provided]:
? 29 States currently apply rental taxes to vehicle
rental networks
? Alaska's current tax rates:
logicalnot 10% for motor vehicles
logicalnot 3% for recreational vehicles
? Historically, vehicle rental tax revenue has been
around $10 million, which could increase 10-30% with
the addition of vehicle rental networks
MS. CARRICK presented slide 5, "Different Standards for the Same
Business mode:," which read as follows [original punctuation
provided]:
logicalnotTraditional car rental and peer-to-peer networks have
the same business model with different tax burdens
logicalnotThe business model of P2P aligns with other app-based
industries such as AirBnb and Uber
logicalnotP2P networks are clearly operating in Alaska, despite
having headquarters in other States
MS. CARRICK noted that the activities of renting vehicles,
providing insurance protection, selling ancillary products such
as car seats or ski racks, and offering digital technology and
mobile apps are activities that traditional car rental
businesses and peer-to-peer vehicle rental networks have in
common. She then presented slide 6, "Testimony Supporting HB
90," which read as follows [original punctuation provided]:
"If you're Hertz, we know about you. You register with
us and pay your taxes. Turo is invisible to us because
we don't know the names, let alone contact
information, for people renting the cars... We're
losing something, but it's hard to tell how much."
-State of Alaska Department of Revenue
8:33:21 AM
REPRESENTATIVE SCHRAGE said that the objection he's heard is
that a person is not a rental company; hosting your car for
rental is a different business model, and taxing an individual
at the same rate as a rental car company doesn't actually level
the playing field. He said that he's also heard the objection
that there hasn't been stakeholder engagement in this proposed
legislation. He asked Representative Wool whether he's spoken
with Turo or others, and whether there has been discussion of
compromise or amendments.
8:34:34 AM
REPRESENTATIVE WOOL responded that he's spoken with Turo, which
obviously doesn't want the tax because it currently has a
competitive advantage because anyone using its platform doesn't
pay tax, making it cheaper to rent cars. Turo naturally would
like to keep that advantage, he said, adding that Turo doesn't
have brick and mortar stores or traditional employees.
Representative Wool noted that Turo representatives engage in
the legislative process, advocating for a lower tax rate than
proposed, and he expressed that he doesn't see any logic for
allowing Turo a lower tax rate. He stressed that the consumer
renting the car would be paying the tax and noted that Airbnb
pays the same bed tax as a hotel. He said that the same law
affecting peer-to-peer accommodations should apply to peer-to-
peer vehicle sharing.
8:37:33 AM
REPRESENTATIVE SNYDER asked Representative Wool to elaborate on
the competitive differences between peer-to-peer and traditional
car rental companies.
REPRESENTATIVE WOOL replied that there could be a wider range of
vehicles offered in a peer-to-peer car sharing application than
by a traditional car rental business, and that prices seem to be
similar.
8:40:04 AM
REPRESENTATIVE MCCARTY asked whether Turo has a corporate
license in Alaska.
MS. CARRICK replied that Turo is located in California and does
not have a location or business license in Alaska.
REPRESENTATIVE MCCARTY summed up his understanding of what Turo
is and asked whether Airbnb or Uber have business licenses in
Alaska.
REPRESENTATIVE WOOL explained that the business model of peer-
to-peer sharing applications depends on calling their providers
"independent contractors." He said that the business avoids
labor obligations and is able to say that only independent
contractors operate in Alaska, but the business doesn't. He
said that owners sharing their car through Turo, or renting a
house through Airbnb, generally don't disclose that they're
operating as a business.
8:43:20 AM
CO-CHAIR SPOHNHOLZ passed the gavel to Co-Chair Fields.
8:43:31 AM
REPRESENTATIVE MCCARTY stated his support for HB 90.
8:44:32 AM
REPRESENTATIVE KAUFMAN asked whether the names of people renting
cars is typically reported to the Department of Revenue (DOR).
MS. CARRICK responded that the quote on the slide referred to
people who are making their vehicle available for rent,
otherwise known as "hosting." She said the state has asked Turo
for information on how many are hosting, who they are, and who
DOR could pursue to collect vehicle rental tax; the companies,
she said, declined to provide the information.
REPRESENTATIVE KAUFMAN agreed that the people paying to rent a
car would be paying the tax and asked whether the service is
"more biased towards individuals who live near each other,
renting cars." He said that he is trying to "play devil's
advocate" and find some way in which a peer-to-peer car rental
is different from a traditional car rental.
8:47:10 AM
REPRESENTATIVE WOOL, in his response, surmised that
Representative Kaufman's question was whether there is something
demographically different about a peer-to-peer car rental. He
said that fewer people rent from Turo than traditional car
rental outlets, but that the trend is changing nationwide,
especially due to many people having more than one car. He
added that he knows individuals who have bought new cars
specifically to host them through an app such as Turo. He noted
that the law currently says that an individual providing a car
for another to rent is required to pay car rental tax; however,
there is no way to learn who those individuals are. Under HB
90, he said, application platforms like Turo would be required
to collect and remit sales tax to the state.
8:49:52 AM
CO-CHAIR FIELDS noted that Airbnb pays bed taxes and said, "It's
totally insulting that we would let a Silicon Valley-based
company pay a lower tax burden than local companies. It makes
no sense. They're an international car rental company that
aggregates products from multiple people." He characterized
companies engaging in this practice as engaging in a form of tax
evasion.
8:50:28 AM
REPRESENTATIVE KAUFMAN noted that Amazon doesn't have a physical
presence, but is doing business, in Alaska. He mused about
every business that provides a virtual interface owing a tax.
REPRESENTATIVE WOOL pointed out that Amazon pays local and state
sales taxes in states where there is no physical store. He
suggested that one could argue that companies not physically
operating in the state should pay more taxes because they're not
paying property taxes, rent, or local employees. He noted that
there is no statewide sales tax in Alaska, so certain companies
have a competitive advantage.
8:53:15 AM
MS. CARRICK recalled South Dakota v. Wayfair, Inc., No. 17-494
(U.S. Jun. 21, 2018), which set the precedent that internet
companies are liable for state and local taxes.
8:53:40 AM
CO-CHAIR FIELDS explained to committee members that South Dakota
v. Wayfair, Inc. was a U.S. Supreme Court decision in 2018 that
affirmed the right of states to collect sales tax for online
transactions.
8:53:50 AM
REPRESENTATIVE SCHRAGE asked whether Turo provides an IRS Form
1099 to individuals who host their cars.
REPRESENTATIVE WOOL replied that the company does not provide
such tax forms, which goes to the heart of the problem. He said
he doesn't know whether an individual claims associated rental
income, comparing the situation to a restaurant server claiming
tips.
8:54:51 AM
REPRESENTATIVE NELSON introduced a hypothetical situation in
which an individual allowed another person to rent their car
while the individual was out of state. He asked whether HB 90
would apply in that situation.
REPRESENTATIVE WOOL replied, "This bill deals with
transportation network companies." He said that, technically,
those who rent their vehicles out are liable for vehicle rental
tax. The helpfulness of HB 90, he said, would be due to the
fact that most people who rent vehicles do so through a more
centralized organization such as a car rental company or a
platform such as Turo.
REPRESENTATIVE NELSON expressed understanding that several
online car sharing platforms such as Turo are being used within
Alaska; the platforms are not paying car rental taxes; and
someone who privately rents a car to a friend would be in
violation of the law requiring payments of car rental tax.
REPRESENTATIVE WOOL responded:
This law does not create the vehicle rental tax. This
just says that if you're a transportation - a peer-to-
peer rental company then you're responsible to remit
the tax. If you rent a car to someone else you
already owe that tax, and if you don't pay it, you
already are in violation, regardless of if this bill
passes. It's already in state law: there is a vehicle
rental tax.
REPRESENTATIVE WOOL said that the state would not pursue tax
remittance from an individual periodically renting out their car
privately, but peer-to-peer businesses such as Turo are doing a
high value of business. He stressed that HB 90 would require
Turo to collect and remit car rental taxes.
8:58:23 AM
CO-CHAIR SPOHNHOLZ asked Representative Wool to confirm that HB
90 would not be creating a new tax, but a mechanism for ensuring
existing law would be enforced.
REPRESENTATIVE WOOL confirmed that the proposed legislation
would not be creating a new tax, but would mandate that the
business operating the peer-to-peer platform would be required
to collect the car rental tax and remit it to the state.
8:59:05 AM
REPRESENTATIVE NELSON asked whether the quote on slide 6 in the
PowerPoint presentation is due to Turo not having an Alaska
business license.
MS. CARRICK replied that the proposed legislation would add
clarity to the statute. She said that according to DOR, Turo
and other peer-to-peer applications are liable for taxes, which
the department has tried to collect. She explained that the
quote referred to the state's previous attempts to collect car
rental tax.
9:00:41 AM
REPRESENTATIVE KAUFMAN expressed interest in hearing testimony
from TechNet.
9:01:32 AM
CO-CHAIR FIELDS noted that the committee would hear public
testimony and said, "I think that's a great idea. Let's reach
out to TechNet and let them explain why they shouldn't pay
taxes, but Alaskans should." He then opined that it "seems
pretty straightforward" that companies such as Turo are engaging
in tax evasion, and he asked Ms. Reynolds to what extent the
Department of Revenue has engaged with the Office of the
Attorney General to enforce tax payment.
9:01:54 AM
NICOLE REYNOLDS, Deputy Director, Tax Division, Department of
Revenue, responded that there was a case in Alaska Superior
Court several years ago during which the State of Alaska had
tried to subpoena Turo's records; however, the case was
dismissed.
9:02:45 AM
CO-CHAIR FIELDS announced that HB 90 was held over.