03/12/2025 03:15 PM House LABOR & COMMERCE

          HB 123-TAXATION: VEHICLE RENTALS, SUBPOENAS                                                                       
                                                                                                                                
4:35:48 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FIELDS announced that the  final order of business would                                                               
be HOUSE BILL NO. 123, "An  Act relating to vehicle rental taxes;                                                               
relating to  the issuance  of subpoenas  related to  tax records;                                                               
and providing for an effective date."                                                                                           
                                                                                                                                
4:35:58 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KEVIN  MCCABE, Alaska State Legislature,  as prime                                                               
sponsor, gave the  sponsor statement for HB 123  [included in the                                                               
committee  file], which  read  as  follows [original  punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
     HB 123 fixes Alaska's  broken vehicle rental tax system                                                                    
     with  a  smarter,  fairer  approach.  The  state's  10%                                                                    
     excise tax on  passenger vehicle rentalsincluding  Turo                                                                    
     rentalshas   sparked   confusion  and   legal  battles,                                                                    
     leaving everyday  Alaskan hosts to fend  for themselves                                                                    
     while  platforms  like  Turo avoid  collection  duties.                                                                    
     Last year, Senate Bill 127 tried to clarify this by                                                                        
     requiring platforms to  collect an 8% tax  and remit it                                                                    
     to  the Department  of Revenue,  while shielding  hosts                                                                    
     from retroactive  penalties. It passed  with bipartisan                                                                    
     support, but  Governor Dunleavy vetoed it,  leaving the                                                                    
     issues unresolved. HB 123 steps in with a better plan.                                                                     
                                                                                                                                
     This  bill  cuts  the  tax  from  10%  to  9%  for  all                                                                    
     passenger vehicle  rentals and cuts it  even further to                                                                    
     7% for other vehicle  rental platform companies such as                                                                    
     Turo  and  Getaround  lower  rates  than  SB 127's  8%,                                                                    
     delivering bigger  savings for renters  and businesses.                                                                    
     It protects  vehicle rental  platform company  hosts by                                                                    
     blocking the  Department of  Revenue from  chasing back                                                                    
     taxes  on prebill  rentals,  ending unfair  enforcement                                                                    
     like bank  garnishments. Vehicle rental  platforms must                                                                    
     now  collect  and  remit   the  tax,  streamlining  the                                                                    
     process  without  burdening non-platform  rentals  like                                                                    
     those on Craigslist or Facebook Marketplace.                                                                               
                                                                                                                                
     HB 123  resolves the  legal gray  area that  has pitted                                                                    
     the   state  against   platforms  such   as  Turo   and                                                                    
     Getaround,   aligns   state    and   local   taxeslike                                                                     
     Anchorage's 8%for   consistency, and  supports Alaskans                                                                    
     earning  extra income.  It's a  practical reboot  of SB
's  intent, with  lower taxes,  less  red tape,  and                                                                    
     real  relief.   This  is   a  win   for  affordability,                                                                    
     competition, and  fairnessa  system built  for Alaska's                                                                    
     future.                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MCCABE  further  noted  that  the  Department  of                                                               
Revenue (DOR) sued  Turo several years ago, and as  a result, the                                                               
judge  rules  that Turo  cars  and  rental cars  were  "similarly                                                               
situated."    He   further  noted  that  owed   taxes  amount  to                                                               
approximately  $4,000-$6,000 among  as  many as  1,500 people  in                                                               
Alaska.                                                                                                                         
                                                                                                                                
4:41:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  BURKE asked  whether the  litigation between  DOR                                                               
and Turo was current.                                                                                                           
                                                                                                                                
4:42:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MCCABE  stated  that  he was  not  aware  of  any                                                               
current  court cases.    He further  stated that  DOR  put out  a                                                               
notice that the taxes must be collected.                                                                                        
                                                                                                                                
4:42:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER noted that  the proposed legislation would                                                               
put the  onus to collect  taxes on the Turo  application ("app").                                                               
He asked whether Turo collected taxes in other jurisdictions.                                                                   
                                                                                                                                
4:42:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MCCABE  replied that  the Turo  app does  have the                                                               
ability to collect taxes through the app.                                                                                       
                                                                                                                                
4:42:59 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CARRICK offered her support  for the intent of the                                                               
legislation,   particularly   the    avoidance   of   retroactive                                                               
penalties,  which  she  remarked   would  be  very  difficult  to                                                               
collect.   She  remarked  that she  found  the differential  rate                                                               
between Turo  versus regular car  companies frustrating,  as Turo                                                               
"has every  ability ... to  pay and remit  this tax as  any other                                                               
car company."  She asserted that,  ultimately, the tax is paid by                                                               
the  end-user,  not  the  person renting  out  cars  through  the                                                               
platform.  She  queried the reason for the  differential rate and                                                               
suggested lowering all the taxes uniformly.                                                                                     
                                                                                                                                
4:44:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MCCABE  identified  the protection  of  users  in                                                               
Alaska  from  retroactive  taxes  as  his  primary  goal  of  the                                                               
proposed legislation.   He  stated that it  was unknown  how much                                                               
money Turo would bring in  [through taxes] and reminded committee                                                               
members that the tax goes towards the state parks.                                                                              
                                                                                                                                
4:45:20 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FIELDS clarified that about  half of the tax goes toward                                                               
the  Department of  Transportation (DOT)  and about  half of  tax                                                               
goes towards  the state  parks.   He likened the  tax to  a "user                                                               
fee."                                                                                                                           
                                                                                                                                
4:45:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MCCABE further noted  that the percentage under HB
 was  negotiated and agreed  upon by the rental  car companies                                                               
and  by Turo.   He  remarked that  he did  not particularly  care                                                               
about the exact tax percentage.                                                                                                 
                                                                                                                                
4:46:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CARRICK  stated that she  found an issue  with the                                                               
differential  rate,   given  that   the  end-user  is   the  same                                                               
regardless of  the platform.   She further  stated that  Turo has                                                               
been evading taxes  in Alaska for many years.   She said that she                                                               
would  like to  see the  same tax  rate, but  that she  otherwise                                                               
supported the proposed legislation.                                                                                             
                                                                                                                                
REPRESENTATIVE  MCCABE  reminded  committee members  that  rental                                                               
recreational  vehicles  (RVs)  and  motorhomes  are  taxed  at  a                                                               
differential  rate of  3 percent.   He  stated that  Turo doesn't                                                               
consider themselves  a rental car company;  rather, they consider                                                               
themselves  a platform,  with  the  car-owner as  the  host.   He                                                               
offered his understanding that the  differential tax rate was the                                                               
rental car  companies' recognition  of Turo  as lacking  a brick-                                                               
and-mortar store.                                                                                                               
                                                                                                                                
REPRESENTATIVE CARRICK commented that Amazon was not a store.                                                                   
                                                                                                                                
4:47:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  COULOMBE asked  for confirmation  that Turo  does                                                               
not pay taxes.                                                                                                                  
                                                                                                                                
REPRESENTATIVE MCCABE replied yes.                                                                                              
                                                                                                                                
REPRESENTATIVE COULOMBE  asked what  would happen  if HB  123 did                                                               
not become law.                                                                                                                 
                                                                                                                                
REPRESENTATIVE MCCABE offered his belief that the State of                                                                      
Alaska would try to collect tax.  He offered his belief that                                                                    
some Turo hosts are finding a way to collect the tax.                                                                           
                                                                                                                                
4:48:45 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FIELDS discussed amendment deadlines.                                                                                  
                                                                                                                                
[HB 123 was held over.]