05/02/2025 09:00 AM Senate FINANCE

SENATE BILL NO. 138                                                                                                           
                                                                                                                                
     "An Act relating to vehicle rental taxes; relating to                                                                      
     the issuance of subpoenas related to tax records; and                                                                      
     providing for an effective date."                                                                                          
                                                                                                                                
9:03:33 AM                                                                                                                    
                                                                                                                                
CARLY  DENNIS, STAF,  SENATOR  MATT  CLAMAN, introduced  the                                                                    
legislation.                                                                                                                    
                                                                                                                                
Co-Chair Stedman asked for a history of the issue.                                                                              
                                                                                                                                
Ms. Dennis replied  stated that the bill had  been around in                                                                    
various forms over the last five years.                                                                                         
                                                                                                                                
9:07:52 AM                                                                                                                    
                                                                                                                                
SENATOR  MATT CLAMAN,  SPONSOR (via  teleconference), stated                                                                    
that  the  bill had  been  copied  initially from  the  year                                                                    
prior, but the Labor and  Commerce Committee changed it to a                                                                    
flat fee of 9 percent for all rentals.                                                                                          
                                                                                                                                
Senator Cronk queried the expected increase in tax revenue.                                                                     
                                                                                                                                
Ms. Dennis  replied that the  fiscal note  was indeterminate                                                                    
because the Department  of Revenue (DOR) was  unaware of how                                                                    
many people were using the platforms.                                                                                           
                                                                                                                                
Co-Chair  Hoffman remarked  that the  fiscal note  was still                                                                    
forthcoming.                                                                                                                    
                                                                                                                                
Senator  Kiehl remarked  that Anchorage  a similar  law, and                                                                    
wondered about the impact on their tax collections.                                                                             
                                                                                                                                
Ms.  Dennis   replied  that,  discounting  the   year  2020,                                                                    
Anchorage  had seen  approximately  $9 million  a year  from                                                                    
vehicle rental tax revenue.                                                                                                     
                                                                                                                                
9:10:04 AM                                                                                                                    
                                                                                                                                
Senator  Kiehl wondered  whether Anchorage  had changed  its                                                                    
tax rate when it initiated the vehicle rental tax.                                                                              
                                                                                                                                
Ms. Dennis replied that they did not.                                                                                           
                                                                                                                                
Senator Kiehl  surmised that the  bill introduced a  tax cut                                                                    
that raised more revenue.                                                                                                       
                                                                                                                                
Ms. Dennis agreed with that statement.                                                                                          
                                                                                                                                
Co-Chair  Stedman stated  that  he had  a  question for  the                                                                    
deputy tax director.                                                                                                            
                                                                                                                                
Senator Merrick wondered whether it was a new tax.                                                                              
                                                                                                                                
Ms. Dennis replied that it was not.                                                                                             
                                                                                                                                
Co-Chair Stedman  wondered whether the tax  was currently in                                                                    
place,  and queried  the  constitutional  provisions of  the                                                                    
tax.                                                                                                                            
                                                                                                                                
9:11:17 AM                                                                                                                    
                                                                                                                                
BRANDON  SPANOS, DEPUTY  DIRECTOR, TAX  DIVISION, DEPARTMENT                                                                    
OF  REVENUE, ANCHORAGE  (via  teleconference), replied  that                                                                    
the tax was overly broad, and  stated that it was imposed on                                                                    
the   individual  renting   the  vehicle   with  the   owner                                                                    
collecting and  remitting the tax.  He stated the  tax would                                                                    
apply  to  vehicles rented  through  the  platform, but  the                                                                    
platforms were not cooperating with the tax information.                                                                        
                                                                                                                                
Co-Chair   Stedman  requested   the   letters  and   dollars                                                                    
collected.   He  was   concerned   about  the   departments                                                                     
constitutional obligation to collect the taxes.                                                                                 
                                                                                                                                
9:15:07 AM                                                                                                                    
                                                                                                                                
Co-Chair Hoffman asked about a  timeframe from the committee                                                                    
to receive the requested communications.                                                                                        
                                                                                                                                
Mr.  Spanos replied  that he  could provide  the information                                                                    
within the week.                                                                                                                
                                                                                                                                
9:15:40 AM                                                                                                                    
                                                                                                                                
Co-Chair Hoffman asked that they be submitted by Wednesday.                                                                     
                                                                                                                                
Co-Chair  Stedman  asked  for the  details  related  to  the                                                                    
letters.                                                                                                                        
                                                                                                                                
Senator  Kiehl  recalled  that there  would  be  information                                                                    
received  by the  Department of  Revenue  (DOR) which  would                                                                    
give information  about individuals renting the  cars on the                                                                    
platforms. He  noted that the  bill stopped DOR  from acting                                                                    
retroactively. He  wondered how many Alaskans  might receive                                                                    
a letter about what they owe in back taxes.                                                                                     
                                                                                                                                
Mr.  Spanos  replied  that  the IRS  had  the  authority  to                                                                    
request a 1099-K  from the platform that  issued payments in                                                                    
excess of $600 to their customers.                                                                                              
                                                                                                                                
9:20:19 AM                                                                                                                    
                                                                                                                                
Senator   Kiehl  felt   that  the   policy  should   be  set                                                                    
legislatively.                                                                                                                  
                                                                                                                                
Senator  Claman stated  stressed  that  there were  existing                                                                    
obligations within statute to enforce law                                                                                       
                                                                                                                                
9:21:57 AM                                                                                                                    
                                                                                                                                
NICOLE STEWART, SELF,  FAIRBANKS (via teleconference), spoke                                                                    
in support of the bill.                                                                                                         
                                                                                                                                
Co-Chair Hoffman wondered how the taxes were being paid.                                                                        
                                                                                                                                
Ms. Stewart replied  that she had not received  a letter and                                                                    
did not know who to pay the taxes.                                                                                              
                                                                                                                                
Co-Chair  Hoffman wondered  whether the  taxes would  be set                                                                    
aside.                                                                                                                          
                                                                                                                                
Ms. Stewart replied that she was not setting money aside.                                                                       
                                                                                                                                
9:24:18 AM                                                                                                                    
                                                                                                                                
CLAIRE    HOLLAND    LECLAIRE,    SELF,    ANCHORAGE    (via                                                                    
teleconference), spoke in support of the legislation.                                                                           
                                                                                                                                
9:26:17 AM                                                                                                                    
                                                                                                                                
Co-Chair Hoffman OPENED public testimony.                                                                                       
                                                                                                                                
Co-Chair Hoffman CLOSED public testimony.                                                                                       
                                                                                                                                
Co-Chair Hoffman noted that the Department of Natural                                                                           
Resources (DNR) needed to provide a fiscal note.                                                                                
                                                                                                                                
Senator Claman thanked the committee for hearing the bill.                                                                      
                                                                                                                                
SB 138 was HEARD and HELD in committee for further                                                                              
consideration.