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 127'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 123 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.]