Alaska is Next Frontier for Economic Nexus

Alaska one of the few places without a state-level sales tax. There are however many independent cities and boroughs which administer and collect their own taxes. As many states across the country seek to reap the tax dollars now available due to the Wayfair decision, the localities in Alaska felt left out in the cold. At its core, the decision in Wayfair requires states imposing an economic nexus standard to do so in a way which does not place an undue burden on the seller. Unlike every other state which has enacted economic nexus rules, Alaska lacks any central body that could make local tax compliance reasonably manageable. However, this may soon change.

A group of interested municipalities in Alaska recently commissioned the drafting of the “Alaska Intergovernmental Remote Seller Tax Agreement.” This agreement will allow participating cities and boroughs to utilize a single, statewide (but not run by State government) sales tax administration system. The draft agreement allows Alaska localities to remain independent with respect to their treatment of sales within their local boundaries but would provide a uniform methodology and procedure for remote sellers and marketplace facilitators that have more than $100,000 in sales or 100 transactions into Alaska annually. Whether cities will flock to join (some already have) remains to be seen.

This draft agreement is merely a preliminary step in the process of Alaska joining the rest of the states currently collecting tax based on economic nexus. Sovos will continue to track the progress being made towards those ends.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Erik Wallin

Erik Wallin is a Senior Tax Counsel on the Tax Research Team at Sovos Compliance. Erik has been with Sovos Compliance since 2011, and his main areas of focus are on U.S. Transaction Tax Law which includes special expertise in the taxation of technology and the taxation mechanisms that apply throughout the Colorado home rule jurisdictions. Erik is a member of the Massachusetts Bar, has a B.A. from York College of Pennsylvania, a J.D. from New England School of Law, and an LL.M. in Taxation from Boston University.
Share This Post