Alaska is Next Frontier for Economic Nexus - Taxify

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.

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