Do you need to collect and remit sales tax in Alaska?
Understanding the landscape of sales taxes in Alaska comes down to knowing local regulations. While the state itself does not impose sales tax, numerous local governments do.
Each local municipality has individual sales tax ordinances. Although these vary, some consistencies exist throughout. For example, if you own a business in an Alaska city or borough that imposes a sales tax, you are expected to register and report all sales directly to that jurisdiction. For vendors outside of the state, or those without a physical location in Alaska, sales tax must be collected and sent to the relevant locations if they exceed specific economic thresholds (this is explained in further detail in the next section).
If you’re uncertain about the taxability of your sales or services in Alaska, you should reach out to local government bodies you’re associated with. Find helpful contact details here.
Do you have sales tax nexus in Alaska?
Sales tax functions differently across the states, but almost all of them of use ‘sales tax nexus’ to help sellers understand their specific responsibilities. There are two primary types: physical and economic.
Let’s dive into their unique characteristics and determine how they might be relevant to your business operations.
Physical sales tax nexus in Alaska
Physical sales tax nexus is centered around the idea of a tangible presence in an area. This can take various forms in Alaska, such as an office, warehouse, storefront, inventory, service or sales agents, or the rental of equipment and tangible property.
One notable distinction between Alaska and other states is that physical presence is established with a specific municipality, rather than across the entire state. For example, if a company operates within an Alaskan city or borough that doesn’t impose sales tax, they won’t need to collect tax. Conversely, if a company has a physical presence within an Alaskan jurisdiction that does impose sales tax, they must register and report all sales within that area.
For those businesses with a physical presence in Alaska who also engage in sales remotely to other parts of the state, the rules are a little bit different. These businesses will need to separate their revenue streams, reporting sales made within the physical location to the appropriate jurisdiction. They should also determine if their remote sales volume or transaction count surpasses the economic nexus thresholds in other locations they sell to, potentially triggering further tax obligations.
Economic sales tax nexus in Alaska
Economic nexus applies to vendors who have no physical presence in Alaska yet engage in remote sales within the state.
Alaska has set up uniform thresholds enforced by all municipalities, which lean on one of two criteria:
- Accumulated gross sales to Alaska equaling or surpassing $100,000 within the previous calendar year, or
- Over 200 separate transactions sourced to Alaska in the previous calendar year.
To establish economic nexus in Alaska, a seller only needs to meet one of these thresholds.
Determining economic nexus accurately requires out-of-state sellers lacking physical presence in Alaska to consolidate all sales rooted in Alaska. This includes sales made through marketplace facilitators and to locations that don’t impose sales tax.
In contrast, Alaska-based sellers catering to various parts of the state assess economic nexus based solely on remote sales. While marketplace facilitator sales are excluded in their determination, they do include sales made to non-taxable destinations.
Are marketplace facilitators required to collect and remit sales tax in Alaska?
As a stakeholder in Alaska’s retail scene, it’s imperative to recognize the different fiscal obligations that apply to marketplace facilitators and marketplace sellers.
Responsibilities of Marketplace Facilitators
Marketplace facilitators adhere to the same economic thresholds as any remote seller. Either grossing sales of $100,000 or 200 separate transactions routed to Alaska in the previous calendar year triggers economic nexus. This includes sales from all sellers on their platform.
Marketplace facilitators with economic nexus are expected to collect and remit sales tax on behalf of all marketplace sellers making sales within Alaska via their platform.
Responsibilities of Marketplace Sellers
On the other side, marketplace sellers—businesses selling goods on a marketplace—may have sales tax responsibilities depending on their operational model.
If a marketplace seller conducts all its sales via a facilitator, there is no need to register for the collection of sales tax in Alaska. However, they must complete the Marketplace Seller Affidavit, thereby formally acknowledging that they bear no sales tax obligations in Alaska.
Retailers conducting sales both through a marketplace and their own company website must account for all Alaska-routed sales in their economic threshold calculations, regardless of the end consumer’s destination or taxability status. In this situation, if the seller meets the economic nexus thresholds, they are tasked with collecting and remitting sales tax on all non-marketplace sales within Alaska. Any sales made within the marketplace should be excluded from their tax reporting.
What platforms are marketplace facilitators?
What is a marketplace facilitator?
A marketplace facilitator, sometimes referred to as a Multivendor Marketplace Platform (MMP), is an online platform that allows customers to purchase goods or services from various vendors in one convenient location. These platforms can benefit businesses by increasing product visibility and attracting a larger customer base. Additionally, marketplace facilitators often have the legal responsibility to collect and remit sales tax on behalf of sellers, which can help ease the sales tax burden for businesses.
Filing Alaska Sales Tax
Filing sales tax in Alaska requires a clear understanding of the registration process, applicable tax rates, and proper filing procedures. These procedures can vary depending on whether you’re an in-state or remote seller.
The journey of sales tax collection and filing starts with registration with the state or relevant locations. If you’re a business located within a taxable municipality in Alaska, you need to contact your respective location for information on obtaining a sales tax permit and how to register.
Remote Sellers Registration
Remote sellers enjoy a streamlined process in Alaska. There’s no need to register with multiple locations. Thanks to the Alaska Remote Sellers Sales Tax Commission Portal, remote sellers can use a single application to register for all taxable Alaska locations.
Sales Tax Collection
When collecting sales tax, make sure to do so based on the location where the buyer receives the product or service. For instance, Alaska-based sellers with customers who visit their location will apply sales tax pertinent to that municipality’s rate. Remote sellers or those who make deliveries should apply sales tax based on the delivery location.
Sales Tax Filing
The method of filing your Alaska sales tax is primarily influenced by whether you are registered as an in-state or a remote seller. In-state retailers registered with a specific municipality must refer to their stipulated filing regulations. On the other hand, remote sellers who register via the Commission Portal must file electronically.
When are sales tax returns due in Alaska?
Sales tax filing frequencies and return due dates in Alaska are unique in that they are not standardized at the state level, but rather determined by local jurisdictions.
When a business registers with a particular municipality, that municipality supplies the timeline for tax filing and the corresponding due dates. This schedule will guide your regular tax filing processes.
Remote sellers default to a monthly filing schedule, although the option for quarterly filing is available upon receiving approval from the Commission. Regardless of whether the filing frequency is monthly or quarterly, the due date is always the last day of the month following a reporting period.
Remember: a sales tax return is necessary to file even if there have been no transactions during the reporting period. This ensures consistent communication and accurate record-keeping with tax authorities, thereby promoting accountable and compliant business practices.