The borough assembly unanimously approved ordinances to update the sales tax code and create an exemption from the tax for small-time handicraft sellers and hobbyists, and also establish a business license program.

The sales tax ordinance, adopted at the May 12 meeting, targets collecting the tax from online sellers, particularly out-of-town companies that market tours and “travel and adventure services” in Wrangell.

“Overall, this ordinance modernizes the borough’s sales tax code to reflect current economic activity, particularly in service-based and tourism-driven sectors,” according to the staff report prepared for the assembly.

The purpose is to ensure that the borough does not miss out on any tax revenues from online sales and travel services, which would be taxed the same as if the sales office were located in Wrangell.

Under the second ordinance approved May 12, every person or company selling goods or services within the borough — ranging from traditional storefronts to mobile vendors and online sellers — must now obtain and maintain a Wrangell business license, separate from any state business license.

While the licenses must be renewed every two years, the assembly included an initial “good faith” provision: Businesses currently in good standing with their sales tax reporting can receive their first license in 2026 at no cost. The license requirement will start July 1, 2026.

The assembly will set the license fee for July 2027 at a later date.

“We just want everybody to get a business license,” Borough Manager Mason Villarma told the assembly. “It doesn’t cost anybody, but we just want to maintain a record of who’s doing (business) and to keep a fair and equitable playing field.”

IRS-recognized nonprofit organizations and churches are exempt from the business license requirement but still are required to collect sales taxes.

Children under the age of 18 can obtain a no-cost “license for juveniles.” But they are exempt from collecting sales tax if they “personally engage in occasional or temporary sales of goods” not on behalf of a business, such as nonprofit fundraising sales.

The sales tax ordinance provides a new exemption from collecting the 7% tax for anyone with less than $500 in revenue from sales or services for the quarterly (three-month) reporting period. The intent is to eliminate collecting and reporting chores on extremely low-volume hobbyists, though they would still be required to obtain a business license.

In addition to exempting low-volume craftspeople from collecting the tax, the ordinance says anyone selling goods or services three days or less over the course of an entire year is exempt from the tax requirement.

A significant portion of the hearing focused on the impact these changes would have on the borough’s nonprofit sector. St. Frances Animal Rescue representative Joan Sargent urged the assembly to reconsider language limiting the tax-collection exemption to nonprofit activities that last three days or less.

“When you run on a really tight (budget) ... taking in animals cost us between $400 and $800 to get altered and vaccinated,” Sargent said, noting that even successful fundraising through community markets often yields less than $500 in profit. “Those thin margins ... it’s just not enough.”

Sargent emphasized that groups like The Salvation Army, Little League and youth wrestling programs are “essential” to the community and often rely on fundraising events that exceed the three-day limit, which could make them subject to collecting sales tax.

The tax-reporting waiver threshold applies to $500 in revenues, not profit.

In response to these concerns, Villarma recommended an amendment to the ordinance. The assembly gave the manager the authority to adjust the language to ensure that nonprofit fundraising activities remain tax-exempt, moving them under a specific section of the code to protect the groups’ “essential” status.

“I think we could just (add) animal shelters as proposed,” Villarma said of the exemption.

In amending some of the enforcement provisions of municipal code, the borough now has the authority to revoke a business license if taxes are not submitted within 45 days.

By the close of the meeting, the assembly signaled that the era of “handshake” business oversight had transitioned into a more structured, modern system. The goal, officials noted, is not to burden the small seller, but to ensure that the borough’s revenue system reflects the current economic reality of a service- and tourism-driven economy.