Borough continues to gain in online sales tax revenues

Since first beginning to collect sales tax on online orders sold by out-of-town merchants such as Amazon in 2020, the borough continues to see an increase in revenues.

In fiscal year 2021, which ended last June 30, the borough collected $180,000 in sales tax from what are called remote sellers, said Mason Villarma, the borough’s finance director. The finance department projects $200,000 in such sales tax revenues for fiscal year 2022, which ends June 30.

At $200,000, the revenues would be about 7% of Wrangell’s total sales tax collections this fiscal year.

The new revenues come through the Alaska Remote Sellers Sales Tax Commission, a statewide effort established by the Alaska Municipal League to ensure remote retailers collect and remit the correct taxes. Wrangell was one of the initial 15 members.

By working together and sharing the costs, the intent is that participating cities and boroughs can collect more than they could earn on their own.

“We currently have 49 cities, boroughs and municipalities that have joined the commission,” Clinton Singletary, statewide municipal sales tax director at the Alaska Municipal League, said Monday.

The first collections under the AML program were in February 2020, after a U.S. Supreme Court ruling in June 2018 allowed states and municipalities to enforce their sales tax codes on out-of-town sellers, such as Amazon and other online, mail-order, phone or catalog merchants.

The Wrangell borough collected $30,581 in fiscal year 2020, reflecting the short period the new rules were in effect that year.

All sales tax revenues are allocated per Wrangell’s municipal code, Villarma said. The general fund receives 68% of the money, heath, sanitation and education receive 28%, and 4% goes to street paving.

Brittani Robbins, executive director at the Wrangell Chamber of Commerce, said collecting tax from online sales is “a really important thing.” Supporters have long argued that collecting sales tax on goods shipped into town lessens an incentive for shoppers to avoid local merchants.

“I think it’s a good thing to tax purchases online and remit it to the city,” Robbins said.

”There was an attempt a few years ago to raise the city sales tax. There has to be a way for us to supplement as a city,” she said. “Collecting city sales tax, especially on those big sales, it’s vital for the city and borough of Wrangell.”