Alaska’s governor has vetoed a bill intended to clarify the rental car tax collection process for Alaskans who put up their vehicles for rent on Turo and similar car-sharing applications.
The Alaska Department of Revenue has said that Turo is subject to the state’s 10% sales tax on rental cars, the same as Avis, Hertz and other companies that own and rent cars. But Turo has argued that users, not the company itself, are liable for collecting the tax.
The state unsuccessfully sued Turo six years ago in an attempt to find out how much tax revenue the state is owed. Since then, the state has occasionally garnished Turo proceeds from the bank accounts of Alaskans who rent their cars but, generally, the rentals go untaxed.
Senate Bill 127, from Anchorage Sen. Matt Claman would have resolved the dispute by making clear in state law that Turo is in charge of collections from rentals on its platform. As a comprise, the bill would have set the rate at 8% for Turo-like rentals, lower than what is charged on other rentals.
That bill passed the House and Senate by wide, bipartisan margins, but the legislative consensus did not sway the governor.
“Unnecessary taxation of a new and growing industry is bad public policy,” the governor wrote in his veto message, issued Sept. 3. “Accordingly, I have vetoed the bill.”
The act means the long-running dispute between the state and Turo is unresolved. The Department of Revenue, expecting passage of the bill, had suspended tax collections from Turo users in 2023. The agency did not immediately respond to a question asking about the current status of the tax.
Claman said he was disappointed by the governor’s decision. Claman said the bill had included a liability shield for back taxes owed by Turo users. With the veto, Alaskans are still liable for those unpaid taxes, and the state could go after them.
“The problem doesn’t go away, and so I’ll certainly be looking to reintroduce the legislation,” Claman said. “We worked with the Department of Revenue as well as Turo and local rental companies to reach an agreement that worked for everybody.”
The veto was Dunleavy’s eighth for a policy bill in 2024 and 13th since being elected in 2018.
The Alaska Beacon is an independent, donor-funded news organization. Alaskabeacon.com.
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