Chapter 4.50
SALES TAX

Sections:

4.50.010    Declaration of sales tax policy.

4.50.020    Definitions.

4.50.030    Levy.

4.50.040    Delivery charges.

4.50.050    Employees/subcontractors.

4.50.060    Multijurisdictional services.

4.50.070    Duty of seller to collect.

4.50.080    Registration.

4.50.090    Certificate displayed.

4.50.100    Certificate nonassignable.

4.50.110    Injunction prohibiting operation of business for failure to register or failure to remit returns.

4.50.120    Tax added to sales price.

4.50.130    Resale certificates – Misuse.

4.50.140    Tax schedule.

4.50.150    Unlawful for seller to fail to collect.

4.50.160    Taxes due.

4.50.170    Obligation to remit taxes.

4.50.180    Duty to keep books – Investigation.

4.50.190    Penalty and interest on delinquent taxes.

4.50.200    Protest of tax.

4.50.210    Forgiveness of uncollected taxes, penalties and interest.

4.50.220    Sale of business – Final return – Liability of purchaser.

4.50.230    Exemptions.

4.50.240    Sales tax exemption for residents sixty-five (65) years of age.

4.50.250    Unlawful to misrepresent exemptions.

4.50.260    Use of funds.

4.50.270    Fee schedule established by resolution.

4.50.280    Regulations authorized.

4.50.290    Appeals.

4.50.300    Clerical errors or omissions – Refund of sales tax – Penalty and interest.

4.50.310    Residence construction tax exemption.

4.50.320    Sales tax liens.

4.50.330    Amended returns, recovery of costs.

4.50.340    Sales tax holiday.

Prior Legislation – Ord. No. 240A, §§1, 2.

O.B.A. – Refund of taxes overpaid in error, 73-7; applicability to independent insurance adjusters, 73-8; collection of city and borough sales tax by borough rather than the city, 72-15; liability of air taxi operator, 73-25; liability of firm which produces product in borough but solicited sales outside the borough, 73-26; city sales tax delinquency of National Bank of Alaska and First National Bank of Ketchikan, 74-10.

State Law Reference – Borough sales and use taxes, AS 29.45.650, 29.45.670.

4.50.010 Declaration of sales tax policy.

(a)    It is the policy of the Ketchikan Gateway Borough to recognize that:

(1)    The voters of the Ketchikan Gateway Borough have granted to the borough government the power to levy sales taxes and, by doing so, have entrusted the borough to administer those taxes fairly, effectively, efficiently, and in full compliance with State and borough laws.

(2)    State law imposes a fiduciary duty upon the Ketchikan Gateway Borough to collect sales taxes levied by the city of Ketchikan and the city of Saxman.

(3)    Proceeds from the sales taxes levied by the Ketchikan Gateway Borough, city of Ketchikan, and city of Saxman (“Ketchikan area local governments”) constitute, by far, the principal sources of municipal tax revenues for each of the three Ketchikan area local governments.

(4)    Significant portions of the borough sales taxes are dedicated to capital funding and debt service for public schools, aquatic center, and recreational facilities, while the remainder is used to fund other core services and facilities provided by the borough.

(5)    A substantial portion of the proceeds of the sales taxes levied by the city of Ketchikan is dedicated to funding the Ketchikan hospital, while the remainder of those taxes and the sales taxes levied by the city of Saxman are used to fund essential services and facilities provided by the city of Ketchikan and the city of Saxman.

(6)    Any sales taxes levied by the three Ketchikan area local governments that are not properly collected and remitted diminish the fiscal resources available to fund school facilities, the Ketchikan General Hospital, borough recreational facilities, and other core local governmental services and facilities of the three Ketchikan area local governments.

(7)    Any sales taxes that are not properly collected and remitted shift the financial burden of funding local governmental facilities and services to property taxpayers and others.

(8)    To the extent, if any, that businesses do not collect and remit taxes on taxable sales, those businesses have a distinct and unfair competitive advantage over businesses that are properly collecting and remitting sales taxes.

(9)    Sales taxes are paid by purchasers of goods and services, not the businesses that collect those taxes. To the extent, if any, that sales taxes are collected but not remitted by businesses, the trust obligations of those businesses are not being fulfilled, and the interests of the greater community of Ketchikan suffer.

(10)    Ketchikan area businesses perform a valuable service to the three Ketchikan area local governments by collecting and remitting sales taxes. While not compensated directly for that service, those businesses and other property owners in Ketchikan enjoy the benefit of more than $210,000,000 in optional property tax exemptions enacted by the assembly (including the complete exemption from ad valorem taxes of business inventories, commercial fixtures, equipment, and all other personal property). At rates in effect at the time of the adoption of these policies, those exemptions saved property taxpayers more than $1,200,000 in borough areawide property taxes alone on an annual basis, and many thousands of additional dollars with respect to borough nonareawide levies and borough service area levies. Optional exemptions approved by the city of Ketchikan council save taxpayers within the boundaries of that government roughly an additional $1,000,000 annually.

(11)    It is the duty, function, and responsibility of the borough finance director as head of the borough finance department to collect borough and city sales taxes, along with penalties and interest on those taxes when due, to issue citations for violations of the borough code regarding collection of sales taxes, and otherwise administer the collection of sales taxes.

(12)    It is the duty and responsibility of the borough manager to supervise and control, directly and indirectly, the finance department and all other administrative departments, agencies, officers, and all other employees of the borough except the borough clerk, borough clerk’s office, borough attorney, and borough attorney’s office.

(13)    The borough assembly has exercised its legislative and policy making functions relating to the levy and collection of sales taxes by enacting laws governing these matters.

(14)    The borough manager and finance director are charged with carrying out the administration of the borough’s sales tax in a manner that is fair, effective, efficient, and in compliance with the laws of the state of Alaska and the borough.

(15)    The borough manager and finance director are further charged with carrying out the fiduciary duties of the borough to collect the sales taxes levied by the city of Ketchikan and the city of Saxman.

(b)    Within the constraints outlined in the borough code, the borough manager shall keep the assembly regularly informed regarding the collection of borough sales taxes; the borough manager shall also keep the assembly, city of Ketchikan, and city of Saxman regularly informed regarding fulfillment of the borough’s fiduciary duty to collect sales taxes levied by city governments within the borough. [Ord. No. 1585, §2, 3-7-11. Code 1974 §45.20.001.]

4.50.020 Definitions.

For the purposes of this chapter, the following words and phrases have the meanings hereinafter respectively ascribed to them:

“Buyer” or “consumer” means and includes without limitation on the generality of the terms, every individual, receiver, assignee, trustee in bankruptcy, trust, estate, firm, co-partnership, joint venture, club, company, business trust, corporation, association, society, or any group of individuals acting as a unit, whether mutual, cooperative, fraternal, nonprofit or otherwise.

“Remuneration for services” means and includes the gross remuneration received for furnishing labor and materials for accomplishing a specified result, including travel and adventure services, and rentals of all types, including but not limited to rentals of equipment, buildings, lands and materials. It shall not be construed to include salaries or wages received by an employee from an employer; however, it shall include all fees received for rentals and services charged under the authority of Chapter 14.40 of the Ketchikan Municipal Code (harbor fees) and Ketchikan Municipal Code 13.08.100 and 13.08.110 (port dockage and wharfage charges).

“Retail sale” or “sale at retail” means any nonexempt sale of services, rentals, or tangible personal property made to a buyer who intends to use, consume, or receive the item or services purchased for his own personal use as the ultimate consumer with no intention to sell the item again, whether to be sold in the same form as received, or in some modified condition or form or after fabrication or use with some other substance or item. Notwithstanding any other provision of this chapter, arrangements made with another person or agent, including but not limited to a travel agent, broker, or other representative, regardless of the location of the travel agent, broker or representative, by a provider of services, rentals or goods, to market such services, rentals, or goods (including travel and adventure services), to provide such services, rentals or goods to another person, or the transfer to the buyer of the right or privilege to receive such services, rentals or goods, is a taxable sale by such provider, and such provider is a seller for the purposes of this chapter. Except as provided below or in KGBC 4.50.060 and 4.50.230, a retail sale or sale at retail is subject to sales tax if the sale occurs within the borough. Without limiting the generality of the foregoing, the following more specific examples in subsections (1) through (5) of this definition are provided to clarify application of this section.

(1)    Where the physical location of the business is within the borough, the sale is subject to the borough’s sales tax. In the event that the seller has no fixed place of business but is conducting business within the borough, the tax will be based on the location where the property is being delivered or the work is being conducted.

(2)    The sale of property or services in the borough is considered subject to sales tax if the seller maintains any office, distribution or sales house within the borough.

(3)    A real estate rental is subject to sales tax.

(4)    Where a buyer receives a service within the corporate limits of the borough the sale is subject to borough sales taxes.

(5)    A person who furnishes proof, in the form required by the borough revenue collector, that he has paid a sales tax to a jurisdiction outside of the borough on the sale of services, rentals, or tangible personal property, is required to pay the borough’s sales tax only to the extent of the difference between the amount of the sales tax so paid to a jurisdiction outside of the borough and the amount of the sales tax levied by the borough. This subsection applies to a sales tax levied in any taxing jurisdiction, whether in or outside the state of Alaska.

“Sale for resale” means the sale of tangible personal property to a buyer whose principal business is the resale of the property whether in the same or an altered form and who holds a valid resale certificate issued by the Ketchikan Gateway Borough. Sale for resale also means the provision of services to a broker whose principal business is the resale of those services to an ultimate consumer and who holds a valid resale certificate issued by the Ketchikan Gateway Borough. Resale certificates do not apply to: travel and adventure services if the sale is to a person who would be entitled to claim the exemption provided by KGBC 4.50.230(v); or supplies purchased by travel and adventure service providers, hotels/motels, lodges, apartment/house rentals, or bed and breakfasts which are not separately charged to the consumer when resold.

“Sales price” means and includes the consideration, whether money, credit, rights, or other property expressed in terms of money paid or delivered by a buyer to a seller, all without any deduction on account of the cost of property sold, the cost of materials used, labor costs, discount, delivery costs, or any other expenses whatsoever paid or accrued, and without any deduction on account of losses.

“Sales tax” means and includes the tax herein levied on gross revenues derived from all taxable commercial retail sales, rentals and services, including sales of travel and adventure services, said revenues being computed in dollars and cents and the tax payable by the seller, the person performing the services, or the person receiving gross revenues from rentals, to the borough.

“Seller” means and includes every person making sales at retail, including travel and adventure services, to a buyer or consumer, whether as agent, broker or principal, and the term also means and includes persons performing services for remuneration as well as persons receiving gross revenues derived from rents.

“Single unit sale” means the sale of a separate, single item or service which is customarily sold, advertised, contracted for sale or sold in the normal course of business as a separate and single item or unit by a single unit of measurement (i.e., per gallon, ton, hour, day, week, month, foot, sack, yard, pound, piece, group, each, box, set, package, or other common unit of measurement). A single unit sale shall include a sale by contract, quote, bid or other lump sum amount only if the sale is based on and computed as a single bid, quote, sum, or package price rather than as an accumulation, sum or aggregation of prices of separately identifiable or separable unit prices as defined above. For purposes of package tours, every individual in the tour will count as a single unit; provided, however, that residential and commercial rent shall be computed on a unit of one (1) month, not based on square footage.

“Travel and adventure services” include, but are not limited to, tours and charters on land and water, guide services, admissions, lectures, transportation services (excluding air transportation), and the rental of lodging, aircraft, vehicles, watercraft, and equipment, including fishing, boating, camping and other tour or adventure related goods. Travel and adventure services also include sales of goods incidental or related to such services. [Ord. No. 1425, §1, 2-5-07; Ord. No. 1287, §1, 11-3-03; Ord. No. 1268B, §2, 11-17-03; Ord. No. 1138, §1, 6-5-00; Ord. No. 1112, §1, 8-2-99; Ord. No. 933, §1, 5-16-94; Ord. No. 854, §§1, 2, 5-4-92; Ord. No. 598, §1, 3-2-87; Ord. No. 547, §§1, 2, 11-18-85; Ord. No. 423A, §1 – 3, 7-19-82; Ord. No. 297, §2, 5-1-78; Ord. No. 240A, §2, 4-4-77. Code 1974 §45.20.005.]

4.50.030 Levy.

There is hereby levied, and the borough shall collect the following sales tax: a two and one-half percent sales tax upon rents, retail sales and services in the borough, except those hereinafter specifically exempted from the tax. [Ord. No. 1303, §1, 3-22-04; Ord. No. 1250, §1, 2-3-03; Ord. No. 1123, §§1, 2, 11-15-99; Ord. No. 870, §1, 7-20-92; Ord. No. 240A, §2, 4-4-77. Code 1974 §45.20.010.]

Editor’s Note – Ord. No. 1303, as amended by Ord. No. 1803, shall cease to be effective, and the one-half percent sales tax increase created by it shall be repealed, at 12:01 a.m. on January 1, 2027.

4.50.040 Delivery charges.

(a)    Delivery Charges. Delivery charges for services rendered for delivery of any personal property, goods or materials which delivery services both commence and terminate within the borough are subject to sales taxes.

(b)    Definition. “Delivery charges” shall mean and include any costs or charges imposed on the sale of freight services, shipping services, courier services, wharfage services, postal services, excepting postal delivery services rendered by the United States Postal Service, and any other services related to the delivery or transportation of any personal property, goods or materials of any nature whatsoever. [Ord. No. 423A, §4, 7-19-82. Code 1974 §45.20.011.]

4.50.050 Employees/subcontractors.

(a)    The remuneration paid by an employer in the form of wages or salary to an employee for the sale of services by such employee to the employer are not taxable under the provisions of this chapter. Sales of services by contractors or subcontractors and any other type of sale of a service by a person other than an employee are taxable unless specifically exempted.

(b)    A person shall be deemed to be an employee under the provisions of this chapter if the person claiming to be an employer is withholding a portion of such person’s wages or salary in accordance with federal income tax laws and regulations. In the event no amounts are being withheld, it shall be presumed such person is not an employee unless the person claiming to be his employer submits clear and convincing evidence establishing the person’s status as an employee. [Ord. No. 423A, §§5, 7, 7-19-82. Code 1974 §45.20.012.]

4.50.060 Multijurisdictional services.

(a)    All services which either commence or terminate within the borough, or which are in any part rendered, supplied or provided within the borough, shall be subject to sales tax, except as otherwise provided in this chapter.

(b)    Sightseeing charter services and shore excursions by land or water which are provided by a person in the business of providing such service and are either sold within the borough or begin or terminate within the borough are subject to sales tax under this chapter to the maximum extent permitted consistent with State and federal law. [Ord. No. 1429, §1, 2-5-07; Ord. No. 423A, §6, 7-19-82. Code 1974 §45.20.013.]

4.50.070 Duty of seller to collect.

The tax levied under the provisions of this chapter is primarily upon the buyers of said personal property, rentals, or services, but the tax is payable to the borough by the seller regardless of whether the seller has collected the same from the buyers. It is the duty of each seller to collect from the buyer or consumer the full amount of the sales tax payable on each taxable sale, service or rental, at the time the property sold is delivered, or when the rentals are collected. Every sale which is made within the borough, unless explicitly exempted by this chapter, or a subsequent ordinance, shall be presumed to be subject to the tax imposed hereunder in any action to enforce the provisions of this chapter. [Ord. No. 240A, §2, 4-4-77. Code 1974 §45.20.015.]

4.50.080 Registration.

(a)    A person, firm, partnership, corporation or other business entity shall file an application for registration with the finance department, on a form provided by the borough, upon the earliest to occur of either obtaining a State of Alaska business license to conduct business within the borough, or conducting any business within the borough. The complete application shall be returned to the finance department along with a copy of the business entity’s Alaska State business license. Registration will not be complete until all of these requirements have been met.

(b)    Each business entity shall be registered under the advertised name, and each separate business shall be registered under its own account. New businesses, or any business that is registering for the first time with the borough, will be required to file and transmit collected sales taxes monthly for a period of no less than six months. Upon expiration of this initial six months, the borough will determine if the business has complied with all provisions of this chapter before converting the business to quarterly reporting. This decision will be based on previous filings and is at the borough’s discretion. [Ord. No. 1468, §1, 2-19-08; Ord. No. 1301, §2, 3-15-04; Ord. No. 1268B, §1, 11-17-03; Ord. No. 1252, §2, 3-3-03; Ord. No. 1243, §1, 1-6-03; Ord. No. 1228, §1, 9-3-02; Ord. No. 1029A, §1, 5-5-97; Ord. No. 798, §1, 4-15-91. Code 1974 §45.20.016.]

4.50.090 Certificate displayed.

(a)    Upon receipt of a properly executed application indicating that all returns required to have been filed pursuant to this chapter by the applicant as seller or agent of any seller have been filed, and that all sales taxes required to have been remitted to the borough have been paid, along with a copy of the pertinent Alaska business license, the finance director shall issue without charge to the seller a certificate of registration. The certificate shall state the address of the place of business to which it is applicable, the applicable Alaska business license number, and shall authorize the seller to collect the tax.

(b)    The certificate must be prominently displayed at the place of business named in the certificate. A seller who has no regular place of business shall attach such certificate to his stand, truck or other merchandising device.

(c)    Where the application or borough records indicate that applicant is currently in violation of filing and remittance requirements of the borough’s sales tax provisions, the finance director may deny the application for registration until such time as applicant enters a binding agreement setting out a method by which full compliance will be attained.

(d)    Upon notification, the finance director shall issue a duplicate sales tax certificate to any seller whose certificate has been lost or destroyed. [Ord. No. 1228, §1, 9-3-02; Ord. No. 798, §2, 4-15-91. Code 1974 §45.20.017.]

4.50.100 Certificate nonassignable.

The certificate of registration is nonassignable and nontransferable and must be surrendered to the director of finance by the seller to whom it was issued upon its ceasing to do business within the borough. If there is a change in the form of organization such as from a single proprietorship to a partnership or a corporation, the admission or withdrawal of a general partner, or a change in seller’s agent for service, the seller making such change shall surrender his old certificate to the director of finance for cancellation. The successor seller is required to file a new application for a certificate of registration. Upon receipt of such application, properly executed, as provided in this chapter, a new certificate shall be issued to such successor seller. [Ord. No. 1765A, §2, 8-17-15; Ord. No. 798, §3, 4-15-91. Code 1974 §45.20.018.]

4.50.110 Injunction prohibiting operation of business for failure to register or failure to remit returns.

(a)    A proceeding may be filed by the borough in the superior court 15 days after providing notice either by hand delivery or by regular mail to any business which has failed to obtain its initial registration under this chapter requesting the issuance of an injunction prohibiting that business from continuing to conduct business.

(b)    A proceeding may be filed by the borough in the superior court 15 days after providing notice either by hand delivery or by regular mail to any business which has failed to file a return as required by KGBC 4.50.160, or which has filed a return but failed to remit payment, requesting the issuance of an injunction prohibiting that business from continuing to conduct business. [Ord. No. 1658A, §1, 3-18-2013; Ord. No. 798, §4, 4-15-91. Code 1974 §45.20.019.]

4.50.120 Tax added to sales price.

Sellers shall add said sales tax to the sales price, rental, or charge for services. Such sales tax is a debt from the buyer or consumer to the seller until paid, and the same is recoverable at law in the same manner as other debts. [Ord. No. 240A, §2, 4-4-77. Code 1974 §45.20.020.]

4.50.130 Resale certificates – Misuse.

(a)    The borough’s director of finance shall issue resale certificates to be utilized in purchases for resale which are exempt from sales tax due to the exception provided governing items for resale. Resale certificates shall be valid for a period of one year and shall be reissued annually by the borough upon determination that a seller has established compliance with the resale exemption described herein. Resale certificates shall be surrendered when the holder ceases doing business. Misuse of a resale certificate is a violation subject to penalty.

(b)    Misuse of a resale certificate shall constitute a violation and is punishable by a fine up to $500, plus costs of prosecution, in addition to civil action that may be pursued by the borough. [Ord. No. 1765A, §3, 8-17-15; Ord. No. 1607, §12, 10-3-11; Ord. No. 798, §5, 4-15-91. Code 1974 §45.20.022.]

4.50.140 Tax schedule.

(a)    Sellers who are not required to collect a sales tax for the city of Ketchikan, Alaska, but who are required herein to collect a sales tax for the borough, shall add the tax herein imposed to the rental, sales price or service charge in strict accordance with the following scale:

Sales

2.5% Tax

Under $0.25

$0.01

$0.25 to $0.74

$0.02

$0.75 to $1.24

$0.03

$1.25 to $1.74

$0.04

$1.75 to $2.24

$0.06

$2.25 to $2.74

$0.07

$2.75 to $3.24

$0.08

$3.25 to $3.74

$0.09

$3.75 to $4.24

$0.11

$4.25 to $4.74

$0.12

$4.75 to $5.24

$0.13

$5.25 and Over

Continue on the same scale.

(b)    Sellers who are required to collect a sales tax for the city of Ketchikan, Alaska, and who are also required to collect a sales tax for the borough, shall add the combined city of Ketchikan sales tax and the borough sales tax imposed by the KGB Code to the rental, sale, or service charge. [Ord. No. 1303, §2, 3-22-04; Ord. No. 972, §1, 7-17-95; Ord. No. 602, §1, 3-16-87; Ord. No. 240A, §2, 4-4-77. Code 1974 §45.20.025.]

4.50.150 Unlawful for seller to fail to collect.

(a)    Any seller who wishes to include tax in the price of items may do so, but must post a sign in a prominent location in the business stating that “Tax Is Included in All Prices” and include the same words on all receipts which do not show tax as part of the selling price. If such a sign is not posted in the premises, then it shall be deemed that taxes have not been included in the receipt and tax will be computed on the total of the receipt and added to for purposes of calculating tax due.

(b)    In addition to the penalties provided elsewhere for violation of this section, a seller who intentionally or recklessly violates this section shall be liable to the borough for civil penalties in an amount of three times the amount of sales tax the seller failed to collect. [Ord. No. 1430, §1, 2-5-07; Ord. No. 1183, §1, 6-4-01; Ord. No. 240A, §2, 4-4-77. Code 1974 §45.20.030.]

4.50.160 Taxes due.

(a)    It is the duty and responsibility of every seller liable for the collection of any tax imposed herein, unless otherwise provided herein, to file with the borough upon forms prescribed and furnished by the borough, a return, prepared under oath, setting forth the amount of all sales, taxable and nontaxable, the amount of tax thereon and other information the borough may require on the form or forms.

(1)    Unless required to file monthly under KGBC 4.50.080(b) or subsection (c) of this section, the tax levied by this title is due and payable at the expiration of each quarter of each calendar year. The completed executed return, together with remittance in full for the amount of the tax due, shall be transmitted to and received by a borough employee working in the finance department on or before 5:00 p.m., local time, on the last day of the month succeeding the end of each said quarter. If the last day of the month succeeding the end of a quarter is a Saturday, Sunday or borough holiday, the completed executed return and amount of the tax due shall be transmitted and received by 5:00 p.m. local time on the next business day.

(2)    If a seller is required to file a monthly return under KGBC 4.50.080(b) or subsection (c) of this section the tax levied by this title is due and payable at the expiration of each month. Such sellers must transmit the completed executed return, together with remittance in full for the amount of the tax due, and such return and remittance must be received by a borough employee working in the finance department on or before 5:00 p.m., local time, on the last day of the month succeeding the end of the month for which the return is made. If the last day of the month is a Saturday, Sunday or borough holiday, the completed executed monthly return and amount of the tax due shall be transmitted and received by 5:00 p.m. local time on the next business day.

Quarterly and monthly returns may be accepted based upon a timely postmark only if the return receives a United States Postal Service cancellation on or before the due date.

(b)    Any person who filed or should have filed a sales tax return for the prior month or quarter shall file a return even though no tax may be due. This return shall show why no tax is due. If the person intends to continue doing business they shall file a return reflecting no sales and a statement indicating their intent to continue doing business, and shall continue to do so each month or quarter until they cease doing business or sell the business. If the person intends to cease doing business they shall file a final return and statement of business closure, and must reregister before restarting operations. If the business is sold, then the person must file a final return upon sale of the business in accordance with KGBC 4.50.220, and provide the name of the person to whom it was sold, the date it was sold, and the address and telephone number of the person to whom it was sold.

(c)    Sellers failing to comply with the provisions of this chapter shall, if required by the borough, file and transmit collected sales taxes monthly until such time that they have demonstrated to the borough that they are or will be able to comply with the provisions of this chapter. Any business who submits two delinquent sales tax returns consecutively will automatically be required to report monthly until such time they can demonstrate their ability to comply with the provisions of this chapter.

(d)    Sales tax returns shall be accompanied by proof, satisfactory to the borough, as to claimed exemptions, or exceptions from the tax herein imposed. In the absence of said proof, the sales, rentals, or services shall be deemed to have been taxable.

(e)    The burden of establishing any tax exemption is upon the claimant.

(f)    If a seller fails to pay taxes in a timely manner as required by this section, and the borough initiates proceedings to collect the taxes, the borough may recover its costs of collection. Such costs are in addition to any penalties or interest provided for in KGBC 4.50.190.

(g)    In addition to any penalties and interest provided for in KGBC 4.50.190, failure to file a sales tax return in accordance with subsection (a) or (c) of this section, or as required by KGBC 4.50.080(b) shall be a violation of this section. The fine for such violation shall be as provided in KGBC 1.25.050.

(1)    Unless required to file monthly under KGBC 4.50.080(b) or subsection (c) of this section, failure to file a return within 45 days of the deadline for filing a timely return shall be a violation of this section.

(2)    For sellers required to file monthly returns under KGBC 4.50.080(b) or subsection (c) of this section, failure to file a return within 15 days of the deadline for filing a timely return shall be a violation of this section. [Ord. No. 1765A, §4, 8-17-15; Ord. No. 1658A, §2, 3-18-2013; Ord. No. 1585, §3, 3-7-11; Ord. No. 1243, §2, 1-6-03; Ord. No. 1228, §1, 9-3-02; Ord. No. 1030A, §1, 5-5-97; Ord. No. 240A, §2, 4-4-77. Code 1974 §45.20.035.]

4.50.170 Obligation to remit taxes.

All sales tax returns and billings shall be mailed to the address of each seller or postal box designated in writing by the authorized representative of each seller. Failure to receive a sales tax return or billing shall not relieve the seller from its obligation to timely remit all sales taxes. [Ord. No. 842, §2, 12-16-91. Code 1974 §45.20.036.]

4.50.180 Duty to keep books – Investigation.

(a)    Every seller shall keep and preserve suitable records of all sales made by him, and such other books or accounts as may be necessary for the borough to determine the amount of tax for the collection of which he is liable hereunder. Every such person shall keep and preserve for a period of two years all invoices of goods and merchandise purchased for resale, and all such books, invoices and other records as may be necessary, all of which are open for examination at any reasonable time by the borough, the borough manager, or his or their designee.

(b)    For the purpose of ascertaining the correctness of a return or for the purpose of determining the amount of tax collected or which should have been collected by any person, the borough manager or his designee may hold investigations and hearings concerning any matters covered by this chapter and may examine any relevant books, papers, records, or memoranda of any such person, and may require the attendance of such person or any officer or employee of such person. The borough manager or his designee has the power to administer oaths and affirmations to such persons, and if any such person, being first duly sworn, refuses to answer any questions put to him by said manager or his designee, the said manager may apply to the superior court for an order requiring said person to answer said questions. The borough manager may issue subpoenas to compel attendance or to require production of relevant books, papers, records or memoranda. If any person refuses to obey any such subpoena, the borough manager may apply to the superior court for an order requiring said person to comply therewith.

(c)     In the event the borough is unable to ascertain the tax due to be remitted by a seller by reason of the failure of the seller to keep accurate books, allow inspection, failure to file a return, or falsification of records, the borough may make an estimate of the tax due based upon all of the information available. Such estimate may be referred to as a “forced filing.” Notice of the estimate of taxes due shall be furnished by certified mail or by hand delivery to the seller or to a responsible adult in charge at the place of business; provided, that if there is no business premises, delivery may be accomplished in the same manner as service under Alaska District Court Civil Rule 11, and shall become final for the purposes of determining liability of the seller to the borough in 10 working days unless the seller earlier files an accurate return, supported by satisfactory records, indicating a lesser liability. If the borough prepares a forced filing return on behalf of a seller which has failed to file a timely return, the borough may recover its actual costs incurred in preparing such return.

(d)    Confidential and Private Material.

(1)    Except as otherwise provided in this section, returns filed with the borough for the purpose of complying with the terms of this chapter and all information obtained from such returns are private and confidential and such returns and information shall be kept from inspection by private persons.

(2)    This section does not prohibit the delivery to a person, or the person’s duly authorized representative, of a copy of any return filed by that person.

(3)    This section does not prohibit the publication of statistics presented in a manner that prevents the identification of particular buyers or sellers.

(4)    This section does not prohibit the disclosure of such returns or information through enforcement or collection proceedings, or when required by court order, or prohibit furnishing such returns and information on a reciprocal basis to other agencies or political subdivisions of the State or United States concerned with the enforcement of tax laws.

(5)    The borough shall disclose by posting on the borough’s website, and may disclose by public inspection and other publishing means in accordance with KGBC 1.10.020, the name (including any business name), the estimated balance due, and the current status of payments and filings of any seller, or agent of any seller, who does not file a return and remit in full all sales taxes and any penalty and interest due, within 45 days after being required to do so by the provisions of this chapter. The posting on the borough’s website shall be maintained to remove the name and other information of a seller or agent of a seller once the seller or agent of a seller files the delinquent return and remits in full all sales taxes, penalties, and interest due. The posting on the borough’s website shall be otherwise updated quarterly at least 45 days after the deadline for filing taxes for that quarter. In disclosing or publishing information under this section, the borough need not notify a taxpayer prior to disclosure or publication. Posting on the borough’s website and publication of delinquencies under this section may report tax amounts delinquent by more than 45 days, according to records maintained by the borough in the normal course of business. Posting on the borough’s website and publication may indicate whether the amount has been calculated based upon voluntary filings or based upon involuntary estimated filings. Posting on the borough’s website and publication need not reflect whether the amount is disputed by the taxpayer. Any failure by the borough to accurately disclose by posting, public inspection, or other means, or any errors in amounts or other information disclosed by posting, public inspection, or other means, do not alter or negate any liability and responsibility for taxes due.

(e)    In addition to any penalties and interest provided for in KGBC 4.50.190, and other remedies provided in this chapter, failure to comply with subsections (a) or (b) of this section shall be a violation of this section. The fine for such violation shall be as provided in KGBC 1.25.050.

(f)    Any person, firm, copartnership or corporation, or an officer, director or agent of a corporation failing to comply with a lawful request or demand of the manager authorized or made under this section, or any other provision of this chapter, shall be a violation. The penalty for a first offense shall be a $50 fine, and for the second offense within 180 days the fine shall be $250.

(g)    If the violation of subsection (f) of this section is committed with intentional or reckless intent, upon conviction the violator may be sentenced to up to 90 days in jail for the violation in addition to the fine amount.

(h)    In addition to such fine(s) or jail service, a person violating subsection (f) or (g) of this section shall be responsible for restitution to the borough in the amount of the costs, including staff time and costs for jail service, incurred as a result of, and in the response to, the violator’s failure or refusal to comply with the lawful request or demand of the manager authorized under this chapter. [Ord. No. 1837, §2, 8-21-17; Ord. No. 1827, §6, 4-3-17; Ord. No. 1658A, §3, 3-18-2013; Ord. No. 1585, §4, 3-7-11; Ord. No. 1252, §1, 3-3-03; Ord. No. 1243, §3, 1-6-03; Ord. No. 759A, §1, 8-20-90; Ord. No. 281A, §5, 12-19-77; Ord. No. 240A, §2, 4-4-77. Code 1974 §45.20.040.]

4.50.190 Penalty and interest on delinquent taxes.

(a)    In the event a seller fails or neglects to file a return when due, or fails to remit taxes collected, or which should have been collected, in a timely manner as required by this chapter, then such return and tax is delinquent and the borough shall add thereto penalties as follows:

If Payment Made:

Additional Penalty (Percentage of Tax Due)

(1) Within seven working days after delinquency date

1%

(2) More than seven working days up to and including 30 days after delinquency date

15%

(3) More than 30 days up to and including 60 days after delinquency date

20%

(4) More than 60 days after delinquency date

25%

(b)    Interest shall accrue on the unpaid tax, not including penalty, from the date of delinquency to the date of payment at the rate of one percent per month. All remedies available to the borough to collect taxes, penalties and interest, plus collection costs, shall commence on the date of the delinquency. Payments received after the date of delinquency shall be applied first to payment of any collection costs, next on interest, next on penalty, and next on the tax. In the event of partial payment, penalties shall continue to accrue on the unpaid portion of the tax as provided for in subsection (a) of this section. Interest at the rate of one percent per month shall also accrue on any unpaid amount of tax until paid in full. [Ord. No. 1469, §2, 3-3-08; Ord. No. 1030A, §2, 5-5-97; Ord. No. 722, §1, 1-2-90; Ord. No. 565, §1, 5-5-86; Ord. No. 548, §1, 11-18-85; Ord. No. 423A, §7, 7-19-82; Ord. No. 297, §3, 5-1-78; Ord. No. 240A, §2, 4-4-77. Code 1974 §45.20.045.]

4.50.200 Protest of tax.

(a)    A buyer who protests the payment of tax levied under this chapter shall pay the tax and shall provide the seller and the finance director with a written statement of protest within five working days of the sale that identifies the sale, rental or service that is the subject of the tax protested, the amount of tax paid, the buyer’s and seller’s name, mailing address, telephone number and the basis for the protest.

(b)    If the seller protests his liability on an assessment under KGBC 4.50.180(c) which has become final, he shall pay the tax under written protest setting forth the basis for the protest. No action for a refund may be maintained nor may a defense to nonpayment be maintained in a civil action unless the amount in dispute has been paid by the seller under written protest filed at or before the time of payment. [Ord. No. 1228, §1, 9-3-02; Ord. No. 1030A, §3, 5-5-97. Code 1974 §45.20.046.]

4.50.210 Forgiveness of uncollected taxes, penalties and interest.

(a)    The manager, with the consent of the assembly, may forgive the payment of uncollected sales taxes, interest and penalty thereon and penalties for failure to file owing by a seller to the borough upon a determination by the manager that such uncollected sales taxes have never been collected by a substantial portion of a clearly definable class of sellers or which have never been collected on a substantial portion of a clearly defined class or type of transaction or service.

(b)    The manager may, upon the recommendation of the borough attorney, authorize forgiveness of uncollected sales taxes, interest and penalty thereon and penalties for failure to file owing by a seller to the borough as part of the compromise and settlement of a disputed claim by the borough in an action for collection of such funds.

(c)    Except as provided in subsections (a) and (b) of this section, the borough may not forgive or waive any amount of uncollected sales tax, interest or penalty. [Ord. No. 1030A, §4, 5-5-97. Code 1974 §45.20.047.]

4.50.220 Sale of business – Final return – Liability of purchaser.

If any seller sells his business to another person, he shall make a final sales tax return within five days after the date of selling the business; and his purchaser, successor, successors, or assigns shall withhold a sufficient portion of the purchase money to pay the amount of sales taxes, penalties and interest due and unpaid to the city or borough or both; and provided further, the purchaser, successor, successors, or assigns are personally liable for the payment of said taxes, penalties and interest, accrued and unpaid to the city or borough or both on account of the operation of the business by any former owner, owners or assigns as shown by the final return or an audit conducted by the borough within 30 days of the filing of the final return. Not later than 10 days before the sale, lease, assignment, transfer or other disposition of the business is completed, the seller shall file with the Ketchikan Gateway Borough an informational notice identifying the name and address of each person or entity involved in the transaction, the nature of the transaction, and the effective date of the transaction. [Ord. No. 1742, §1, 12-15-14; Ord. No. 240A, §2, 4-4-77. Code 1974 §45.20.050.]

4.50.230 Exemptions.

The following sales and services are exempt from said sales tax:

(a)    Retail sales and remuneration for services amounting to less than $125 in any calendar quarter; however, any sales taxes collected shall be remitted.

(b)    Casual and isolated sales not made in the regular course of business.

(c)    Sales of insurance and bonds of guaranty and fidelity.

(d)    The agreed value of new or used articles taken in trade as credit or part payment on the sale of new articles shall be deducted from the value of the article being purchased in determining said tax.

(e)    Gross receipts derived from sales, services, rentals and transactions which the municipalities are prohibited from taxing under the Constitution and laws of the United States or the State of Alaska.

(f)    Gross receipts derived from sales initiated by orders received from outside the city or borough where delivery is made outside the city or borough by mail or commercial common carrier.

(g)    Gross receipts derived from sales of health care and funeral goods and services as follows:

(1)    Sale of cemetery plots, caskets, funeral and burial related items, funeral charges and services by a funeral home;

(2)    Professional services and supplies by a person licensed, qualified, or certified by the State as a doctor of medicine and surgery, a doctor of osteopathy and surgery, a chiropractor, a dentist, a naturopath, an optometrist, an audiologist, a hospital, a midwife, operator of a birth center, an acupuncturist, an occupational therapist, a physical therapist, a certified nurse aide, or a registered or practical nurse; provided, that the sale is within the scope of the State license or certificate;

(3)    Controlled substances supplied and services performed pursuant to a prescription from a person listed in subsection (g)(2) of this section;

(4)    Counseling services by a mental health professional including a psychotherapist, psychologist or psychological associate, a clinical social worker, an alcohol and drug counselor, or a marital and family therapist, licensed or certified by the State; provided, that the services are within the scope of the license or certificate;

(5)    Assisted living services provided in accordance with an assisted living plan and in an assisted living home licensed as such by the State;

(6)    Sales of hospital services, or from sales of oxygen used for medical purposes, blood or blood plasma, artificial devices designed or altered for the use of a particular disabled person, artificial limbs, eyes and organs, hearing aids, crutches, and wheelchairs;

(7)    Provided, however, services rendered by barbers, cosmeticians and masseurs are not exempt.

(h)    (1)    Gross receipts from sales, services and rentals to any nonprofit organization or nonprofit institution if such organization or institution be organized exclusively for religious, educational, or charitable purposes, and if such organization or institution shall have obtained a certificate of exemption as provided for in subsection (h)(2) of this section and displays that certificate of exemption as provided for in subsection (h)(3) of this section.

(2)    Any organization or institution described in subsection (h)(1) of this section may apply to the revenue collector for a certificate of exemption. Such application shall be made on forms to be furnished by the revenue collector, and each applicant shall be required to furnish such information as the revenue collector may reasonably require. If the revenue collector shall determine that the applicant is entitled to an exemption provided for herein, the revenue collector shall issue or cause to be issued a certificate of exemption which shall be effective as of its date of issue. The revenue collector shall endeavor to issue or deny the exemption within 30 days after the date an application is filed.

(3)    A buyer seeking to make a purchase entitled to a sales tax exemption under subsection (h) of this section shall display a valid certificate of exemption to the seller at the time of purchase. If the buyer does not so display the required valid certificate of exemption the sale is taxable, and the seller shall collect the sales tax due on the sale.

(i)    Gross receipts derived from sales, services and rentals to the United States government, the state of Alaska, and its political subdivisions, and municipalities, or agencies funded by these governments.

(j)    Retail sales of food in school and college cafeterias and lunchrooms which are operated primarily for teachers or students and which are not operated for profit.

(k)    Retail sales in dining rooms or cafeterias of food furnished by nonprofit organizations under programs wholly or partially supported by government funds.

(l)    Gross receipts or proceeds derived from the transportation of students to and from grade or high schools in motor or other vehicles.

(m)    All services provided by the city of Ketchikan and the Ketchikan Gateway Borough, except:

(1)    Services for which rental or other fees are charged under the authority of Chapter 14.40 of the Ketchikan Municipal Code (harbor fees), and Ketchikan Municipal Code sections 13.08.100 and 13.08.110 (port dockage and wharfage charges).

(2)    Sales by Ketchikan Public Utilities of those items which are generally available from private enterprise, including but not limited to: Internet service, telephone equipment installed on customers’ premises or sold to the public, pagers and paging services, caller identification boxes, cellular phone services or any other services as determined to be so available from private enterprise.

(n)    Dues or fees to nonprofit clubs, labor unions, or fraternal organizations.

(o)    Gross receipts derived from veterinary services.

(p)    Gross receipts or proceeds derived from sales made directly to consumers or users of newspapers.

(q)    That portion of the selling price of a single unit sale in excess of one thousand dollars ($1,000), including that part of a periodic rental price of all types of property exceeding one thousand dollars ($1,000). The periodic rental price is the amount owed on a monthly or more frequent period; rentals exceeding a payment period of one (1) month are computed for sales tax purposes as though payment were to be made on a monthly basis.

(r)    Gross receipts derived from sales of educational services by a nonprofit institution in providing a program of learning on a formal study basis in an institution of learning which has an organized curriculum consisting of specific subjects and skills as outlined in the state of Alaska course of study as officially adopted by the State Department of Education for elementary, junior high or senior high schools, for children ages five (5) through eighteen (18).

(s)    Gross receipts derived from sales of day care services for children.

(t)(1)    Gross receipts derived from sales for the purchases made with food coupons, food stamps, or other type of certificate issued under 7 U.S.C. 2011 through 2025 (Food Stamp Act); and (2) Food instruments, food vouchers, or other type of certificate issued under 42 U.S.C. 1786 (Special Supplemental Food Program for Women, Infants, and Children).

(u)    A special sales tax exemption may be granted to an organization or institution that qualifies under subsection (h) of this section to exempt such organization from the obligation to collect sales taxes on sales of tangible personal property sold by such organization as part of a project to raise funds for a particular charitable project, upon filing an application for a charitable project sales tax exemption permit not less than fifteen (15) days prior to the date for commencement of the exemption on a form required by the revenue collector, and compliance with each of the following requirements:

(1)    The organization or institution must be the holder of a current and valid tax exempt certificate issued under subsection (h) of this section;

(2)    The fundraising project must be to raise funds to be used and expended solely and exclusively for a qualified charitable project as set forth and specified in the application;

(3)    All proceeds and revenues received from the sales from the project, less only the actual cost of the items sold, including shipping, must be used solely and exclusively for the specific charitable purpose that is identified and approved in the application and permit as issued;

(4)    Separate accounting records as required by the revenue collector shall be kept as to all the sales; and

(5)    A tax return on such form as is required by the revenue collector shall be filed no later than thirty (30) days after the date specified in the application for conclusion of the fundraising project, or quarterly as required in KGBC 4.50.160, whichever is less, or as otherwise specified in the permit, which tax return shall specify (a) the total amount of gross receipts received; (b) the amount actually paid to the charitable organization to be funded as specified in the application and permit; and (c) such further and additional information, data and verification as is deemed appropriate by the revenue collector.

(6)    In the event a tax return is not filed as herein provided, or if all of the funds are not paid in the manner and to the specific charity as required by the permit, the permittee shall be liable and responsible for payment of the entire amount of sales tax that would have been collected and remitted had the sales not been conducted as sales tax exempt, plus interest and penalties thereon as provided in KGBC 4.50.190 from the date the sales tax amount would have become due as provided in KGBC 4.50.160.

(7)    No applicant may be granted a permit under this section to exempt more than one hundred twenty (120) calendar days, or more than twenty-five thousand dollars ($25,000) in gross sales, in any calendar year.

(v)    That part of the sales price paid by the buyer for travel and adventure services purchased outside the borough which is not remitted, directly or indirectly, to the person providing or performing the service and which is a selling cost or commission or similar charge.

(w)    That part of the gross receipts from the legal sale of pull tabs which exceeds the ideal net from such sales. “Ideal net” means the total amount that would be received if every individual pull tab in a series were sold at its face value, less the total predetermined prizes available to be paid out in the series.

(x)    Gross receipts derived from sales of aviation fuel delivered into aircraft at the airport.

(y)    Sales of goods which are transported into the borough on a cruise ship, which do not leave the cruise ship, and where the entire transaction, both payment and delivery, takes place on board a cruise ship. For purposes of this exemption a “cruise ship” means a commercial passenger vessel that carries passengers for hire except that “cruise ship” does not include a vessel:

(1)    Authorized to carry fewer than twenty (20) passengers;

(2)    That does not provide overnight transportation for at least twenty (20) passengers for hire; or

(3)    That is operated by the United States, state of Alaska, or a foreign government.

(z)    Airfare or the air charter sales price paid for transportation of persons including that portion of a sale of travel or adventure services paid for air transportation of persons.

(aa) Sales, services and rentals made by a seller, which is either: (1) a group sponsored by public or nonprofit schools, or (2) an entity organized and administered solely by an organization that has a current 501(c)(3), 501(c)(4), 501(c)(6) and 501(c)(10) exemption ruling from the Internal Revenue Service and an exemption certificate from the borough manager or his designee; provided, however, this exemption does not apply to sales if any of the following are present:

(1)    The income from the sale is subject to federal income taxation;

(2)    The sale is a sale of an alcoholic beverage, except that sales pursuant to State of Alaska Alcoholic Beverage Control Board special events permit shall be exempt from sales taxation for sales made by a seller at no more than five (5) special events in a twelve (12) month period;

(3) The sale of food from a food establishment operated by the seller sold through regularly conducted restaurant type operations; or

(4)    The sale is a rental of property which is not exempt from taxation as real or personal property under AS 29.45.030 and KGBC 4.45.070(a). [Ord. No. 1656S, §1, 3-18-13; Ord. No. 1610, §1, 11-14-11; Ord. No. 1476, §§1, 2, 4-21-08; Ord. No. 1426, §1, 2-5-07; Ord. No. 1290, §1, 12-1-03; Ord. No. 1268B, §§ 3, 4, 11-17-03; Ord. No. 1200, §3, 12-3-01; Ord. No. 1183, §2, 6-4-01; Ord. No. 865, §1, 7-6-92; Ord. No. 854, §3, 5-4-92; Ord. No. 694, §1, 5-15-89; Ord. No. 681, §§1, 2, 2-6-89; Ord. No. 622, §1, 6-1-87; Ord. No. 598, §§2 – 5, 3-2-87; Ord. No. 584, §1, 9-15-86; Ord. No. 547, §3, 11-18-85; Ord. No. 429, §1, 9-7-82; Ord. No. 373, §1, 7-21-80; Ord. No. 316, §§1, 2, 1-2-79; Ord. No. 297, §5, 5-1-78; Ord. No. 240A, §2, 4-4-77. Code 1974 §45.20.055.]

Editor’s Note – Ord. No. 819, adopted 6-17-91, authorized amendment of this section to increase the single unit sales tax exemption cap to $2,000, effective upon the adoption of a substantially similar ordinance amending the city of Ketchikan Municipal Code. In 2007, the borough attorney advised that the assembly would need to adopt a new ordinance in order to raise the single unit exemption due to the passage of time since the approval of Ord. 819 without approval of a substantially similar ordinance by the city of Ketchikan.

4.50.240 Sales tax exemption for residents sixty-five (65) years of age.

(a)    Any person sixty-five (65) years of age or older who is a resident of the state of Alaska and has been a bona fide resident of the borough for not less than one hundred eighty (180) consecutive days immediately preceding the application therefor may apply for and be issued by the borough manager or designee a senior citizen sales tax exemption card, which card entitles the person to be exempted from the operation of the borough consumer’s sales taxes, and if the applicant also qualifies therefor, exemption to the extent allowed by a city from the city consumer’s sales tax, on purchases of all types of property, rentals and services not for use in any trade or business; provided, however, that the one hundred eighty (180) consecutive-day period provided for in this section may be reduced to thirty (30) days if:

(1)    The applicant has previously held a senior citizen exemption card in the Ketchikan Gateway Borough;

(2)    The person has not been absent from the Ketchikan Gateway Borough for more than twenty-four (24) months; and

(3)    The person establishes to the satisfaction of the borough finance director or his designee that either:

a.    The absence was for medical treatment of the person or an immediate family member, or

b.    The absence was due to circumstances beyond their control.

No seller within the borough shall charge or collect the sales taxes on exempted purchases from any person who displays such valid sales tax exempt card. All sellers within the borough shall keep records of such exempt sales and submit quarterly totals of such sales to the borough’s finance department, together with any other information required by law. In the event the person ceases to be a bona fide resident of the borough, entitlement to the sales tax exemption that requires such residency shall terminate, and the card shall be void as to that sales tax exemption.

(b)    No person who has duly applied for and received such a registration card may use it to obtain such tax exemption when the rents, retail purchases, and any or all of them, otherwise subject to the sales taxes, are used or consumed by any person or persons other than the person duly holding such registration card, or his or her spouse.

(c)    No person who has not duly applied for or received such a registration card may use it to obtain such tax exemption; provided, however, in the case of a person who is eligible for an exemption under this section, is otherwise authorized to receive a registration card under this section, and who is physically or mentally unable to use said card, a special card authorizing another person or entity to use the special card for the benefit of the person who is physically or mentally unable to use the card may be issued.

A card issued under this subsection may be issued to either:

(1)    An individual specifically authorized to make purchases on behalf of the eligible person and who certifies on a form designated by the finance director that any purchases under the special authorization shall be only for the use of the eligible person or their spouse; or

(2)    A governmental or nonprofit agency which, as part of their services to seniors, regularly provides such service to senior citizens who are physically or mentally unable to make purchases for themselves.

In the case of a governmental or nonprofit agency, such cards shall be issued in the agency name; shall bear distinguishing markings; and any employee authorized to use such card shall certify on a form designated by the finance director that any purchases under the special authorization shall be only for the use of an eligible person or their spouse. Governmental or nonprofit agencies will accept full responsibility for the safekeeping of such cards and maintain an appropriate accountability of the use of each card. When making purchases using the authorization, the employee shall keep a log of the purchase, the amount, and the party for whom the purchase was made. The log shall be retained for at least three years by the agency, and shall be subject to audit by the borough.

(d)    For the purposes of this section “resident of the state of Alaska” means a person who is physically present in the state with the intent to remain in the state indefinitely and to make a home in the state. A person demonstrates the intent required under this subsection by maintaining a principal place of abode in the state for at least 180 consecutive days immediately preceding the date of application for the senior citizen sales tax exemption card. In addition, an applicant for an exemption card must meet the requirements of subsection (d)(1) or (d)(2) of this section:

(1)    The individual shall be eligible for a permanent fund dividend under AS 43.23.005 for that same year or for the immediately preceding year; or

(2)    If the individual has not applied or does not apply for one or both of the permanent fund dividends, the individual would have been eligible for one of the permanent fund dividends identified in subsection (d)(1) of this section had the individual applied.

A “resident of the borough” is a person who has established a residence in the borough and has the intent to remain in the borough indefinitely and make his or her home in the borough. A person demonstrates the intent required under this subsection by maintaining a principal place of abode in the state for at least 180 consecutive days immediately preceding the date of application for the senior citizen sales tax exemption card.

(e)    The finance director shall periodically review the qualifications of holders of senior citizen exemption cards, and shall revoke the card of any person found not to meet the qualification. A written notice of the revocation, together with the basis therefor, shall be sent to the residence address provided by the exemption cardholder. A revocation decision is a final administrative decision and may be appealed to the superior court in accordance with the Alaska Rules of Court.

(f)    Any person who violates any provision of this section is guilty of a violation and upon conviction thereof shall be fined an amount not to exceed $100, and such sales tax exemption card shall be surrendered to the court, which, in turn, shall return the card to the borough for cancellation and destruction. Lawful use of the card is a condition precedent to its validity, and any unlawful use thereof shall render the card void from the date of its inception. By applying for any such card, the applicant thereby agrees to be bound by such conditions. [Ord. No. 1607, §13, 10-3-11; Ord. No. 1571, §1, 9-7-10; Ord. No. 1405AS, §1, 12-18-06; Ord. No. 1361, §2, 6-20-05; Ord. No. 1301, §1, 3-15-04; Ord. No. 1287, §2, 11-3-03; Ord. No. 1233, §1, 9-23-02; Ord. No. 1228, §1, 9-3-02; Ord. No. 1183, §3, 6-4-01; Ord. No. 1026, §1, 5-5-97; Ord. No. 795, §1, 4-1-91; Ord. No. 618, §1, 6-1-87; Ord. No. 598, §§6, 7, 3-2-87; Ord. No. 240A, §2, 4-4-77. Code 1974 §45.20.060.]

Editor’s Note – Ord. No. 1571 became effective on the first day of the month following the date of adoption of a substantially similar ordinance amending City of Ketchikan Municipal Code §3.04.110 to conform with the standards as modified by this ordinance. City of Ketchikan Ord. No. 10-1662, substantially similar to borough Ord. 1571, was adopted September 16, 2010, and became effective October 16, 2010.

4.50.250 Unlawful to misrepresent exemptions.

Any buyer or consumer who falsely states or in any way misrepresents the use to which merchandise or material is to be put for the purpose of securing tax exemption under the terms of this chapter is guilty of an unlawful act, and upon conviction thereof is subject to the penalties provided in KGBC 1.10.040. [Ord. No. 240A, §2, 4-4-77. Code 1974 §45.20.065.]

4.50.260 Use of funds.

(a)    Except as provided for in subsection (b) and (c) of this section, all money accumulated under the provisions of this chapter shall be deposited by the borough finance director to the general fund of the borough to be used and expended for the sole purpose of providing administrative and governmental areawide borough services and maintenance and operations of a system of areawide schools.

(b)    There is hereby created a borough sales tax capital projects fund into which 20 percent of all borough sales tax revenues as defined in KGBC 4.50.020 shall be deposited. Annual revenues received into this fund may only be expended for bona fide recreation costs in the following proportion: 75 percent for capital improvement projects, and 25 percent for the maintenance and operation of borough recreation facilities.

(c)    There is hereby created a borough sales tax educational facilities capital projects fund into which 20 percent of all borough sales tax revenues, as defined in KGBC 4.50.020, shall be deposited. Annual revenues received into this fund may only be expended for: debt service on voter approved school construction bonds, capital costs associated with the construction, furnishing and equipping of the Schoenbar and Fawn Mountain construction projects, other school capital expenditures which would be eligible for bond funding if bond financing were used; and insurance on school buildings and grounds. [Ord. No. 1786, § 1, 4-4-16; Ord. No. 1710, §1, 4-7-14; Ord. No. 1303, §3, 3-22-04; Ord. No. 1228, §1, 9-3-02; Ord. No. 1139, §1, 6-5-00; Ord. No. 870, §2, 7-20-92; Ord. No. 240A, §2, 4-4-77. Code 1974 §45.20.070.]

Editor’s Note – Ord. No. 1303, as amended by Ord. No. 1803, shall cease to be effective, and the one-half percent sales tax increase created by it shall be repealed, at 12:01 a.m. on January 1, 2027.

4.50.270 Fee schedule established by resolution.

The borough assembly shall, by resolution, establish a fee and charge schedule for new business registrations, issuance of resale certificates, issuance/replacement of senior citizen sales tax exemption cards and miscellaneous fees and deposits. Such fees shall be paid, filed and deposited as provided in such schedule of fees or otherwise provided by ordinance. Fees shall not be refunded, except as may be provided in the resolution establishing such fees. [Ord. No. 1287, §3, 11-3-03. Code 1974 §45.20.075.]

4.50.280 Regulations authorized.

The borough manager is authorized to prescribe by departmental regulations the forms to be used and the methods and procedures to be followed by the borough in collecting said taxes. This authorization does not authorize regulations of substance which impose any requirements upon buyer or sellers. [Ord. No. 240A, §2, 4-4-77. Code 1974 §45.20.080.]

4.50.290 Appeals.

(a)    A seller aggrieved by the action of the borough in fixing the amount of the tax under this chapter or in imposing a penalty or interest may appeal to the borough manager within forty-one (41) calendar days from the date taxes are due and payable under this chapter. The right to an appeal shall be deemed waived if not timely requested as set forth in this subsection.

(b)    Contested taxes, penalties and interest that remain unpaid shall continue to accrue penalty and interest as provided by this title until paid. Contested taxes, penalties and interest that are paid and are found to be overpaid shall be refunded with interest at the rate of eight (8) percent from the date of payment.

(c)    All appeals shall be filed in writing with the borough manager and shall contain all of the following information:

(1)    Name, address, and telephone number of the aggrieved seller;

(2)    A specific and detailed statement of the amount of tax, interest or penalty contested, the basis and grounds upon which the appeal is made, and all pertinent records, documents, or other evidence substantiating the grounds as stated;

(3)    A statement of the relief sought; and

(4)    A statement as to whether a hearing is requested.

(d)    Arguments or reasons for failure to timely file a return and remit taxes collected shall not be considered a valid basis or grounds for granting an appeal. The basis and grounds for granting any appeal are limited to:

(1)    The identity of the seller is in error;

(2)    The amount of the debt is erroneous due to a clerical error (and the nature and extent of the error is specified in the request for a hearing);

(3)    The seller disputes the denial of exemption(s) for certain sales; or

(4)    Taxes have been levied and forgiven in accordance with KGBC 4.50.210.

(e)    A request for appeal is filed on the date it is personally delivered, or if delivered to the manager by United States mail, the date of the United States Postal Service postmark stamped on the properly addressed cover in which the request is mailed. If the due date falls on a Saturday, Sunday, or a holiday, the due date is the next business day. A current mailing address must be provided to the manager with the request for appeal, and any change in mailing address after the request for appeal is filed must be reported to the manager.

(f)    Upon such filing of a written appeal, the borough manager shall immediately send a copy thereof to the city manager or administrator when the amount of sales tax, interest or penalty contested includes a city levy. The city involved may provide written information that may be considered in deciding the appeal.

(g)    Unless the appellant waives a hearing, the borough manager or person designated by the borough manager shall hold a hearing pursuant to Chapter 2.115 KGBC to determine whether a correction is warranted. The borough manager or designee shall decide the appeal based upon the pertinent records provided by the parties involved or discovered by any investigation ordered by the manager and, if a hearing is requested, any evidence presented at the hearing. If a hearing is requested, the appellant need not appear at the hearing. If the appellant fails to appear, the borough manager or designee may make a determination based upon the evidence received and any written materials submitted by the appellant. The determination need not make formal findings of fact or conclusions of law, but the written determination shall state the reasons for the decision and indicate the evidence relied upon. Such determination shall be issued no later than ten (10) business days after the date of hearing if a hearing is held or ten (10) days after the appeal is filed if the hearing is waived. Such determination shall be final.

(h)    Taxes, penalties, and interest declared to be due in the final determination shall be subject to normal collection action of the borough. The amount due must be paid or if the manager’s decision is appealed, a bond to secure payment must be filed with the court in accordance with Alaska Rules of Court, Rules of Appellate Procedure.

(i)    Within thirty (30) days after receipt of the final determination, a seller aggrieved by the decision may appeal to the superior court in the first judicial district. The seller shall be given access to the borough’s file in the matter for preparation of the appeal. If after the appeal is heard it appears the tax was correct, the court shall confirm the tax. If incorrect, the court shall determine the amount of the tax and, if the seller aggrieved is entitled to recover the tax or part of it, the court shall order the repayment and the borough shall pay the amount due within fourteen (14) days after receipt of a certified copy of the judgment, which copy shall be attached to the payment. [Ord. No. 1030A, §5, 5-5-97; Ord. No. 836, §2, 2-3-92; Ord. No. 423A, §8, 7-19-82; Ord. No. 240A, §2, 4-4-77. Code 1974 §45.20.085.]

4.50.300 Clerical errors or omissions – Refund of sales tax – Penalty and interest.

(a)    The finance director may correct manifest clerical errors or omissions at any time they are found and verified.

(b)    If, in payment of taxes legally imposed, a remittance by a seller through error exceeds the amount due, and the borough, on audit of the account in question, is satisfied that this is the case, the borough shall refund the excess to the seller with interest at eight (8) percent from the date of payment. A claim for refund filed one (1) year after the due date of the tax is forever barred. A copy of the refund audit and entitlement shall be given to the city manager or administrator when the amount of refund includes a city levy. [Ord. No. 1228, §1, 9-3-02; Ord. No. 1030A, §6, 5-5-97; Ord. No. 642, §1, 12-21-87; Ord. No. 274, §1, 11-21-77. Code 1974 §45.20.090.]

4.50.310 Residence construction tax exemption.

(a)    Upon proper application, and in accordance with the terms of this section, materials used in construction of an owner-occupied single-family dwelling or eligible portion of an owner-occupied duplex may be purchased on a tax exempt basis. Where the new construction is a remodel which creates additional living space, materials used in the creation of additional square footage of living space may be eligible if square footage was increased by more than ten (10) percent of the size of the structure prior to the remodel. Remodels must occur on an existing owner-occupied single-family dwelling or eligible portion of an owner-occupied duplex. Materials used on portions of a remodel which do not increase living space by at least ten (10) percent are not eligible for the exemption.

(1)    The dwelling must be an owner-occupied permanent place of residence. Construction must have begun and a zoning permit issued after July 1, 1996.

(2)    Purchases for which a sales tax exemption is sought must be made after the effective date of the zoning permit.

(3)    If the dwelling is a duplex, it may only qualify to the extent of those portions of tax attributable to improvements in the owner-occupied permanent principal place of residence portion of the duplex.

(4)    The applicant must present the zoning permit and designs to the finance director.

(5)    If the finance director determines that the project qualifies, the finance director shall issue an owner-occupied construction exemption card. Such card shall be limited to the duration of the zoning permit to which it applies.

(6)    The exemption card is valid only for purchases of building materials used in the construction of the owner-occupied dwelling. This shall include lumber, building materials, electrical and plumbing supplies, rental of tools and equipment, furnace and other heating apparatus and permanent carpeting. Not included are the purchase of tools, machinery, labor and services for use in the construction of the dwelling, nor shall it include spare material not used.

(7)    The holder of the exemption card must reside in the dwelling.

(8)    The applicant must retain all receipts and other records regarding purchases for at least three (3) years and must make such records available to the borough for audit upon request of the borough.

(9)    The exemption card shall be surrendered to the finance director upon expiration.

(b)    An exemption card issued under this section can only be used for purchases of the items on the list provided with the application.

(c)    No seller of building supplies within the borough shall charge or collect the sales tax on exempted purchases from any person who displays such valid sales tax exemption card. All sellers within the borough shall keep records of such exempt sales and submit quarterly totals of such sales to the borough finance department, together with any other information required by law.

(d)    Any person who violates any provision of this section is guilty of a violation and upon conviction thereof shall be fined an amount not to exceed one hundred dollars ($100.00), and such sales tax exemption card shall be surrendered to the court, which, in turn, shall return the card to the borough for cancellation and destruction. Lawful use of the card is a condition precedent to its validity, and any unlawful use thereof shall render the card void from the date of its inception. By applying for any such card, the applicant thereby agrees to be bound by such conditions. [Ord. No. 1607, §14, 10-3-11; Ord. No. 1405AS, §2, 12-18-06; Ord. No. 1301, §3, 3-15-04; Ord. No. 1228, §1, 9-3-02; Ord. No. 1135, §1, 4-17-00; Ord. No. 1043, §1, 8-18-97; Ord. No. 1027A, §1, 5-18-97. Code 1974 §45.20.095.]

4.50.320 Sales tax liens.

(a)    The sales tax, interest, and penalties imposed by this chapter, and the administrative costs under subsection (f) of this section, shall constitute a lien in favor of the borough upon all of the real and personal property of every person making taxable sales subject to this chapter.

(b)    The lien imposed by this section arises and attaches at such time as payment becomes delinquent under KGBC 4.50.190 and continues until the entire amount is satisfied.

(c)    If delinquent sales taxes, including interest and penalties, are not paid within ten (10) days from the mailing of notice and demand for payment thereof, a notice of lien may be recorded in the office of the district recorder. Upon recordation, the sales tax lien has priority over all other liens except:

(1)    Liens for property taxes and special assessments;

(2)    Liens that were perfected before the recording of the sales tax lien for amounts actually advanced before the recording of the sales tax lien;

(3)    Mechanics’ and materialmen’s liens for which claims of lien under AS 34.35.070 or notices of right to lien under AS 34.35.064 have been recorded before the recording of the sales tax lien.

(d)    An action to foreclose a lien created by this section shall be commenced and pursued in the manner provided for the foreclosure of liens in AS 09.45.170 through 09.45.220.

(e)    The remedy provided in this section is not exclusive and shall be in addition to all other remedies available to the borough to collect the sales taxes, penalties, and interest due under this chapter.

(f)    Fees for the administrative costs of filing on notices of liens and releasing of liens shall be:

(1)    Filing of notices of lien: twenty-five dollars ($25.00), plus recorder’s office filing fee.

(2)    Release of liens: twenty-five dollars ($25.00), plus recorder’s office filing fee. [Ord. No. 667, §1, 9-19-88; Ord. No. 565, §2, 5-5-86. Code 1974 §45.20.100.]

4.50.330 Amended returns, recovery of costs.

The seller shall be responsible for reimbursement to the borough of its costs, including staff time, incurred to correct accounts in the event a seller:

(a)    Files a return following notice of an involuntary return under KGBC 4.50.180(c);

(b)    Files a return that contains a manifest clerical error corrected under KGBC 4.50.300(a), which causes the borough to incur two hundred fifty dollars ($250.00) or more in costs to correct the seller’s account; or

(c)    Files, for any reason, an amended return, which causes the borough to incur two hundred fifty dollars ($250.00) or more in costs to correct the seller’s account. [Ord. No. 1585, §5, 3-7-11. Code 1974 §45.20.105.]

4.50.340 Sales tax holiday.

(a)    The Ketchikan Gateway Borough assembly may, by resolution, declare a day during the period from October 1st through March 31st of the fiscal year as a “sales tax holiday.” Any resolution declaring a day as a sales tax holiday shall become effective only if the city council of the city of Ketchikan declares the same day as a sales tax holiday exempting qualified sales on that day from its sales tax.

(b)    On a sales tax holiday the duty of the seller to collect the tax levied under this chapter is suspended, subject to the limitations in this section. On a sales tax holiday a seller of goods or services may choose not to collect the tax on its sale of those goods and services. The buyer will then have no obligation to pay the tax on that sale. If the seller chooses to continue collecting the tax on a sales tax holiday, the buyer shall pay the tax and the seller shall collect and transmit the tax as required by this chapter.

(c)    A sales tax holiday does not suspend the duty of the seller to collect and transmit sales tax on the following transactions:

(1)    Rentals with rental periods of greater than one (1) day;

(2)    Sales of public utility services that are otherwise taxable (e.g., Internet service, cable television service, and telephone service);

(3)    Sales of gasoline, diesel fuel, or home heating fuel;

(4)    Goods (other than major appliances and furniture) or services purchased on a sales tax holiday which are performed or delivered on a different day; or

(5)    Sales of major appliances and furniture purchased on a sales tax holiday which are delivered on a day more than fourteen (14) days from the date of sale.

(d)    If a seller chooses not to collect sales tax on a sales tax holiday, that seller shall report all sales, rentals and services as exempt sales on their regular sales tax return, and shall submit a statement with its sales tax return identifying the total of such sales tax holiday sales. [Ord. No. 1598S, §1, 9-6-11. Code 1974 §45.20.110.]