Chapter 4.09
SALES TAX Revised 1/23 Amended Ord. 23-14
Sections:
4.09.010 Levy of sales tax. Revised 1/23 Amended Ord. 23-14
4.09.020 Collection of tax. Revised 1/23
4.09.030 Presumption of taxability—Sales price and purchase price.
4.09.040 Separate statement of tax—No advertising to absorb or refund tax.
4.09.100 Exemptions. Revised 1/23
4.09.110 Residence construction tax refund.
4.09.120 Exemption from seasonal sales tax increase. RepealedOrd. 23-14
4.09.210 Exempt sales.
4.09.220 Exemption certificate—Form.
4.09.230 Exemption certificate—Requirements.
4.09.240 Improper use of subject of purchase obtained with exemption certificate—Penalty.
4.09.250 Liability for payment of tax—Security for retailer without place of business—Penalty.
4.09.260 Method of accounting.
4.09.270 Returns—Payment—Authority of city and borough of Sitka.
4.09.280 Form of return.
4.09.285 Reserved.
4.09.290 Substantiation of sales and exemptions.
4.09.300 Methods.
4.09.310 Deduction for bad debts.
4.09.320 Timely filing allowance.
4.09.330 Security—Limitations—Sales of security deposit at auction—Bond.
4.09.340 Taxpayer quitting business— Liability of successor.
4.09.345 Application of payments.
4.09.350 Procedures on delinquencies.
4.09.360 Tax as debt.
4.09.370 Refunds and credits.
4.09.380 Period of limitation.
4.09.390 Taxes lien.
4.09.395 General penalty provision.
4.09.400 Rules and regulations.
4.09.405 Confidential and nonconfidential tax information.
4.09.410 Sales tax audits.
4.09.420 Definitions.
4.09.010 Levy of sales tax. Revised 1/23 Amended Ord. 23-14
A. There is levied a consumer’s sales tax on sales, rents, and leases made in the city and borough of Sitka. This tax applies to sales, rentals, and leases of tangible personal property; sales of services sold within the city and borough of Sitka; sales of services performed wholly or partially within the city and borough of Sitka when the provision of such services originates or terminates within the city and borough of Sitka; and rentals and leases of real property located within the city and borough of Sitka. Notwithstanding any provision of law, air or sea charter services, provided a person or entity in the business of providing such charter services, are exempt from sales tax by the city and borough of Sitka if the charter does not commence and end within the city and borough of Sitka.
B. The rate of levy of the sales tax levied under subsection A of this section is five percent on sales made during the months of October, November, December, January, February, and March. The rate of levy of the sales tax levied under subsection A of this section is six percent on sales made during the months of April, May, June, July, August, and September.1
C. A flat rate of ten dollars per fish box shall be levied on the packaged fish and/or seafood caught or taken and retained by fish charter customers as part of the fish charter. This tax shall be paid by the fish charter customer, collected by whoever packages the fish and/or seafood caught or taken by the fish charter customer, and is in addition to any sales tax paid based on the cost of the charter. This tax is effective January 1, 2007. For purposes of this subsection, a “fish box” means any packaging by a fish charter operator or processor of fish and/or seafood caught or taken as part of the charter by a fish charter customer. The sales tax collected from this levy on fish boxes shall be deposited by the finance director in the following funds in the following ratios:
1. Thirty percent in the harbor fund;
2. Thirty percent in a fisheries enhancement fund, available to be used for any fisheries enhancement proposal upon approval of the proposal by the assembly; and
3. Forty percent in the general fund.
D. In place of the consumer’s sales tax levied in subsection A of this section, there is levied a consumer’s sales tax on sales made in the city and borough of Sitka of marijuana, as “marijuana” is defined in AS 17.38.900(10), and marijuana products, as “marijuana products” is defined in AS 17.38.900(15). The rate of levy of the sales tax under this subsection is six percent on sales made during the first year, starting on January 1, 2023, and eight percent on sales made during the second year and each year thereafter. The sales tax collected under this subsection shall be deposited by the finance director into the student activities fund. Each year during the annual budget process an appropriation from the student activities fund will be made based on projected annual revenue and the funds appropriated will be transferred to the Sitka school district. This funding will be restricted to the support of extracurricular student activities and associated travel costs.
E. Except as provided in subsections C and D of this section, all moneys accumulated under the terms of this chapter shall be deposited by the finance director in the general fund of the city and borough of Sitka and shall be used for the general operating expenses of the city and borough of Sitka in such a proportion as deemed advisable from time to time by the assembly.
(Ord. 22-12S § 4, 2022; Ord. 12-46A § 4 (part), 2013; Ord. 09-55 § 4, 2009; Ord. 06-38 § 4, 2006: Ord. 03-1758 § 4(B), 2004.)
4.09.020 Collection of tax. Revised 1/23
A. The tax described in Sections 4.09.010(A) and (D) is imposed on the purchaser and must be collected by the seller and paid to the city and borough of Sitka by the seller as provided in Section 4.09.270. The seller holds all taxes collected in trust for the city and borough of Sitka. The tax must be applied to the sales price.
B. The assembly at their first meeting of September each year shall consider whether to authorize any sales tax free day(s) that have historically followed Thanksgiving. If authorized, the sales tax free day(s) will not be applicable to any sale of fuel, alcoholic beverages, tobacco products, and marijuana, as such are defined in this code, nor affect any sale which is part of a continuing obligation of the buyer to pay the seller over time.
(Ord. 22-12S § 4, 2022; Ord. 18-41 § 4, 2018: Ord. 13-44 § 4, 2013: Ord. 03-1758 § 4(B), 2004.)
4.09.030 Presumption of taxability—Sales price and purchase price.
A. In order to prevent evasion of the sales tax and to aid in its administration, it is presumed that:
1. All sales by a person engaging in business are subject to the sales tax;
2. All property purchased or sold by any person for delivery into the city and borough of Sitka is purchased or sold for a taxable use in the city and borough of Sitka;
3. All liquor sales by lodges that hold an outdoor recreation liquor license under Alaska Statute 04.11.225 are considered individual sale units, and are taxable separately rather than as part of the lodge’s package sale.
B. In a sale in which the amount of money paid does not represent the value of the property or service purchased, the sales tax must be imposed on the value of the property or service purchased.
C. For purposes of this chapter, the sales price or purchase price of property must be determined as of the time of acquisition.
D. For purposes of this chapter, a sale of services occurs at the time the services are provided.
(Ord. 06-19 (A-1) § 4(B) (part), 2006; Ord. 03-1758 § 4(B), 2004.)
4.09.040 Separate statement of tax—No advertising to absorb or refund tax.
A. If any person collects a tax in excess of the tax imposed by Section 4.09.010(A), both the tax and the excess tax must be remitted to the city and borough of Sitka.
B. The sales tax must be stated separately for all sales, except for sales from coin-operated or currency-operated machines, sales of drinks in a bar, sales on the dock, sales from street vending carts, admission fees, open markets, ticket sales, taxi fares, and other sales as determined by regulation by the assembly of the city and borough of Sitka.
4.09.100 Exemptions. Revised 1/23
The following sales are exempt from taxation:
A. Casual Sales. A casual and isolated sale not made in the regular course of business is exempt from the levy of sales tax imposed by Section 4.09.010(A).
B. Church Sales. Sale of tangible property or the sale of services by a church are exempt, except where the sale or service is incidental to a business for a profit.
C. Court Fixed Fees. Any sale where the price is fixed by law, by a court of competent jurisdiction, or by other authority beyond the control of the seller, and where, if the tax were applied, in effect would become an income tax upon the seller, is exempt.
D. Dues and Fees. Dues or fees paid to become or remain a member of a labor union, fraternal organization or nonprofit organization that has obtained an IRC 501(c) tax exemption certificate are exempt.
E. Federal and State Prohibitions. A sale which the municipality is prohibited from taxing under the Constitution and laws of the United State or the Constitution of the state of Alaska is exempt.
F. Freight and Wharfage. Freight and wharfage charges, whether arising out of foreign, interstate or intrastate commerce, are exempt. Warehouse, storage services, and delivery services that begin and end within the city and borough of Sitka are taxable, unless such delivery services are included in a through bill of lading in conjunction with interstate commerce.
G. Governmental Agencies. A sale directly to any federal, state, municipal or tribal government, or any department or agency of these governments, is exempt.
H. Insurance. The sale of insurance policies, guaranty bonds, and fidelity bonds are exempt.
I. Loans. The principal amount of the loan and the interest charged for loaning of money are exempt. Any fees associated with the loaning of money are subject to sales tax, unless exempt under other sections of this chapter.
J. Medical and Veterinary Services. The following sales are exempt:
1. Professional services and supplies provided within the scope of a license or certificate issued by the state of Alaska (“Alaska licensed or certified”) to the following or similar positions: doctor of medicine and surgery; doctor of osteopathy and surgery; chiropractor; dentist; naturopath; optometrist; psychiatrist; psychologist; audiologist; hospital; medical clinic; midwife; birth center; acupuncturist; occupational therapist; physical therapist; certified nurse; nurse’s aide; or registered or practical nurse;
2. Prescription drugs and medical services prescribed or provided by a person or business listed in subsection (J)(1) of this section;
3. Counseling services provided by an Alaska licensed or certified psychiatrist, psychologist, psychological associate, clinical social worker, substance abuse counselor, marital and/or family therapist;
4. Assisted living services provided by an Alaska licensed or certified assisted living or respite care home;
5. Purchase or rentals of hearing aids, crutches, wheelchairs and similar medical equipment prescribed or provided by a person or business listed in subsection (J)(1) of this section; and
6. Veterinary services and prescribed supplies provided within the scope of an Alaska licensed or certified veterinarian.
K. Newspapers. The sale of daily newspapers to a consumer is exempt.
L. Nonprofit Charitable Organizations. Sales made by nonprofit charitable organizations which do not have paid employees and which do not keep normal business hours are exempt.
M. Outside City and Borough. Sales of goods or services resulting from orders received from outside the city and borough by mail, telephone, or other similar public communication where delivery of the property or performance of services ordered is made outside the city and borough are exempt.
N. Over Twelve Thousand Dollars on Sales and Rents of Tangible Personal Property and on Sales of Services, and Over Twelve Thousand Dollars in Rent or Lease of Real Property on a Monthly Basis. That portion of a selling price for a single piece of equipment or tangible personal property or sale unit in excess of twelve thousand dollars is exempt. A single sale unit is:
1. Any retail merchandise sale where the selling price is totaled on one invoice or any sales slip, although this exemption does not apply if any portion of the invoice or sales slip refers to more than one business day;
2. Any sale of services sold by an individual unit price; or
3. Any liquor sale by lodges that hold an outdoor recreation lodge liquor license.
Notwithstanding any other provision of law, the exemption described in this subsection does not apply to any “running” invoice or sales slip representing the sale of items or commodities which are not services. The exemption described in this subsection applies to any sales of services in which services provided to more than one individual are packaged together or “bundled” for purposes of payment on one invoice or sales slip to the extent that such individuals are members of the immediate family of the person making the payment and the person making the payment provides to the seller a certification of such relationship on a form provided by the city and borough. For purposes of this subsection, “members of the immediate family” are the individual’s spouse, children, parents, parents-in-law, siblings, grandparents, grandchildren, and domestic partners.
O. School Sales.
1. Retail sales, rentals, or services at a school-approved activity by a school-approved group raising funds for a school-approved purpose;
2. Retail sales in schools of food or beverages not sold to the general public; and
3. As used in this subsection, school means a public or private, primary or secondary school, university, trade school or college. This subsection does not include tutor services.
P. Resale. A sale for resale of a product, service or rental to a consumer where the resale is subject to tax is exempt.
Q. Student Transportation. The service of transporting students to and from a school in vehicles is exempt.
R. Marijuana and Marijuana Products. Sales of marijuana and marijuana products under Section 4.09.010(D) are exempt from the levy of sales tax imposed by Section 4.09.010(A).
S. Service Performed by a Licensed Undertaker or Mortician. Fees charged by a licensed undertaker or mortician for services and goods supplied in the course of the undertaking business are exempt.
T. Reserved.
U. Exemption for Games of Skill and Chance. Sales of lottery tickets and other forms of games of skill and chance allowed under Section 10.40.020 are exempt.
V. Government-Funded Agencies. Nonprofit organizations that qualify as tax exempt under IRC Section 501(c) and derive fifty percent or more of their gross revenue from local, state, or federal government sources are exempt from paying sales tax if:
1. The organization files a bi-annual report setting out its qualifications; and
2. The application for exemption is approved by city and borough of Sitka and an exemption certificate is issued. The date of the certificate becomes the effective date of the tax exemption. City and borough of Sitka has a maximum of thirty days to review an application and grant an exemption certificate.
W. Child and Adult Dependent Care. The sales of child day care, pre-elementary school care, babysitting services and adult dependent care are exempt.
X. Public Transportation. Fees for public transportation are exempt if agency providing public transportation qualifies under subsection V of this section, Government-Funded Agencies.
Y. Exemption for Persons Who Have Reached the Age of Sixty-Five.
1. Any person, sixty-five years of age or older, who is a resident of the state of Alaska may apply for and be issued by the finance director a senior citizen sales tax exemption certificate which entitles the person, person’s spouse, or the person’s qualified domestic partner to be exempt from sales tax for the purchase of goods, services or rentals which are solely for the personal use or consumption of the person, person’s spouse, or the person’s qualified domestic partner. This exemption does not apply for purchases for the person, person’s spouse, or the person’s qualified domestic partner:
a. For use in any trade or business, including but not limited to commercial fishing; or
b. For purchase of alcoholic beverages, cigarettes or other tobacco products and marijuana or marijuana products.
2. Definitions.
“Alcoholic beverage” includes beer, wine, and all other spirituous, vinous, malt and other fermented or distilled liquid intended for human consumption and that contains one-half of one percent or more of alcohol by volume, for which a license or permit for its sale or barter is required by AS 04, entitled “Alcoholic Beverages.”
“Cigarette” shall have the same meaning as defined in Section 4.26.190.
“Other tobacco products” shall have the same meaning as defined in Section 4.26.190.
“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.
3. Verification.
a. The applicant, at the time of application for a senior citizen sales tax exemption card, will provide a minimum of two pieces of identification to prove Alaska residency. One of the identification documents must show birth date.
b. The applicant shall fill out a formal application which will include a verification of their “intent to reside in Alaska.”
4. A resident at least sixty years old, who otherwise qualifies for the exemption, and is the widow, widower, or qualified domestic partner of a deceased person who qualified for the exemption under subsection (Y)(1) of this section, may apply for and be issued a senior citizen sales tax exemption certificate.
Z. Youth Camps. Fees charged for nonprofit youth camps primarily serving persons under eighteen years of age are exempt.
AA. Residential Rent. Rent paid for residential housing for thirty or more consecutive days or an entire calendar month by a person or persons for a room, set of rooms, structure, or suite is exempt from sales taxes. This exemption does not apply to any transaction taxable under Chapter 4.24 regarding the transient lodging tax.
AB. Sale of Service Costs or Commission. That part of the sales price paid by the buyer for Sitka travel and adventure services purchased outside the city and borough of Sitka 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.
(Ord. 22-12S § 4, 2022; Ord. 19-42 § 4 (part), 2019; Ord. 18-35 § 4 (part), 2018; Ord. 18-14 § 4 (part), 2018; Ord. 17-03 § 4, 2017; Ord. 15-24A § 4, 2015; Ord. 12-46A § 4 (part), 2013; Ord. 12-19 § 4, 2012; Ord. 12-07S § 4, 2012; Ord. 08-04 § 4, 2008; Ord. 07-12 § 4 (part), 2007; Ord. 06-19 (A-1) § 4(B) (part), 2006; Ord. 04-19 § 4(A), 2004; Ord. 03-1758 § 4(B), 2004.)
4.09.110 Residence construction tax refund.
Upon proper application the city and borough will refund sales tax paid on the construction of an owner-occupied single-family dwelling or duplex.
A. The dwelling must be a new dwelling unit, not merely an extension of an existing unit.
B. At the time of refund application, no more than two years shall have passed since the issuance of either a grading permit, foundation permit, or building permit. The applicant may choose which permit issuance date begins the two-year period. No refund shall be made for items purchased prior to the issuance of the permit selected by the applicant. No sales tax paid to businesses outside of the city and borough shall be refunded.
C. The refund shall be the amount of sales tax actually paid for materials and services used in the construction of the dwelling. This shall include lumber, building materials, electrical and plumbing supplies or services, furnace and other heating apparatus and permanent carpeting and major appliances, such as kitchen stove, refrigerator, washer, dryer and freezer. Items not included are throw rugs, televisions, furniture, drapery, pictures and minor appliances, not built into the building. Also not included are tools and machinery purchased to use in the construction of the dwelling, nor shall it include spare material(s) not used.
D. Upon application for a refund the applicant shall certify, under penalty of perjury:
1. The sales tax requested to be refunded has actually already been paid to the supplier;
2. That all items for which a refund is requested were consumed in the construction of the dwelling or have actually been installed in the dwelling.
3. That all services were used to prepare the lot for construction, construct the dwelling, or install materials in the dwelling.
E. Applications for refund shall be made to the finance director and shall be supported by detailed invoices. Such invoices must be presented in an orderly fashion with the total amount of refund being applied for totaled. The finance director will disallow unsupported application or portions thereof. Appeals may be made to the assembly.
F. Only one refund will be issued in conjunction with the same building permit. If a builder chooses to apply for a refund prior to completion of construction during the two-year period commencing with the issuance of the building permit and subsequently incurs additional construction costs after the issuance of a refund, sales taxes paid on those additional costs will not be refunded, even if incurred within two years after the issuance of the building permit.
G. If a noncontractor home builder completes and sells a home prior to the end of the two-year time period for refunds, the amount of applicable sales tax will be deducted from the amount of the refund. This is the amount of sales tax applicable to the sale of the home in effect at that time.
(Ord. 14-08 § 4, 2014: Ord. 12-46A § 4 (part), 2013; Ord. 03-1758 § 4(B), 2004.)
4.09.120 Exemption from seasonal sales tax increase. RepealedOrd. 23-14
The following retail sales are exempt from any increase in the sales tax imposed on a seasonal basis, including the one percentage point increase for the months of April, May, June, July, August, and September set out in Section 4.09.010(B):
A. Rentals of Real Property. Rent paid as consideration for the use of real property either for thirty or more consecutive days or an entire calendar month by a person or persons of a room, set of rooms, structure, or suite is exempt from the additional one percent increase for the months of April, May, June, July, August and September. This exemption does not apply to any transaction taxable under the transient lodging tax set out in Chapter 4.24.
4.09.210 Exempt sales.
All exempt sales under Section 4.09.100 must be documented in an invoice. The city and borough of Sitka shall prescribe on a form issued by the finance director the requirement for an invoice. (Ord. 03-1758 § 4(B), 2004.)
4.09.220 Exemption certificate—Form.
A. A purchaser seeking an exemption from sales tax must apply for and be issued an exemption certificate from the city and borough of Sitka. The finance department shall provide an application for an exemption certificate. Upon approval of the application and issuance of the certificate, a purchaser shall present or provide the valid authorized exemption number or the certificate when purchasing goods or services for resale, for purchases by a government, approved government-supported nonprofit agency, or by an authorized senior citizen.
B. The certificate must include:
1. For resale:
a. General character of property or service sold by the purchaser in the regular course of business intended for resale;
b. Name and address of the purchaser;
c. Signature or electronic signature of the purchaser;
d. Expiration date; and
e. City and borough of Sitka’s authorized exemption number.
2. For senior citizen:
a. Name and address of the purchaser or purchaser’s designee;
b. Signature or electronic signature of the purchaser or purchaser’s designee;
c. Expiration date as appropriate for the authorized exemption; and
d. City and borough of Sitka’s authorized exemption number.
3. For all others:
a. Name and address of the purchaser;
b. Expiration date as appropriate for the authorized exemption; and
c. City and borough of Sitka’s authorized exemption number.
(Ord. 20-33 § 4 (part), 2020: Ord. 12-46A § 4 (part), 2013: Ord. 03-1758 § 4(B), 2004.)
4.09.230 Exemption certificate—Requirements.
A. An exemption certificate issued by the city and borough of Sitka and executed by a purchaser or lessee must either (1) be in the possession of and presented by the purchaser or lessee or (2) the valid authorized exemption number provided to the seller or lessor by the purchaser or lessee, at the time that an exempt transaction occurs.
B. An exemption certificate must contain the information and be in a format prescribed by the city and borough of Sitka.
C. If the seller or lessor accepts an exemption certificate or a valid authorized exemption number and believes in good faith that the purchaser or lessee will employ the property or service transferred in an exempt manner, the properly executed exemption certificate or valid authorized exemption number is considered conclusive evidence, as to the seller or lessor, that the sale is exempt.
D. Resale exemption certificates shall be issued annually to businesses that are approved upon application and are current in filing and remitting sales tax, valid for the balance of the calendar year upon issuance.
E. Senior citizen exemption certificate is valid for life.
F. There is no fee for an exemption certificate or a replacement certificate.
G. The exemption certificate shall be surrendered and is void when the holder no longer qualifies for the exemption.
(Ord. 20-33 § 4 (part), 2020: Ord. 12-46A § 4 (part), 2013; Ord. 03-1758 § 4(B), 2004.)
4.09.240 Improper use of subject of purchase obtained with exemption certificate—Penalty.
A. If a purchaser who uses an exemption certificate uses the subject of the purchase for a purpose other than one allowed as exempt under this chapter, the sale is considered a taxable sale as of the time of first use by the purchaser, and the sales price is the price that the purchaser paid. If the sole nonexempt use is rental while holding for sale, the purchaser shall include in the sales price the amount of the rental charged. Upon subsequent sale of the property, the seller shall include the entire amount of the sales price, without deduction of amounts previously received as rentals.
B. A person who uses an exemption certificate for property that will be used for purposes other than the purpose claimed is subject to a penalty, payable to the city and borough of Sitka, of one hundred dollars or one hundred percent of the tax due, whichever is greater, for each transaction in which an improper use of a certificate has occurred.
C. The finance director may revoke any exemption certificate if the holder has been found to have provided false information when applying for the certificate, used the exemption certificate to obtain an exemption to which the exemption holder is not entitled, has permitted another to use the exemption certificate to obtain an exemption to which the other holder is not entitled, or ceases to be entitled to the exemption from sales tax for which the certificate was issued. The revocation shall be permanent unless the finance director, upon approval of the administrator, provides for a shorter revocation period.
4.09.250 Liability for payment of tax—Security for retailer without place of business—Penalty.
A. Liability for the payment of the sales tax is not extinguished until the taxes have been paid to the department.
B. A retailer who does not maintain an office or other place of business in the city and borough of Sitka is liable for the sales tax on all property sold or leased and services provided in the city and borough of Sitka in accordance with this chapter and may be required to furnish adequate security to ensure collection and payment of the taxes. When authorized and except as otherwise provided in this chapter, the retailer is liable for the taxes on all property sold and services provided in the city and borough of Sitka in the same manner as a retailer who maintains an office or other place of business in the city and borough of Sitka.
(Ord. 03-1758 § 4(B), 2004.)
4.09.260 Method of accounting.
A person shall report and pay the sales tax using the same method of accounting that the person uses for federal tax purposes. (Ord. 03-1758 § 4(B), 2004.)
4.09.270 Returns—Payment—Authority of city and borough of Sitka.
A. A person who has a tax liability under Section 4.09.010 shall file a return on a form or in a format prescribed by the city and borough of Sitka and pay the tax due quarterly. The return shall be filed and the tax paid on or before the last day following the end of the period for which the tax is due. Each person engaged in business in the city and borough of Sitka subject to taxation under Section 4.09.010 shall file a return in accordance with the following:
1. Quarterly. Unless as otherwise provided for in this section, sellers shall on or before the last day of the month succeeding the end of each quarter year ending March 31st, June 30th, September 30th, and December 31st, prepare a return for the preceding quarter year. Returns shall be filed personally, with the finance department by 4:45 p.m., placed in the drop box located outside of City Hall, or postmarked on the last day of the month following the end of each quarter year. In the event the last day of the month falls on a legal holiday, Saturday, or Sunday, then the return may be filed on the first business day following.
2. Monthly. If a seller fails to file or is late in filing returns for two of the last four quarters, the finance director may require the seller to submit returns and payment each month.
3. Yearly. If a seller submits within the dates required for the four quarterly returns for a calendar year and the total amount collected and remitted to the city and borough of Sitka is two hundred dollars or less, seller may request in writing to the finance director, to file a sales tax return once a year for the previous calendar year. The yearly sales tax return is due on January 31st of each year. If total sales tax collected and/or remitted to the city and borough of Sitka exceeds two hundred dollars, seller may be required to file quarterly sales tax returns for future sales. If seller fails to file yearly sales tax return by due date, seller may be required to file and remit sales tax quarterly. If the seller fails to file yearly sales tax return and the amount of sales tax collected during the period of the return exceeds five hundred dollars, seller may be required to submit sales tax returns and remit sales tax to the city and borough of Sitka monthly for a minimum of one year.
4. Itinerant Seller. A person doing business within the city and borough of Sitka and liable for an itinerant nonresident business license on less than an annual basis shall file a sales tax return and remit in full the tax shown as due within twenty-four hours following the expiration of his license, but in any event prior to leaving the city and borough of Sitka.
5. Filing to be Continuous. A person who has filed a sales tax return will be presumed to be making sales in successive quarters unless the person files a return showing termination or sale of their business.
B. For the purposes of the sales tax, a return must be filed by the seller required to collect the tax.
C. Each return must be authenticated by the person filing the return or by the person’s agent authorized in writing to file the return.
4.09.280 Form of return.
On forms furnished by the city and borough of Sitka, the seller shall furnish the following information, sign the form and certify that it correctly states the information purportedly set forth:
A. Total sale divided into the following categories:
1. Retail and wholesale sales/services, including materials;
2. Long-term rentals of property or equipment (thirty days or more); and
3. Short-term rentals of property or equipment (less than thirty days);
B. All exemptions listed in Section 4.09.100 will be listed on the form separately by exemption category;
C. The amount of any refund which the seller wishes to claim for tax paid on purchases made for resale and attachment of “Application for Sales Tax Refund” forms indicating payment of the amount;
D. The amount of tax due;
E. Such other information as may be reasonably required.
(Ord. 12-46A § 4 (part), 2013; Ord. 07-04 § 4(A) (part), 2007: Ord. 03-1758 § 4(B), 2004.)
4.09.290 Substantiation of sales and exemptions.
The seller shall maintain records that will substantiate all amounts listed on the returns filed with the city and borough and include the following information needed by line item:
A. Gross receipts should at a minimum provide documentation for the following sales:
1. Retail and wholesale sales/services rendered, including materials;
2. Long-term rentals of property or equipment (thirty days or more); and
3. Short-term rentals of property or equipment (less than thirty days);
B. A substantiation of sales exempt under Section 4.09.100(M), Outside City and Borough, by a listing of:
1. The amount of sales or group of similar sale,
2. The means by which the order was received,
3. The point to which the sale was delivered,
4. The means of transportation used for delivery of the goods;
C. A substantiation of sales exempt under Section 4.09.100(G), Governmental Agencies;
D. A substantiation of sales exempt under Section 4.09.100(P), Resale;
E. A substantiation of the balance of all retail sales claimed exempt under Section 4.09.100(N), Over Twelve Thousand Dollars on Sales and Rents of Tangible Personal Property and on Sales of Services, and Over Twelve Thousand Dollars in Rent or Lease of Real Property on a Monthly Basis, by a listing of each sale and the amount of each which was not taxable;
F. A substantiation of sales exempt from the tax under Section 4.09.100(Y), Exemption for Persons Who Have Reached the Age of Sixty-Five, that lists:
1. Senior exemption number provided by the city and borough of Sitka to the senior citizen,
2. Name of senior citizen;
G. A substantiation of all other sales claimed exempt by documenting each exemption separately.
4.09.300 Methods.
A. The city and borough of Sitka shall adopt regulations providing for payment of the sales tax based on a rounding method.
B. The city and borough of Sitka may use sampling principles or methods in lieu of one hundred percent examination of records in conducting a sales tax audit.
(Ord. 03-1758 § 4(B), 2004.)
4.09.310 Deduction for bad debts.
A. A person filing a return under Section 4.09.280 may deduct sales found to be worthless. The bad debt may be deducted when it:
1. Is written off as uncollectible in the person’s books and records; and
2. Qualifies as a deduction for federal income tax purposes under 26 U.S.C. (Internal Revenue Code).
B. If the amount of bad debt exceeds the amount of taxable sales during the period that the bad debt is written off, a person may file a refund claim with the city and borough of Sitka.
C. If a bad debt deducted under subsection A of this section is subsequently collected, the person who claimed the deduction shall pay the tax levied under Section 4.09.010 on the amount collected. For purposes of this subsection, any payments made on a debt or account are applied:
1. First to the taxable price of the property or service and the tax levied under Section 4.09.010 on the property or service; then
2. To interest, service charges, and any other charges.
4.09.320 Timely filing allowance.
A. A person filing a return under Section 4.09.270 may claim an allowance in the amount of three percent of the tax determined to be payable to the city and borough of Sitka or one hundred dollars a quarter, whichever is less, if the return is timely filed and the tax is timely paid provided:
1. The person remits within the first fifteen days of the second month of the quarter the actual tax collected during the first month of the quarter or one-third of the total tax remitted during the previous quarter (or, if seasonal fluctuations in gross business receipts exist, not less than one-third of the total tax remitted during the same quarter of the previous year); and
2. The person remits within the first fifteen days of the third month of the quarter the actual tax collected during the second month of the quarter or one-third of the total tax remitted during the previous quarter (or, if seasonal fluctuations in gross business receipts exist, not less than one-third of the total tax remitted during the same quarter of the previous year); and
3. The person files a return and remits the balance of the tax due as required in Section 4.09.270.
B. The allowance may be deducted on the return. The allowance may not be greater than the tax determined to be payable to the city and borough of Sitka.
4.09.330 Security—Limitations—Sales of security deposit at auction—Bond.
A. The city and borough of Sitka may require a retailer to deposit with the city and borough of Sitka security in a form and amount that the city and borough of Sitka determines is appropriate. The deposit may not be more than twice the estimated average liability for the period for which the return is required to be filed or ten thousand dollars, whichever is less. The amount of security may be increased or decreased by the city and borough of Sitka, subject to the limitations provided in this section.
B. If necessary, the city and borough of Sitka may sell at public auction property deposited as security to recover a sales tax or use tax amount required to be collected, including interest and penalties. Notice of the sale must be served personally on or sent by certified mail to the person who deposited the security. After the sale, any surplus above the amount due that is not required as security under this section must be returned to the person who deposited the security.
C. In lieu of security, the city and borough of Sitka will require a retailer to file a bond issued by a surety company authorized to transact business in the state of Alaska to guarantee solvency and responsibility if such retailer failed to remit sales tax on a previous business to the city and borough of Sitka.
D. In addition to the other requirements of this section, the city and borough of Sitka will require the corporate officers, directors, or shareholders of a corporation to provide a personal guaranty and assumption of liability for the payment of the tax due under this chapter.
E. Appeals may be made to the assembly on the requirement to file a bond issued by a surety company.
4.09.340 Taxpayer quitting business—Liability of successor.
A. All taxes payable under this chapter are due and payable immediately whenever a taxpayer quits business, sells, exchanges, or otherwise disposes of the business or disposes of the stock of goods. The taxpayer shall make a return and pay the taxes due within ten days after the taxpayer quits business, sells, exchanges, or otherwise disposes of the business or disposes of the stock of goods.
B. Except as provided in subsection D of this section, a person who becomes a successor in the taxpayer’s business or stock of goods is liable for the full amount of the tax and shall withhold from the sales price payable to the taxpayer a sum sufficient to pay any tax due until the taxpayer produces either a receipt from the city and borough of Sitka showing payment in full of any tax due or a statement from the city and borough of Sitka that tax is not due.
C. If a tax is due but has not been paid as provided in subsection A of this section, the successor is liable for the payment of the full amount of tax. The payment of the tax by the successor is considered to be a payment on the sales price and, if the payment is greater in amount than the sales price, the amount of the difference becomes a debt due to the successor from the taxpayer owing the tax under subsection A of this section.
D. A successor is not liable for any tax due from the person from who the successor acquired a business or stock of goods if:
1. The successor gives written notice to the city and borough of Sitka of the acquisition; and
2. An assessment is not issued by the city and borough of Sitka against the former operator of the business within three months after receipt of the notice from the successor. If an assessment is issued by the city and borough of Sitka and a copy of the assessment is not mailed to the successor, the successor is not liable for the tax due.
(Ord. 03-1758 § 4(B), 2004.)
4.09.345 Application of payments.
A. Any payment submitted to the finance department for any taxes, fees, penalties, interest or cost due under any provision of this chapter shall be credited to the tax period for which remitted in the following order:
1. Costs;
2. Fees/penalties;
3. Interest; and then
4. Taxes.
B. If no tax period is specified, payment is applied to the balance due as a whole in the following order:
1. Costs;
2. Fees/penalties;
3. Interest; and then
4. Taxes.
(Ord. 12-46A § 4 (part), 2013.)
4.09.350 Procedures on delinquencies.
A. Late Fee, Penalty and Interest. Late fee, penalty and interest will be assessed as follows:
1. A late fee will be charged if the seller does not file the proper form(s) in a timely manner for the tax due dates listed in Section 4.09.270. A fee of fifteen dollars will be charged the first month or any part of that month, with an additional twenty-five dollars added for each additional month or portion of a month, up to a maximum of one hundred dollars.
2. If the seller does not remit the sales tax then due on the dates listed in Section 4.09.270, and an abatement has not been granted under subsection C of this section, a penalty equal to five percent of the delinquent tax shall be added to the tax for the first month or any part of that month, an additional five percent shall be added to the tax due for each month or part of a month for delinquency, with a total penalty of twenty-five percent. It shall be assessed and collected in the same manner as the tax is assessed and collected.
3. In addition to the late fee and penalty provided in subsections (A)(1) and (2) of this section, interest at the rate of twelve percent per year on the delinquent tax from the date of delinquency until paid shall accrue and be collected in the same manner as the delinquent tax is collected.
B. Written Demand and Additional Procedures. If a seller fails to file the return or make the remittance in accordance with Section 4.09.270, the finance director shall make written demand upon the seller, mailed to his last known address, for submission of the return and/or remittance. In the event of noncompliance with the demand, the finance director may do any or all of the following actions:
1. Criminal Action. File a criminal complaint against the seller in the district court for violation of Section 4.09.270;
2. Civil Action. Make a sales tax assessment against the seller, with the assessment based upon an estimate of the gross revenue received by the seller during the period and institute civil action to recover the amount of the tax. The estimate of gross revenue shall be derived from past returns of the seller, the general economic level on the business community and, if available, returns of comparable businesses;
3. Hearing. Notify the seller in writing by certified mail that a hearing will be held to determine the sales tax liability of the seller at a specified time and place not less than fifteen days after the date of the notice. The seller shall present himself at the hearing and make available for inspection his books, papers, records, and other memoranda pertaining to gross revenues derived from his commercial transactions sufficient to enable the city and borough of Sitka to make a determination whether the return is required or tax due;
4. Publish. Publish in a newspaper of general circulation within the city and borough of Sitka the name and amount of sales tax due, if any, of a person convicted of the crime of violating this chapter or a person against whom the city and borough of Sitka has recovered a judgment for unpaid sales tax.
C. Waiver of Penalties. Penalties from a delinquent tax remission shall be waived if:
1. The seller submits a penalty abatement request form to the finance department within seven calendar days of the due date and has paid the delinquent tax in full;
2. The seller has no past due balances with any department of the city and borough of Sitka; and
3. The finance department verifies that the seller has not filed a late sales tax return or been granted an abatement within three years of the request for abatement.
(Ord. 17-08 § 4, 2017; Ord. 12-46A § 4 (part), 2013; Ord. 03-1758 § 4(B), 2004.)
4.09.360 Tax as debt.
A. The tax imposed by this chapter and related interest and penalties become a personal debt of the person required to file a return from the time the liability arises, regardless of when the time for payment of the liability occurs.
B. If the personal representative of an estate has voluntarily distributed the assets held in that capacity without reserving sufficient assets to pay the taxes, interest, and penalties, the personal representative is personally liable for any deficiency, to the extent permitted under AS 13.16.
C. This section applies to corporate officers, directors, or shareholders required by the city and borough of Sitka to personally guarantee the payment of the taxes for their corporation. The officer or employee of a corporation whose duty it is to collect, truthfully account for, and pay to the city and borough of Sitka the taxes imposed by this chapter and who fails to pay the taxes is liable to the city and borough of Sitka for the taxes imposed by this chapter and the penalty and interest due on the taxes.
(Ord. 03-1758 § 4(B), 2004.)
4.09.370 Refunds and credits.
The city and borough of Sitka may credit or refund overpayments of taxes, taxes erroneously or illegally assessed or collected, penalties collected without authority, and taxes that are found unjustly assessed or excessive in amount, or otherwise wrongfully collected. The city and borough of Sitka shall set limitations, specify the manner in which claims for credits or refunds are made, and give notice of allowance or disallowance. When a refund is allowed to a taxpayer, it shall be paid out of the general fund on a warrant issued under a voucher approved by the city and borough of Sitka. (Ord. 03-1758 § 4(B), 2004.)
4.09.380 Period of limitation.
The amount of any tax imposed under this chapter may be determined and assessed at any time within a period of six years after the tax became due and payable. The period shall begin on the date when a return is required to be filed. Where no return has been filed, then the period does not begin to run until the discovery of the delinquency occurs. No suit or other proceeding for the collection of the tax shall be begun after the expiration of the period. (Ord. 03-1758 § 4(B), 2004.)
4.09.390 Taxes lien.
The tax, interest and penalty imposed under this chapter shall constitute a lien in favor of the city and borough of Sitka upon all property of the person owing the tax. This lien arises upon delinquency and continues until the liability is satisfied or the lien is foreclosed. When recorded, the lien authorized under this section shall have priority over all other liens, except those for property taxes and special assessments. (Ord. 03-1758 § 4(B), 2004.)
4.09.395 General penalty provision.
Violation of this chapter is a misdemeanor punishable by a fine of not more than five hundred dollars or by imprisonment for not more than thirty days, or by both. Additionally, each and every day during any portion of which a violation or failure to comply is committed, permitted, or continued shall be a separate offense, and shall be charged and punished accordingly. (Ord. 12-46A § 4 (part), 2013.)
4.09.400 Rules and regulations.
The finance director shall from time to time cause to be promulgated rules and regulations as are necessary and advisable to provide for the application and interpretation of this chapter and to submit them to the assembly for its adoption or rejection, and to cause to be provided methods and forms for reporting and collecting the tax in accordance with this chapter and regulations. (Ord. 03-1758 § 4(B), 2004.)
4.09.405 Confidential and nonconfidential tax information.
A. The following information is publicly available information:
1. Names and addresses of business owners who have filed tax returns under this chapter;
2. Whether a business is registered to collect taxes under this chapter in the city and borough of Sitka;
3. Whether a business is current in tax returns and in remitting sales tax due under this chapter, and the number of returns not filed; and
4. Names and exemption numbers of governmental agencies and government funded agencies which have received a tax-exempt number from the city and borough of Sitka relating to taxes due under this chapter.
B. The city and borough of Sitka may permit any authorized representative of any federal, state or other local government agency to inspect and copy any tax returns filed and reports prepared under this chapter, if the other governmental agency provides substantially similar access to the city and borough of Sitka and if the city and borough of Sitka determines that other governmental agency provides adequate safeguards for the confidentiality of the tax returns and reports.
C. Except as otherwise provided in this section, tax forms and their contents shall be confidential and shall not be disclosed by the finance department except:
1. In connection with efforts by the city and borough of Sitka to collect the tax;
2. In response to a subpoena issued by a court, state agency or governmental board or commission;
3. In connection with legislative inquiry specifically authorized by the assembly;
4. In connection with the city and borough of Sitka audits for purposes of verifying city and borough of Sitka accounting practices;
5. In compilation of statistics and studies by the finance department for public distribution, so long as information from individual businesses is not identifiable as to source. (Ord. 07-04 § 4(A) (part), 2007.)
4.09.410 Sales tax audits.
A. Any seller who has established a sales tax account with the city and borough of Sitka, who is required to collect and remit sales tax, or who is required to submit a sales tax return under the provision of Section 4.09.270 is subject to a discretionary sales tax audit at any time. The purpose of such an audit is to examine the business records of the seller in order to determine whether appropriate amounts of sales tax revenue have been collected by the seller and remitted to the city and borough of Sitka.
B. The finance director shall be responsible for directing that sales tax audits take place and for selecting the particular sellers whose business records will be audited.
C. Sales tax audits of seller’s business records may be accomplished by either an employee of the city and borough of Sitka’s finance department or by an individual or firm under contract with the city and borough of Sitka.
D. Sellers selected for a sales tax audit will be notified by letter and will be required to meet with, and make available for inspection and copying all pertinent business records including income tax returns that may be requested for the prior six fiscal years for examination, to the finance department employee, or contractor conducting the audit, within thirty days of notification. Under extenuating circumstances, the finance director may grant an extension of time for compliance.
E. After completion of a sales tax audit, sellers subject to the audit will be notified of the results of the audit by letter. If the audit has resulted in an additional sales tax liability to the city and borough of Sitka, the additional sales tax, with interest assessed retroactive to the date the sales tax was due, must be remitted to the city and borough of Sitka within fourteen days after the receipt of the letter, or the additional sales tax will be subject to the procedures on delinquencies outlined in Section 4.09.350. If the audit has resulted in a refund due the seller, the refund will be sent to the seller within fourteen days, or applied to the seller’s account, at the seller’s option.
F. It shall be the seller’s responsibility to maintain business records in sufficient detail to substantiate all information reported on sales tax returns, including sales qualifying as retail sales exempt from taxation under the provision of Section 4.09.100. If insufficient detail exists within a seller’s business records to substantiate retail sales exemptions, such sales will be reclassified as taxable sales and subject to sales tax collection and remittance.
G. Any seller notified of an additional sales tax liability as a result of a sales tax audit shall have the right to appeal the additional liability to the assembly. Such an appeal must be filed with the municipal clerk within thirty days of notification by letter of the liability. If an additional liability is appealed, the accumulation of penalties and interest under the provisions of Section 4.09.350 will be suspended on the date the appeal is filed with the municipal clerk; if the appeal is subsequently denied by the assembly, all such penalties and interest will be retroactive back to the original date of notification of additional liability by letter.
H. Any seller refusing to comply with the provisions of this section shall be subject to any or all of the procedures on delinquencies as outlined in Section 4.09.350, including the filing of a criminal complaint against the seller in district court.
4.09.420 Definitions.
In this chapter:
A. “Consideration” means a valuable inducement and includes, without limitation, money, property, and services;
B. “Engaging in business” means carrying on or causing to be carried on any activity with the purpose of direct or indirect benefit;
C. “Lease,” “leasing,” or “rental,” regardless of whether a transaction is characterized as a lease or rental under generally accepted accounting principles, 26 U.S.C. (Internal Revenue Code), AS 45.01 through 45.08, 45.12, 45.14, and 45.29 (Uniform Commercial Code), or other provisions of federal, state, or local law:
1. Means a transfer of possession or control of tangible personal property of a fixed or indeterminate term for consideration; a lease or rental may include future options to purchase or extend;
2. Does not include:
a. A transfer of possession or control of property under a security agreement or deferred payment plan that requires the transfer of title upon completion of the required payments;
b. A transfer of possession or control of property under an agreement that requires the transfer of title upon completion of required payments if payment of an option price does not exceed the greater of one hundred dollars or one percent of the total required payments; or
c. Providing tangible personal property along with an operator for a fixed or indeterminate period of time; a condition of this exclusion is that the operator is necessary for the equipment to perform as designed; for the purpose of this subsection, an operator must do more than maintain, inspect, or set up the tangible personal property;
3. Includes agreements covering motor vehicles and trailers if the amount of consideration may be increased or decreased by reference to the amount realized upon sale or disposition of the property as defined in 26 U.S.C. 7701(h)(1);
D. “Maintaining an office or other place of business” means:
1. A person’s having or maintaining in the city and borough of Sitka, directly or by an affiliate, an office, distribution house, sales house, warehouse, or place of business; or
2. An agent’s operating within the city and borough of Sitka under the authority of the person or its affiliate, whether the place of business or agent is located in the city and borough of Sitka permanently or temporarily or whether the person or affiliate is authorized to do business in the city and borough of Sitka;
E. “Manufacturing” means combining or processing components or materials, including the processing of ores in a mill, smelter, refinery, or reduction facility, to increase the value of the components or materials for sale in the ordinary course of business; “manufacturing” does not include construction;
F. “Person” means an individual, estate, trust, receiver, cooperative association, club, corporation, company, firm, partnership, joint venture, syndicate, or other entity, including a gas, water, or electric utility owned or operated by a borough, municipality, or other political subdivision of the state;
G. “Purchase price” means “sales price” and applies to the measure subject to sales tax;
H. Residential Rent. Rent paid for residential housing for thirty or more consecutive days or an entire calendar month by a person or persons for a room, set of rooms, structure, or suite is exempt from sales taxes. This exemption does not apply to any transaction taxable under Chapter 4.24 regarding the transient lodging tax;
I. “Sale,” “selling,” or “purchasing” means the transfer of property for consideration or the performance of a service for consideration;
J. “Sales price”:
1. Means the total amount of consideration, including cash, credit, property, and services, for which personal property or services are sold, leased, or rented, valued in money, whether received in money or otherwise, without any deduction for the following:
a. The seller’s cost of the property sold;
b. The cost of materials used, labor or service cost, interest, losses, all costs of transportation to the seller, all taxes imposed on the seller, and any other expense of the seller;
c. Charges by the seller for any services necessary to complete the sale, other than delivery and installation charges;
d. Delivery charges;
e. Installation charges;
f. The value of exempt personal property given to the purchaser where taxable and exempt personal property have been bundled together and sold by the seller as a single product or piece of merchandise;
g. Credit for a trade-in, as determined by state law;
2. Does not include:
a. Discounts, including cash, term, or coupons that are not reimbursed by a third party that are allowed by a seller and taken by a purchaser on a sale;
b. Interest, financing, and carrying charges from credit extended on the sale of personal property or services if the amount is separately stated on the invoice, bill of sale, or similar document given to the purchaser;
K. “Sales tax” means the applicable tax imposed by Section 4.09.010;
L. “Service” means an activity that is engaged in for another person for consideration and that is distinguished from the sale or lease of property; in determining what a service is, the intended use, principal objective, or ultimate objective of the contracting parties is irrelevant; “service” includes:
1. Activities performed by a person for its members or shareholders;
2. Construction activities and all tangible personal property that will become an ingredient or component part of a construction project; and
3. Labor; professional services; transportation; telephone or other communications service; entertainment, including cable, subscription, or pay television or other telecommunications service; the supplying of food, lodging, or other accommodations in hotels, restaurants, or elsewhere; admission to exhibitions; the use of a computer, computer time, a computer system, a computer program, a computer network, or any part of a computer system or network; and the supplying of equipment for use;
4. Travel and adventure services means 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;
M. “Tangible personal property” means personal property that can be seen, weighed, measured, felt, or touched, or that is in any other manner perceptible to the senses; “tangible personal property” includes electricity, water, gas, steam, and prewritten computer software;
N. “Tax” means the tax levied by Section 4.09.010.
(Ord. 19-42 § 4 (part), 2019; Ord. 18-35 § 4 (part), 2018: Ord. 18-14 § 4 (part), 2018: Ord. 12-46A § 4 (part), 2013; Ord. 07-12 § 4 (part), 2007; Ord. 03-1758 § 4(B), 2004.)