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Sales Tax in Alaska

Taxation is an essential component of any state. It allows a government to generate revenue and provide amenities and infrastructures to the citizens. In addition, there are several types of taxes collected by the government. Sales tax is an example of such a tax. Likewise, each state has its specific laws that define the rate and collection of this levy. Governments collect sales tax on items and services sold to buyers. In most cases, this levy is collected when a purchase is made. Also, it is usually the responsibility of retailers to collect this tax.

Alaskan Sales Tax

People staying in Alaska pay less tax than most Americans. A resident of this state does not pay income tax. Similarly, the state government does not collect any sales levy from residents. Therefore, the rate paid as sales tax is usually determined by individual localities within the state. On average, all municipals do not charge more than 2% sales tax across Alaska. This rate is considered one of the lowest across the United States. Also, the highest rate paid by citizens of Alaska is 7.5%.

Taxable Items and Services

The items and services eligible for taxation taxed in Alaska are not determined by the state government. Therefore, each local government may have different eligibilities. A taxpayer may want to contact their local authority for more information or visit the Alaskan Department of Commerce.

Municipalities Sales Tax Collection

Each municipal in Alaska makes decisions on whether to collect sales tax. The local governments decide on the rates for each location. However, the rates and decisions to collect or not depend on the local authority. Sales tax exemptions are also different in each area. Nonetheless, the state government has made some exceptions that cut across all municipalities. These exceptions include alcohol and space exploration facilities. The Alaskan Department of Commerce periodically publishes information rated to each municipal. This information can be found in the Alaska Taxable publication. In addition, towns and cities may have different sales tax requirements and rates. Therefore, it is not uncommon for a taxpayer to pay taxes for cities and towns.

Filling Sales Tax in Alaska

In the past, all businesses required a physical address for sales tax collection. This requirement was altered in 2020. Now, any online or offline business is mandated to gather and forward sales tax under the Alaska Remote Sale Tax Commission if it fulfills two criteria. These criteria are:

  • An enterprise must make a minimum of 200 transactions within a tax year;
  • A business must make sales equal to or more than $100,000 within a tax year.

However, not all locations are registered with this commission. A taxpayer may be required to collect taxes from buyers and remit in some locations while injuring the levy in others. On the other hand, a taxpayer may present proof of sales tax payment to their respective municipals. Doing this makes the determination of use tax easier. Therefore, only the difference in use tax is paid by the taxpayer if such a difference exists.

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