Local sales tax on invoices in Alaska

Alaska has no state sales tax, so an Alaska invoice never carries a state tax line. Boroughs and cities can levy their own sales taxes, and any sales tax you charge in Alaska belongs to one of them.

Borough and city sales taxes: what they can reach

Alaska’s local governments have the authority to adopt a local sales tax, and the Alaska Remote Seller Sales Tax Commission (ARSSTC) counts over 100 taxing jurisdictions in the state.

Under Alaska Statutes Sec. 29.45.650, a borough may tax sales, rents and services provided in the borough, any or all of them, and may grant exemptions by ordinance. A city inside a borough with an areawide sales tax may tax the sources the borough taxes. A city in a borough without one, or outside any borough, may levy sales and use taxes the way a borough can.

By statute, there’s no limit on a borough’s or city’s sales tax rate. Each municipality keeps control of its own rates and exemptions, and some rates change by season. Whether your services or the goods you sell are taxed, what’s exempt and at what rate all come from that borough’s or city’s own code.

Filing: locally, where you have a physical presence

No business files sales tax with the State of Alaska. You file locally for all your sales in a jurisdiction where you have a physical presence, which the ARSSTC defines as an office, warehouse, storefront, inventory, a service or sales agent, or rented equipment or property.

Your invoice: local tax only

There’s no state sales tax to put on an Alaska invoice. A sales tax line on it is a borough’s or city’s tax, charged under that municipality’s own code, and that code is where to check how to charge it.

Work for the State of Alaska: no local tax

Alaska’s boroughs and cities, home rule and general law alike, may not levy or collect a sales or use tax on a construction contract awarded by the state or a state agency. The same bar covers a subcontract awarded in connection with the project that contract funds.

The Division of Finance also tells state vendors that the Alaska Constitution exempts the State of Alaska from all taxes emanating from within Alaska, including city and borough sales and use taxes. The State has no tax exemption certificate because it doesn’t need one, and the exemption applies to any Alaska state agency.

Finding a municipality’s rate

The Office of the State Assessor’s Alaska Taxable report lists each municipality’s reported tax rates in Table 1B. The ARSSTC also publishes a tax map of taxing boundaries and allowed exemptions, but it shows only the ARSSTC’s member jurisdictions.

Rating a sale by ZIP code can go wrong in Alaska, because many Alaska ZIP codes are larger than a local taxing jurisdiction’s boundary. The ARSSTC also lists a missed sales tax cap, and a missed exemption such as for senior citizens, non-profits, resale or government entities, among the ways a buyer ends up charged tax in error.