Bill Summary – FastDemocracy

State of Alaska
                                                            Fiscal Note
                                                                                                Bill Version:                  CSSB 127(FIN)
 2024 Legislative Session
                                                                                                Fiscal Note Number:            2
                                                                                                (S) Publish Date:              3/13/2024
 Identifier:        SB127CS(TRA)-DOR-TAX-01-19-24                                 Department:       Department of Revenue
 Title:             TAXATION: VEHICLE RENTALS, SUBPOENAS                          Appropriation: Taxation and Treasury
 Sponsor:           CLAMAN                                                        Allocation:       Tax Division
 Requester: SENATE TRANSPORTATION                                                 OMB Component Number:               2476
 Expenditures/Revenues
 Note: Amounts do not include inflation unless otherwise noted below.                                                                (Thousands of Dollars)
                                                 Included in
                                    FY2025       Governor's
                                Appropriation      FY2025                                              Out-Year Cost Estimates
                                  Requested       Request
 OPERATING EXPENDITURES               FY 2025        FY 2025       FY 2026                        FY 2027            FY 2028         FY 2029         FY 2030
 Personal Services
 Travel
 Services
 Commodities
 Capital Outlay
 Grants & Benefits
 Miscellaneous
 Total Operating                            0.0           0.0          0.0                              0.0              0.0              0.0              0.0
 Fund Source (Operating Only)
 None
 Total                                            0.0              0.0               0.0                0.0              0.0              0.0              0.0
 Positions
 Full-time
 Part-time
 Temporary
 Change in Revenues
 None                                             ***                                 ***               ***              ***              ***               ***
 Total                                            ***              0.0                ***               ***              ***              ***               ***
 Estimated SUPPLEMENTAL (FY2024) cost:                                      0.0             (separate supplemental appropriation required)
 Estimated CAPITAL (FY2025) cost:                                           0.0             (separate capital appropriation required)
 Does the bill create or modify a new fund or account?       No
 (Supplemental/Capital/New Fund - discuss reasons and fund source(s) in analysis section)
 ASSOCIATED REGULATIONS
 Does the bill direct, or will the bill result in, regulation changes adopted by your agency?                   No
 If yes, by what date are the regulations to be adopted, amended or repealed?
 Why this fiscal note differs from previous version/comments:
 Updated from SLA2023 to SLA2024 fiscal note template.
 Prepared By:             Brandon Spanos, Acting Director                                                             Phone:       (907)269-6736
 Division:                Tax Division
                                                                   REPORT                                             Date:        01/19/2024 05:15 PM
                                                                                 ED
                                                                    SFC 03/1 OUT OF
 Approved By:             Eric DeMoulin, Administrative Services Director                                             Date:        01/19/24
 Agency:                  Department of Revenue
                                                                                  2/2024
Printed 3/12/2024                                                    Page 1 of 2                                                            Control Code: dxjRK
                                                                                                           CSSB 127(FIN) - Fiscal Note 2
                                                  FISCAL NOTE ANALYSIS
STATE OF ALASKA                                                                   BILL NO. CSSB 127
2024 LEGISLATIVE SESSION
Analysis
   Background
   Alaska currently imposes an excise tax under AS 43.52 on the lease or rental of passenger and recreational vehicles in the
   state if the lease or rental of the vehicle does not exceed 90 consecutive days. The rate of the tax for passenger vehicles is
   10% of the total fees and costs charged for the lease or rental of the passenger vehicle. The rate of the tax for recreational
   vehicles is 3% of the total fees and costs charged for the lease or rental of the recreational vehicle. The current tax applies
   broadly to nearly all short‐term rentals, including those executed via an online platform. However, because the platforms
   do not report the transactions to the Department of Revenue, it is difficult to enforce the current tax on the individual
   vehicle owners.
   This bill would move the responsibility for collecting and remitting the tax from the individual owner to the vehicle rental
   platform company if the lease or rental was arranged or executed through the platform. The Department of Revenue, Tax
   Division is aware of at least four businesses arranging vehicle rentals in the State that do so online and have not paid the
   vehicle rental tax. The bill would bring some additional revenue back into the general fund which has been eroded due to
   the peer‐to‐peer vehicle rental platforms operating in the state. These companies are arranging rentals which have
   historically been provided by traditional vehicle rental companies, which because they are the owners of the vehicles have
   filed and paid the tax. This bill would take effect immediately.
   Revenue Impact
   The Department of Revenue has collected an average of $11.7 million in vehicle rental taxes over the past four years. The
   revenue from the vehicle rental tax was $9.7 million in FY2020, $7.9 million in FY2021, $13.9 million in FY2022, and $15.1
   million in FY2023. This bill would capture unreported vehicle rentals that are arranged or executed through a vehicle
   rental platform and, therefore, would have a positive effect on revenue.
   However, the Department of Revenue does not have enough data on peer‐to‐peer rental information in Alaska to provide
   an estimated revenue impact. Therefore, the change in tax revenue is indeterminate.
   Implementation Cost
   This proposed legislation does not change the tax itself, it merely captures unreported vehicle rentals by requiring the
   vehicle rental platform to collect and remit the tax. This bill would not require the Department of Revenue to make
   changes to its Tax Revenue Management System (TRMS). Therefore, there would be no cost to the department for
   implementation. Additional review and audit work would be absorbed by existing staff.
(Revised 10/31/2023 OMB/LFD)                                                                                         Page 2 of 2
SB127CS(TRA)-DOR-TAX-01-19-24                                   Page 2 of 2                                                Control Code: dxjRK
Statutes affected: 
SB0127A, AM SB 127, introduced 04/12/2023: 43.05.040, 43.52.050, 43.52.010, 43.52.099
SB0127B, AM CSSB 127(TRA), introduced 05/03/2023: 43.05.040, 43.52.050, 43.52.010, 43.52.099
SB0127C, AM CSSB 127(FIN), introduced 03/13/2024, passed House 05/10/2024, passed Senate 03/18/2024: 43.05.040, 43.52.020, 43.52.010, 43.52.050, 43.52.099
SB0127C, AM CSSB 127(FIN), introduced 03/13/2024: 43.05.040, 43.52.020, 43.52.010, 43.52.050, 43.52.099