Alaska

Alaska seeks taxes from Turo car sharing platform in long-running dispute

Published

2 years ago

June 4, 2023

Alaska seeks taxes from Turo car sharing platform in long-running dispute

Vehicles travel southbound on Gambell Street near E. 15th Avenue in Anchorage in August 2021. (Emily Mesner / ADN)

JUNEAU — The state of Alaska wants to collect taxes from Turo, the online platform where people can advertise and rent their cars, after multiple legislative efforts and a trip to the courts have failed to resolve a long-running dispute.

The dispute raises questions about how e-commerce is regulated in Alaska — and the state’s power to enforce its laws.

The state has said that transactions made through Turo, and other peer-to-peer car rental websites, should incur the state’s 10% vehicle-rental tax, which has been imposed on sales by brick-and-mortar rental car agencies since 2003. Turo has argued it is not a car-rental firm that owns a fleet of vehicles, meaning it should not be liable for that tax.

Deputy Revenue Commissioner Fadil Limani said Turo accounts for the vast majority of online car rentals in Alaska, and the state could be missing out on millions of dollars per year.

Without data from the San Francisco-based company, it’s not possible to estimate how much tax revenue the state is failing to receive from Alaskans who rent their cars through Turo, called “hosts.”

In March of 2018, the state sued Turo for refusing to comply with subpoenas that required the company to show its financial records going back to 2009. Former Juneau Superior Court Judge Louis James Menendez dismissed the case later that year, and said the subpoena was overly broad and unduly burdensome.

The state Tax Division issued its subpoenas “for the express purpose” of securing information to determine if Turo was liable for state taxes, Menendez said. Because the subpoenas were unsuccessful, the judge said that he could not answer the underlying question in the case: whether Alaska’s rental-vehicle tax should apply to Turo.

Since the state’s lawsuit was dismissed, the Department of Revenue has sought a legislative fix, supporting measures to clearly spell out in state law that Turo is responsible for collecting the state’s 10% vehicle-rental tax from renters. A bill supported by the Dunleavy administration stalled in the Senate before the end of the first regular legislative session last month.

In the intervening years, the state has collected taxes directly from hosts — including, until recently, by garnishing some of their bank accounts.

But there have been challenges.

Turo manages all financial transactions itself and pays hosts directly after subtracting fees, meaning hosts have no method to collect taxes from renters. That means hosts have needed to pay their tax liabilities out of pocket, sometimes months after a transaction has been made.

‘Level playing field’

The number of Alaska Turo hosts has grown exponentially in recent years, particularly at the end of the pandemic when rental cars were scarce and prices skyrocketed.

Rental car agencies estimate that there are over 3,000 vehicles listed on Turo in Anchorage and Mat-Su, making the platform the largest single source of rental vehicles in the state.

Turo declined to share with the Daily News how many Alaska-based hosts there are or how much revenue it generates locally per year.

For traditional rental car companies, levying state taxes on Turo is about fairness. Carrigan Grigsby, executive vice president of Avis Alaska — the state’s largest brick-and-mortar rental car company — said that hosting platforms should not get preferential treatment and effectively be allowed to charge lower fees for customers.

“Obviously, we believe that business should operate on a level playing field,” he said to a state Senate committee in April.

Grigsby said that some Turo hosts effectively operate like small businesses, and the state should tax them like that. Turo has three categories of hosts and considers a “professional host” to typically have 10 or more cars, often using the platform as their primary income source.

Turo’s business has also experienced strong growth in recent years. By the end of 2022, the billion-dollar company reported having 160,000 active hosts and 320,000 active vehicles across 11,000 cities in the U.S., Europe and Australia. The privately held company, which filed an updated initial public offering with the U.S. Securities and Exchange Commission in March, reported generating $746.6 million in revenue in 2022 — a 59% increase from the year before.

‘Collect an old tax’

Senate Bill 127, introduced in April by Sen. Matt Claman, D-Anchorage, is the latest attempt to resolve the Turo tax dispute with the state after two previous legislative efforts fell short. It is supported by the rental car industry.

Under Claman’s bill, Turo would impose the 10% vehicle-rental tax on the renter at the point of sale through its app or website, and the company would then remit tax revenue to the state quarterly.

“We’re not imposing a new tax and trying to apply it retroactively. We’re just trying to collect an old tax, or an existing tax,” he said.

Limani said it would be easy for Turo to enable the tax collection feature on its website and app, which it already does in 40 states. And there is precedent for Turo collecting taxes in Alaska.

In 2020, the Anchorage Assembly passed an ordinance to extend its own 8% vehicle-rental tax to include platforms like Turo. The Municipality of Anchorage estimated at the time that change would raise an additional $760,000 per year, increasing by 5% annually.

The municipality does not distinguish between hosting platforms and rental car agencies when calculating vehicle-rental tax revenue, a spokesperson for the mayor’s office said. City data shows Anchorage rental car companies made over $63 million in the third quarter of last year, and paid $4.2 million in taxes — a 36% increase from the same period in 2019, before the COVID-19 pandemic and when municipal taxes were first imposed on Turo.

Unfruitful meetings

The Turo tax dispute has largely gone on behind closed doors, involving meetings late last year between members of the Dunleavy administration and Turo representatives. But those meetings were not fruitful, with a Department of Revenue memorandum attached to SB 127 stating that Turo has been “unwilling to find a workable solution.”

“I just don’t see them working in good faith,” Limani said. “And they’re just trying to ride this for as long as they can, anticipating that it may or may not happen sometime in the near future.”

Catherine Mejia, a Turo spokesperson, disputes that account. She said the state and the rental car industry have blocked any compromise tax figure being approved, but that Turo users should not be required to pay the full 10% state tax.

“We believe that is wildly unfair to local residents,” she said, arguing that hosting platforms and rental car agencies are fundamentally different businesses. “So we’re willing to come to the table with anything between zero and 9%.”

Limani acknowledged that Alaska lobbyist Ted Popely, who has been on a $5,000-per-month contract with Turo since January, suggested to him that the company could accept a lower tax figure. But the Dunleavy administration was not prepared to support that, he said.

Grigsby with Avis Alaska said that rental car agencies would insist that any new vehicle-rental tax rate be applied equally to themselves and peer-to-peer car rental services.

Host accounts garnished

Some Alaska hosts report having their bank accounts garnished by the state for failing to pay the vehicle-rental tax. Kyla Dinkel, an Anchorage financial adviser who currently has 15 cars listed on Turo, estimates that she will make between $22,000 to $24,000 per month in June, July and August.

After discussing the issue with fellow Turo users online, Dinkel said she stopped paying state taxes, adding, “there’s no legislation showing us that as Turo hosts, we should be personally liable for those taxes.”

Dinkel said that the state twice garnished her bank account, but one amount was refunded, she said, after the state had “guesstimated” how much she had earned.

In April, the Department of Revenue said that 25 Alaska Turo hosts collectively owed over $470,000 in back taxes — or an average of $19,000 each.

The state’s delinquency figures represent just some of the hosts who had paid taxes in the past; there are likely hundreds more who have never paid taxes to the state and are effectively unknown to auditors, Limani said, adding that the state’s delinquency figures were estimates extrapolated from previous filings.

By email, Limani said that due to taxpayer confidentiality, the Dunleavy administration was unable to comment on specifics about how many Alaska Turo hosts had their accounts garnished and how many have subsequently been refunded.

The governor quietly ended direct tax collections from Turo hosts late last year, instead anticipating a legislative fix, according to a Department of Revenue memorandum posted online in April alongside Claman’s bill, which failed to pass this year.

The Legislature had been focused on passing a budget and other bills, and there was simply not enough time, Limani said, adding that the plan now is to revive the measure during next year’s regular legislative session.

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Alaska

Nearly 70 years ago, the world’s first satellite took flight. Three Alaska scientists were among the first North Americans to spot it.

Published

2 hours ago

January 17, 2025

Press Room

Nearly 70 years ago, the world’s first satellite took flight. Three Alaska scientists were among the first North Americans to spot it.

Sputnik 1 orbits Earth in this artist’s rendition by Gregory Todd. (Creative Commons image)

On any clear, dark night you can see them, gliding through the sky and reflecting sunlight from the other side of the world. Manmade satellites now orbit our planet by the thousands, and it’s hard to stargaze without seeing one.

The inky black upper atmosphere was less busy 68 years ago, when a few young scientists stepped out of a trailer near Fairbanks to look into the cold October sky. Gazing upward, they saw the moving dot that started it all, the Russian-launched Sputnik 1.

Those Alaskans, working for the Geophysical Institute at the University of Alaska Fairbanks, were the first North American scientists to see the satellite, which was the size and shape of a basketball and, at 180 pounds, weighed about as much as a point guard.

The Alaska researchers studied radio astronomy at the campus in Fairbanks. They had their own tracking station in a clearing in the forest on the northern portion of university land. This station, set up to study the aurora and other features of the upper atmosphere, enabled the scientists to be ready when a reporter called the institute with news of the Russians’ secret launch of the world’s first manmade satellite.

Within a half-hour of that call, an official with the Naval Research Laboratory in Washington, D.C., called Geophysical Institute Deputy Director C. Gordon Little with radio frequencies that Sputnik emitted.

In October 1957, researchers from the Geophysical Institute track the Sputnik 1 satellite from the Ballaine Lake Tracking Station on the UAF campus. From left are Bob Merritt, Joe Pope, Pete Michelow, Gordon Little, Glen Stanley and Ernest Stiltner. (Photo provided by Geophysical Institute)

“The scientists at the Institute poured out of their offices like stirred-up bees,” wrote a reporter for the Farthest North Collegian, the UAF campus newspaper.

Crowded into a trailer full of equipment about a mile north of their offices, the scientists received the radio beep-beep-beep from Sputnik and were able to calculate its orbit. They figured it would be visible in the northwestern sky at about 5 a.m. the next day.

On that morning, three of them stepped outside the trailer to see what Little described as “a bright star-like object moving in a slow, graceful curve across the sky like a very slow shooting star.”

For the record, scientists may not have been the first Alaskans to see Sputnik. In a 1977 article, the founder of this column, T. Neil Davis, described how his neighbor, Dexter Stegemeyer, said he had seen a strange moving star come up out of the west as he was sitting in his outhouse. Though Stegemeyer didn’t know what he saw until he spoke with Davis, his sighting was a bit earlier than the scientists’.

Charles Deehr, an emeritus professor at UAF’s Geophysical Institute, created this image of Dexter Stegemeyer, perhaps the first man in North America to see the Sputnik 1 satellite in October 1957. From the book “Alaska Science Nuggets” by T. Neil Davis.

The New York Times’ Oct. 7, 1957 edition included a front-page headline of “SATELLITE SEEN IN ALASKA,” and Sputnik caused a big fuss all over the country. People wondered about the implications of the Soviet object looping over America every 98 minutes. Within a year, Congress voted to create NASA.

Fears about Sputnik evaporated as three months later the U.S. launched its own satellite, Explorer 1, and eventually took the lead in the race for space.

Almost 70 later, satellites are part of everyday life. The next time you see a satellite streaking through the night sky, remember the first scientist on this continent to see one was standing in Alaska. And the first non-scientist to see a satellite in North America was sitting in Alaska.

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Alaska

Western Alaska storm and southerly flow drives warmth back into the state

Published

9 hours ago

January 17, 2025

Press Room

Western Alaska storm and southerly flow drives warmth back into the state

ANCHORAGE, Alaska (KTUU) – Gusty winds and heavy snow has begun to spread into Western and Southwest Alaska, with a surge of warmer air. Temperatures in Southwest Alaska is already 10 to 35 degrees warmer than yesterday morning. This warmth will spread across the rest of the state through the weekend, with some of the most pronounced warmth along the Slope. We’ll see many areas this weekend into next week remaining well-above average.

SOUTHCENTRAL:

Temperatures are slowly warming across Southcentral, with many areas seeing cloud coverage increasing. While we could see some peeks of sunshine today, most locations will see mostly cloudy conditions. While we can’t rule out light flurries for inland locations, most of the precipitation today will occur near the coast. Snow looks to be the primary precipitation type, although later this evening a transition to rain or wintry mix will occur. This comes as temperatures quickly warm across Southcentral.

We’ll see highs today in the upper 20s and lower 30s for inland areas, while coastal regions warm into the 30s and 40s. The southerly flow aloft will remain with us for several days, pumping in the warmth and moisture. As a result, Kodiak could see over an inch of rain today, with gusty winds.

While most of the precipitation this weekend remains near the coast, inland areas will see the best chance for wintry mix Sunday into Monday. Little to no accumulation is expected.

The key takeaways for this weekend, is snow transitioning to rain, with some gusty winds likely for parts of Southcentral this weekend.

SOUTHEAST:

Another fairly quiet day is expected across Southeast today, outside of some light snow near Yakutat. We’ll see a mix of sun and clouds with temperatures remaining on the cooler side. Parts of the Northern Panhandle may stay in the upper 20s today. The stretch of quiet weather will stay with us through the first half of Saturday, followed by an increase in precipitation and winds. This upcoming system may bring some heavy snowfall to Southeast, so be prepared for that potential this weekend. Temperatures warm into next week, back into the upper 30s and lower 40s for many areas.

INTERIOR:

While temperatures this morning have bottomed out as low as -30 near Fort Yukon, temperatures will warm into the weekend. A wind advisory for the Alaska Range goes into effect at 9 Friday morning, where winds up to 60 mph will warm the Interior. Temperatures today for many locations will warm into the single digits, with some of the greatest warming arriving Saturday through next week. It’s likely we’ll spend most of next week with temperatures in the 20s and 30s, with the warmest locations near the Alaska Range. While we will largely stay dry, there is a chance for some light snow arriving Sunday night into Monday.

SLOPE/WESTERN ALASKA:

Temperatures will remain slightly above average for parts of the Slope today, with warming winds to build into the Slope this weekend. This comes as our area of low pressure in the Bering Sea continues to move farther north. Be prepared for gusty easterly winds along the Slope, leading to blowing snow and reduced visibility. We’ll see temperatures quickly warm well above average, with highs climbing into the 20s and 30s along the Slope into next week. While some snow is possible through the weekend, the heaviest activity will occur for the Brooks Range. We’ll see the potential for 4 to 12 inches of snowfall, with the highest amounts occurring along the southern slopes of the Brooks Range near Kobuk Valley. Winds could gusts as high as 45 mph, leading to greatly reduced visibility.

Heavy snow is impacting Western and Southwest Alaska this morning, with winds gusting up to 50 mph. Numerous winter weather alerts, as well as a coastal flood advisory is in effect. The heaviest snow will fall for the Seward Peninsula and east of Norton Sound, where up to a foot or more of snow is to be expected. The heaviest amounts will fall today, with the activity set to lighten up through Sunday. In addition to the snow, gusty winds will lead to areas of blowing snow. Visibility could be reduced down to less than half a mile at times. As southerly flow continues to pump in warmth, we’ll see a transition from snow to rain later today into Saturday for parts of Southwest Alaska.

ALEUTIANS:

Gusty winds and heavy rain will fall through the Aleutians today, where up to .75″ of rain is possible. As the area of low pressure moves north, we’ll see a new low form just south of the Eastern Aleutians. This will lead to additional rain and winds into the weekend. Winds could gusts upwards of 50 mph through the Eastern Aleutians and through the Alaska Peninsula. With ridging to our east, more rain and winds remain with us into early next week. There is the potential that the Pribilof Islands see a return to snow Sunday, as colder air moves into the Bering Sea.

OUTLOOK AHEAD:

Well above average warmth will stay with us as we close out January. While one more short-lived cold snap is possible, we may have to wait until February before we tap into warmer conditions. Temperatures through the close of January will keep average monthly temperatures 5 to 12 degrees above average for much of the state. The overall trend still favors a wetter pattern, although with warmer weather the southern parts of the state will favor more rain or a mixed bag of precipitation.

Have a wonderful and safe holiday weekend.

See a spelling or grammar error? Report it to web@ktuu.com

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Alaska

Alaska governor, ally of Trump, will keep flags at full-staff for Inauguration Day • Alaska Beacon

Published

17 hours ago

January 17, 2025

Press Room

Alaska governor, ally of Trump, will keep flags at full-staff for Inauguration Day • Alaska Beacon

Alaska will join several other Republican-led states by keeping flags at full-staff on Inauguration Day despite the national period of mourning following President Jimmy Carter’s death last month.

Gov. Mike Dunleavy announced his decision, which breaks prior precedent, in a statement on Thursday. It applies only to flags on state property. Flags on federal property are expected to remain at half-staff.

Flags on state property will be returned to half-staff after Inauguration Day for the remainder of the mourning period.

The governors of Indiana, Idaho, Iowa, Texas, Florida, Tennessee, Oklahoma, North Dakota, Nebraska, Montana and Alabama, among others, have announced similar moves.

U.S. Speaker of the House Mike Johnson, a Republican from Louisiana, said on Tuesday that flags at the U.S. Capitol would remain at full-staff on Inauguration Day.

Their actions follow a statement from President-elect Donald Trump, who said in a Jan. 3 social media post that Democrats would be “giddy” to have flags lowered during his inauguration, adding, “Nobody wants to see this, and no American can be happy about it. Let’s see how it plays out.”

Dunleavy is seen as a friend of the incoming president and has met with him multiple times over the past year. Dunleavy and 21 other Republican governors visited Trump last week in Florida at an event that Trump described as “a love fest.”

Since 1954, flags have been lowered to half-staff during a federally prescribed 30-day mourning period following presidential deaths. In 1973, the second inauguration of President Richard Nixon took place during the mourning period that followed the death of President Harry Truman.

Then-Gov. Bill Egan made no exceptions for Alaska, contemporary news accounts show, and no exception was made for Nixon’s inauguration in Washington, D.C., either.

A spokesperson for Dunleavy’s office said the new precedent is designed to be a balance between honoring the ongoing mourning period for former President Jimmy Carter and recognizing the importance of the peaceful transition of power during the presidential inauguration.

“Temporarily raising the flags to full-staff for the inauguration underscores the significance of this democratic tradition, while returning them to half-staff afterward ensures continued respect for President Carter’s legacy,” the spokesperson said.

GET THE MORNING HEADLINES.

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