DENALI BOROUGH, ALASKA

ORDINANCE 91-05

 

AN ORDINANCE AMENDING ORDINANCE NO. 91-02 AND ESTABLISHING PROCEDURES FOR THE COLLECTION AND ENFORCEMENT OF A TAX ON THE RENTAL OF OVERNIGHT ACCOMMODATIONS

 

            BE IT ENACTED by the Assembly of the Denali Borough, Alaska, that:

 

            Section 1.  This ordinance is of a general and permanent nature.

 

            Section 2.  Section 3 of Ordinance No. 91-02, Definitions, is repealed and re-enacted as Section 2 of this ordinance, as follows:

 

            Definitions.  For purposes of this ordinance, the following words shall have the meanings set forth below.

 

A.     “Administrative costs of collection” means the actual amount of attorney’s fees, litigation costs, and other expenses incurred by the borough in collecting any taxes, interest, and/or penalties due under this ordinance or in otherwise enforcing any provision of this ordinance.

 

B.     “Guest” means an individual, corporation, partnership, association, or other entity which pays monetary or other consideration for the right to occupy an overnight accommodation.

 

C.    “Merchant” means an individual, corporation, partnership, association, or other entity which operates an overnight accommodation and any person who performs, or is under duty to perform, any of the following actions on behalf of an operator:

1.      Exercise custody and control of taxes collected under this ordinance; or

2.      Pay such taxes to the borough; or

3.      File a tax return with the borough; or

4.      Keep records required by this ordinance.

 

An owner of an overnight accommodation who contracts with a third party to operate the overnight accommodation for the benefit of the owner is also a merchant.  However, a landlord who leases an overnight accommodation to a third party to operate the accommodation for the third party’s benefit is not a merchant.

 

D.    “Overnight accommodation” means a structure, portion of a structure, or area which is occupied or available for occupancy by transients for dwelling, lodging, or sleeping purposes and includes any hotel, motel, inn, campground, bed and breakfast, or other similar facility.

 

E.     “Rent” means the consideration received by a merchant for the right to occupy an overnight accommodation valued in money, whether received in money or otherwise, including all receipts, cash, credits, property or services of any kind or nature, and any amount for which credit is allowed by a merchant to a guest.  “Rent” does not include the cost of food or entertainment, nor does it include the cost of banquet, conference, or other similar facilities not occupied for dwelling, lodging, or sleeping purposes.

 

F.     “Rental” means the act of purchasing the right to occupy an overnight accommodation.  A rental is complete and tax is due thereon when:

 

1.      A guest has registered or “checked in” with a merchant and paid rent in cash, by credit card, or otherwise, regardless of whether the rent is paid in advance or at the time of registration; or

2.      A guest who has paid rent in advance fails to register or “check in” with a merchant at the appointed time, and the merchant retains all or any part of the prepaid rent.  Tax is due on the amount of prepaid rent retained by the merchant.

Tax may be due under both 1 and 2 for rental of the same overnight accommodation to two different guests for the same period of time.  The act of making a reservation to occupy an overnight accommodation in the future in not a completed rental for which tax is due.

 

G.    “Transient” means a guest who occupies or has the right to occupy an overnight accommodation for fewer then thirty (30) consecutive days.  A guest which purchases the right to occupy an overnight accommodation for use by employees of the guest on a rotating basis is not a transient if the total period of occupancy of all employees of the guest exceeds thirty (30) consecutive days, even though the occupancy of any particular employee may be less than thirty (30) consecutive days.

 

Section 3.  Section 4 of Ordinance No. 91-02, Imposition of Overnight Accommodations Tax, is repealed and re-enacted as Section 3 of this ordinance, as follows:

 

Imposition of Overnight Accommodations Tax.  There is levied on the rental of overnight accommodations to transients within the borough a tax on the rent for each overnight accommodation.  The amount of the tax shall be four percent (4%) of the rent received by the merchant for the rental of the overnight accommodation.  The guest shall pay the tax.

 

Section 4.  Section 5 of the Ordinance No. 91-02, Collection and Accrual of Overnight Accommodation Tax, is repealed and re-enacted as Section 4 of this ordinance, as follows:

 

Collection of Overnight Accommodation Tax.

 

A.     Every merchant making a rental subject to taxation under this ordinance shall collect the tax imposed by this ordinance from the guest not later than the time at which the rental is complete.  Taxes not collected when due are delinquent.

 

B.     Every merchant shall state the amount of tax due under this ordinance separately from all rent and other charges on any invoice or receipt given to a guest.

 

C.    A merchant shall not advertise or hold out or state to the public or to any guest, directly or indirectly, that the tax or any part thereof imposed by this ordinance will be assumed or absorbed by the merchant or that it will not be added to the rent, or that it will be refunded.  A merchant shall not assume, absorb or fail to add the tax or any part thereof to the rent, or refund the tax or fail to separately state the tax to the guest.   Provided however, that this subsection C shall not apply to rentals for which a merchant received a reservation prior to May 1, 1991.

 

Section 5.  New section 5, Registration Required, is enacted.

 

Registration Required.

 

A.     Every merchant shall file with the borough clerk an application for a certificate of registration on a form prescribed by the Clerk not later than ten days after the date of commencing operation of an overnight accommodation or opening an additional place of business as an overnight accommodation.

 

B.     Upon receipt of a properly executed application, the clerk shall issue without charge to the merchant, a certificate of registration stating the address of the overnight accommodation to which it is applicable and authorizing such merchant to collect the tax.  The certificate must be prominently displayed at the regular place of business named therein.

 

Section 6.  New section 6, Title to Taxes, in enacted.

 

Title to Taxes.  Upon collection by a merchant of taxes imposed by this ordinance, title to and ownership of the collected taxes shall vest in the borough.  Pending transmittal to the borough, every merchant shall hold the tax funds in trust for the use and benefit of the borough.  Every merchant shall segregate and identify the tax funds in its books and records as being held in trust for the borough.

 

Section 7.  New section 7, Duty to File Tax Return and to Transmit Taxes to the Borough, in enacted.

 

            Duty to File Tax Return and to Transmit Taxes to the Borough.

 

A.     Every merchant making a rental of an overnight accommodation in the borough in any month shall make out a return for that month and file the return with the borough clerk on or before the fifteenth (15th) day of the following month.  A return which is not timely filed is delinquent.  The return shall be made out upon forms furnished by the borough and shall contain the following information:

 

1.      The amount of all rents received from rentals of overnight accommodations completed during the month.

2.      The amount of tax due thereon under this ordinance.

3.      The amount of tax actually collected thereon.

4.      Such other information and documentation as the clerk may require.

 

A merchant which makes no taxable rentals in a given month shall, if the merchant made a taxable rental during any of the preceding three months, nonetheless file a return with the clerk establishing that no taxable rentals were made.

 

B.     On or before the due date of the return for each month, every merchant shall transmit the taxes due on rentals completed during that month to the clerk.  Regardless of whether a return has been filed, taxes due for a given month which are not transmitted to the clerk on or before the due date of the return for that month are delinquent.

 

C.    As compensation for collecting the tax, a merchant may deduct and retain each month two percent (2%) of the amount of taxes due to be transmitted to the borough for that month, if the merchant has:

 

1.      Timely transmitted all taxes due under this ordinance during each of the preceding twelve months; and

2.      Timely completed and filed all returns required by this ordinance during each of the preceding twelve months; and

3.      Complied with all other provisions of this ordinance during each of the preceding twelve months.

 

Provided however, that the amount deducted and retained by a merchant under this subsection shall not exceed two hundred dollars for any month.

 

D.    For purposes of this section, taxes and returns are timely transmitted and/or filed only when the taxes and/or returns are actually received in the office of the borough clerk, or placed in the U.S. Mail properly addressed to the clerk, with proper postage affixed and postmarked, on or before the date on which the taxes are due to be transmitted and/or the return is due to be filed.

 

Section 8.  New section 8, Estimated Taxes, is enacted.

 

            Estimated Taxes.  If the borough is unable to ascertain the amount of tax due from a merchant in any month because the merchant has failed to file a return as required, or has filed a false, inaccurate, or incomplete return, or because the merchant has failed to keep accurate books and records as required, or has falsified records the borough may make an estimate of the amount of tax due based on any evidence in its possession.  The clerk shall mail or deliver to the merchant written notice of the amount of the estimate, and this amount shall be presumed to correctly state the amount of the tax due from the merchant to the borough unless the merchant files an accurate return and then thirty days after the date on which the clerk mails or delivers the notice.  A notice is sufficient under this section if it is either actually delivered to the merchant, or if it is mailed to the merchant by certified mail, return receipt requested, at the merchant’s most current address as contained in the borough’s tax records.

 

            Section 9.  New section 9, Confidentiality, is enacted.

 

            Confidentiality. 

 

  1. Except as provided below, all returns filed with the borough for the purpose of complying with the terms of this ordinance and all data obtained from such returns are confidential and shall be kept from inspection of all persons except officers, agents, and employees of the borough.  Provided however, that such returns and/or information obtained therefrom may be discussed by the assembly in public session if the merchant affected consents in writing.

 

  1. In the course of criminal or civil action to enforce any provision of this ordinance, the borough may allege, prove, publish, and produce for any purpose any return and/or information previously filed with the borough.  The borough may deliver to a merchant or his authorized representative a copy of any return filed by him or on his behalf.  The borough may also publish statistics concerning the information contained in returns, if the publication is done in such a manner that the information contained in a particular return cannot be identified.

 

  1. It is unlawful for any person to divulge to another any return or any information obtained from a return filed with the borough except as provide in the section.

 

             Section 10.  New section 10, Record Keeping Required, is enacted.

 

            Record Keeping Required.

 

  1. Every merchant shall keep and preserve for a period of three years records of all rentals completed, the amount of rent received, the amount of taxes collected, and such other books or accounts as may be necessary to determine the amount of tax for which the merchant is liable hereunder.  Each merchant shall permit the borough or its agent to examine, inspect, and copy said records, books, and accounts at any reasonable time.

 

  1. For the purpose of ascertaining the correctness of any return, or determining the amount of tax collected or which should have been collected by any merchant, the Mayor or his agent may hold audits, investigations and hearings concerning any matters covered by this ordinance, and may examine any relevant books, papers, records, accounts, memoranda of any such merchant, and may require the attendance of any person through issuance of subpoena which shall be enforced under the Alaska Rule of Civil Procedure in the same manner as subpoenas issued by an officer or agent of the state.

 

Section 11.  New section 11, Penalties and Interest, is enacted.

 

Penalties and Interest. 

 

  1. A merchant who fails timely to file a return as required by this ordinance shall pay to the borough a penalty of fifty percent of the tax shown or which should have been shown on the return, but the penalty shall not exceed one thousand dollars.  Provided however, that if the return is filed more than thirty days after it is due, then the merchant shall pay a penalty of one thousand dollars.  In addition the merchant shall pay the borough’s administrative costs of collection incurred in enforcing the requirement to file a return.  Penalties and administrative cost of collection are due immediately upon accrual and are delinquent thereafter.

 

  1. A merchant who fails timely to transmit the tax required by this ordinance shall pay a penalty of five percent of the taxes owed for each month or portion thereof during which the taxes are delinquent, but the penalty shall not exceed twenty-five percent of the amount of the delinquent taxes or one thousand dollars whichever is less.  This penalty shall be paid in addition to the penalty provided in subsection A for failure to file a return.  In addition the merchant shall pay the borough’s administrative costs of collection and interest at the rate of fifteen percent per year on all delinquent taxes, not including penalties and administrative costs for collection, from the due date until paid in full.  Penalties, interest, and administrative costs of collection are due immediately upon accrual and are delinquent thereafter.

 

  1. The borough shall apply payments received on a delinquency first to the payment of penalties, then to the payment of administrative costs of collection, then to the payment of interest, and then to the payment of delinquent taxes.

 

Section 12.  New section 12, Civil Action Authorized, is enacted.

 

            Civil Action is Authorized.

 

  1. The borough may institute a civil action against a guest to collect taxes due but not paid, the borough’s administrative costs of the collection, and civil penalty provided below.  The borough may institute a civil action against a merchant to recover taxes which the merchant failed to collect, or which the merchant collected and failed to transmit to the borough, together with the penalties, interest, and administrative costs of collection imposed by section 11.  In any such action, a tax return or estimated tax under section 8 shall constitute prima facie evidence of the amount of tax which was, or should have been, collected.

 

  1. The borough may institute a civil action against a merchant who fails timely to file a return to recover the penalties and administrative costs of collection imposed by section 11.

 

  1. Pursuant to AS 29.25.070, the borough may institute a civil action against any person who violates a provision of this ordinance.  In addition to injunctive and compensatory relief, the borough may recover its administrative costs of collection and a civil penalty not to exceed one thousand dollars ($1,000) for each violation.  The borough may bring an action to enjoin a violation or to recover a civil penalty notwithstanding the availability of any other remedy.  Each day that a violation of this ordinance continues constitutes a separate violation.

 

      Section 13.  New section 13, Tax Lien, is enacted

 

      Tax Lien

 

  1. The tax, penalty, administrative costs of collection, and interest imposed by this ordinance shall constitute a lien in favor of the borough upon all the merchant’s real and personal property.  The lien arises upon delinquency and continues until the liability for the amount is satisfied or the property is sold at foreclosure sale.  The lien is not valid as against a mortgagee, pledgee, purchaser or judgment creditor until notice of the lien is filed in the office of the recorder in the district in which the property is located in the manner provided for federal tax liens AS 40.19.010 - .050 as they currently exist or may be subsequently amended.  AS 40.19.010 - .050 apply to the tax liens arising under this ordinance, and are incorporated by reference as if fully set forth.

 

  1. When recorded as provided in subsection A, such a lien has priority over other liens except as provided in AS 29.45.650 as it currently exists or may be subsequently amended.

 

  1. Sales tax liens on property shall be enforced by foreclosures conducted as provided by law for enforcement of judgment liens.

 

Section 14.  New section 14, Prohibition of Making Rentals Without Registering, in enacted.

 

Prohibition of Making Rentals Without Registering.

 

  1. A merchant who is required to register shall not engage in the rental of overnight accommodations within the borough if the merchant has not previously registered in the manner required by section 5.

 

  1. The borough may institute a civil action, pursuant to AS 29.25.070, to enjoin a merchant from engaging in the rental of overnight accommodations in the borough until the merchant has registered.  The borough may also recover from the merchant the civil penalty imposed by section 12 and the borough’s administrative costs of collection incurred in enforcing this section.

 

Section 15.  New section 15, Sale of Business, is enacted.

 

Sale of Business.  If any merchant sells his overnight accommodation business to another person or entity, the merchant shall file a final tax return within fifteen days after the closing date of the sale.  The purchaser shall withhold a sufficient portion of the purchase money to pay the taxes due on the final return, and any other taxes, penalties, interest, and administrative costs of collection which may be due or past due from the merchant, and shall pay this amount to the clerk on or before the due date of the final return.  If the purchaser of an overnight accommodations business fails to withhold and pay these amounts a provided above, the purchaser shall be personally liable to the borough for the payment of these amounts as if the purchaser had been a merchant at the time the amounts initially became due.  The borough may collect these amounts in the manner provided in this ordinance for the collection of taxes, penalties, interest, and administrative costs of collections.

 

Section 16.  New section 16, City Sales Tax, is enacted.

 

City Sales Tax.  The borough hereby authorizes the City of Anderson to levy and collect a sales tax on sources on transactions other than those taxed under this ordinance.

 

Section 17.  Section 6 of Ordinance No. 91-02, Violations a Misdemeanor, is repealed and reenacted as Section 17 of this ordinances as follows:

 

Violations a Misdemeanor.  A person who violates a provision of this ordinance is guilty of a misdemeanor and shall be punished by a fine not exceeding one thousand dollars or imprisonment for not more than ninety days or both.

 

Section 18.  Section 2 of Ordinance No. 91-02, Severability, is repealed and re-enacted as Section 18 of this ordinance as follows:

 

Severability.  If a court of competent jurisdiction determines that any provision of this ordinance or any application thereof to any person or circumstance is invalid, the remainder of this ordinance and its application to other persons or circumstances shall not be affected thereby.

 

Section 19.  Effective Date.  This ordinance becomes effective May 1, 1991.  Authority to collect this tax was granted by ballot measure at the time incorporation on December 7, 1990.

 

                             DATE INTRODUCED:   April 14, 1991 

 

                             FIRST READING:     April 14, 1991 

 

                             PUBLIC HEARING:    April 27, 1991 

 

PASSED and APPROVED by the DENALI BOROUGH ASSEMBLY this 27th day of April, 1991.

 

 

                                   SIGNATURE ON FILE

                                               Mayor

 

 

 ATTEST:                    SIGNATURE ON FILE

                                           Borough Clerk