DENALI BOROUGH, ALASKA

ORDINANCE 94-11

INTRODUCED BY: Donald Mellecker

This ordinance was tabled.

AN ORDINANCE AMENDING TITLE III OF THE

DENALI BOROUGH CODE OF ORDINANCES BY CREATING CHAPTER 22 ENTITLED

GENERAL SALES TAX

BE IT ENACTED BY THE DENALI BOROUGH ASSEMBLY:

CHAPTER 22. GENERAL SALES TAX

Sections:

l. Classification.

2. Definitions.

3. Imposition of General Sales Tax.

4. Collection of General Sales Tax.

5. Registration Required.

6. Title to Taxes.

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

8. Estimated Taxes.

9. Confidentiality.

10. Record Keeping Required.

11. Penalties and Interest.

12. Civil Action Authorized.

13. Tax Lien.

14. Prohibition of Making Rentals Without Registering.

15. Sale of Business.

16. [City of Anderson.]

17. Violations a Misdemeanor.

18. Severability.

19. Special Provisions for Pre-existing Contracts.

20. Appeal.

21. Effective Date

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

Section 2. 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. "Buyer" means any person or business which receives a product or service in exchange for money, credit, or other goods or services which have a value.

C. "Seller" means any person or business that sells, exchanges, trades, barters, rents, leases, or otherwise transfers goods or services of any kind to another person or business.

D. "Sale" means any sale, lease, rental, exchange, trade, barter, or other transaction involving the transfer of goods or services in exchange for money, credit, or any other value received.

["Sale" also includes the value of any group tour, wilderness adventure, or any other travel or recreation package sold outside the Borough for activities which occur in whole or in part within the

Borough.]

E. "Business" means any corporation, partnership, sole proprietorship, or any individual required by state or federal law to file tax returns as a business.

Section 3. Imposition of a General Sales Tax. There is levied a tax on the sale of all goods and services sold within the Denali Borough [except as provided for in Section 3, sub-section A below]. The tax shall apply to all sales, exchanges, transfers, barters, trades, and any other transactions which involve the exchange of money or value for goods, services, or like value. The amount of the tax shall be 2%

(two percent) of the actual sales price, or of the usual and customary value of the goods or services, whichever is greater.

[A. Exceptions to this general sales tax are as follows:

1. Real property transactions are exempt from this tax.

2. Casual and isolated sales not made in the regular course of business are exempt from this tax.

3. Sales of intangible personal property such as raffle tickets, bingo, and charitable gaming are exempt from this tax.

4. Sales made by registered non-profit organizations are exempt fromthis tax.]

Section 4. Collection of a General Sales Tax.

A. Every seller who makes a sale subject to taxation under this ordinance shall collect the tax imposed by this ordinance from the buyer not later than the time at which the sale is completed and paid

for by the buyer. Taxes not collected when due are delinquent.

B. Every seller shall state the amount of tax due under this ordinance separately from all sales, rental and other charges on any invoice or receipt given to a buyer.

C. A seller shall not advertise or hold out or state to the public or to any buyer, directly or indirectly, that the tax or any part thereof imposed by this ordinance will be assumed or absorbed by

the seller or that it will not be added to the sales price, or that it will be refunded. A seller shall not assume, absorb or fail to add the tax or any part thereof to the sales price, or refund the tax or

fail to separately state the tax to the buyer.

Section 5. Registration Required.

A. Every business 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 any business activity within the Denali Borough.

B. Upon receipt of a properly executed application, the Clerk shall issue without charge to the business, a certificate of registration stating the address of the business to which it is

applicable and authorizing such business to collect the tax. The certificate must be prominently displayed at the regular place of business named therein.

Section 6. Title to Taxes. Upon collection by a business 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 business shall segregate and identify the tax funds on its books and records as being held in trust for the

Borough.

Section 7. Duty to File Tax Return and to Transmit Taxes to the Borough.

A. Every business which makes a sale or sales 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 last 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 sales made 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 business which makes no taxable sales in a given month shall, if the business made a taxable sale during any of the preceding three months, nonetheless file a return with the Clerk establishing that no taxable sales were made.

B. On or before the due date of the return for each month, every business shall transmit the taxes due on sales 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. Estimated Taxes. If the Borough is unable to ascertain the amount of tax due from a business in any month because the business has failed to file a return as required, or has filed a false,

inaccurate, or incomplete return, or because the business 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 business 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 business to the Borough unless the business files an accurate return and transmits the taxes due as shown thereon to the Clerk, not later than 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 business, or if it is mailed to the business by certified mail, return receipt requested, at the business's most current address as contained in the Borough's tax records.

Section 9.Confidentiality.

A. 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 business affected consents in writing.

B. In the course of a 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 business or their 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.

C. 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 provided in this section.

Section 10. Record Keeping Required.

A. Every business shall keep and preserve for a period of three years records of all sales completed, the total amount of all monies received from sales, the amount of taxes collected, and such other

books or accounts as may be necessary to determine the amount of tax for which the business is liable hereunder. Each business shall permit the Borough or its agent to examine, inspect, and copy said

records, books, and accounts at any reasonable time.

B. 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 business, 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, record ,accounts or memoranda of any such business, and may require the

attendance of any person through issuance of a subpoena which shall be enforced under the Alaska Rules of Civil Procedure in the same manner as subpoenas issued by an officer or agency of the state.

Section 11. Penalties and Interest.

A. A business 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 business shall pay a penalty of one thousand dollars. In addition the

business shall pay the Borough's administrative costs of collection incurred in enforcing the requirement to file a return. Penalties and administrative costs of collection are due immediately upon accrual

and are delinquent thereafter.

B. 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 of 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.

C. 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. Civil Action Authorized.

A. The Borough may institute a civil action against an individual to collect taxes due but not paid, the Borough's administrative costs of collection, and the civil penalty provided below. The Borough may institute a civil action against a business to recover taxes which the business failed to collect, or which the

business 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 facia evidence of the amount of tax which was, or should have been, collected.

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

C. 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. Tax Lien.

A. 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 business'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 in AS 40.19.010 Ä .050 as they currently exist or may be subsequently amended. AS 40.19.010 Ä .050 apply to the tax liens arising under this ordinance, and are incorporated by reference as if fully set forth.

B. 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.

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

Section 14. Prohibition of Making Sales Without Registering.

A. A business who is required to register shall not engage in the sales or rental of goods or services within the Borough if the business has not previously registered in the manner required by section 5.

B. The Borough may institute a civil action, pursuant to AS 29.25.070, to enjoin a business from engaging in the sales or rental of goods or services in the Borough until the business has registered. The Borough may also recover from the business the civil penalty imposed by Section 12 and the Borough's administrative costs of collection incurred in enforcing this section.

Section 15. Sale of Business. If any owner of a business sells his business to another person or entity, the merchant shall file a final tax return within thirty (30) 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 business, and shall pay this amount to the Clerk on or before the due date of the final return. If the purchaser of a business fails to withhold and pay these amounts as provided

above, the purchaser shall be personally liable to the Borough for the payment of these amounts as if the purchaser had been an owner of a business 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 collection.

Section 16. City Sales Tax. The Borough hereby authorizes the City of Anderson to levy and collect a sales tax on sources and transactions other than those taxed under this ordinance.

[Section 16. City of Anderson The Denali Borough will annually return to the City of Anderson an amout approximately equal to the revenue that the Borough collects from businesses located within the city limits of Anderson as a result of this tax. Such return shall be made in accordance with the forward funding provisions of the Denali Borough Charter and the Denali Borough Code of Ordinances. Any penalties, interest, fines, or recovery of costs incurred, received by the Denali Borough as a result of a dispute with any business located within the City of Anderson shall not be included in the amount to be returned to the City of Anderson.]

Section 17. 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. 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 January 1,1995 if it is approved by the public at a regular or special election held prior to that date.

Section 20. [19]. Special Provisions for Pre-existing Contracts.

A. This section applies only to taxes levied on sales that are completed during calendar year 1995 under a contract between a business and an individual or another business that was fully executed on or before December 31,1994. If such a contract covers more than one year, this section applies only to sales occurring under said contract during 1995, and not to sales occurring in subsequent years. This section only applies if a business has registered in the manner prescribed in this section. All other sales are governed by the other provisions of this ordinance and not by this section. The provisions of this section are intended to allow businesses that have presold goods or services at a contractually fixed price, to an individual or another business, an exemption from the sales tax for the calendar year 1995.

B. Upon the request of a business, the mayor may, but is not required to, permit the business to register to exempt itself from transmitting to the Borough, taxes levied on sales occurring under pre-existing contracts to which this section applies. Such registration shall be separate and in addition to the registration otherwise required by Section 5 of this ordinance. The business shall apply for registration under this section on a form prescribed by the Clerk. The application shall contain the following information and shall be accompanied by a one hundred dollar ($100) non-refundable application fee.

1. The name and address of the parties to the pre-existing contract and the dates on which each party signed the contract.

2. The total value of all the sales covered by the contract during 1995.

3. Proof satisfactory to the mayor that the information in items 1 and 2 is accurate, i.e. a copy of the contract and/or any other information requested by the mayor.

In addition the mayor may impose as conditions of registration, such other requirements as he deems necessary to protect the legal interests of the Borough. The provisions of Section 9 shall apply to

the information required by this subsection.

C. Section 4 C shall not apply to taxes levied on sales occurring under pre-existing contracts to which this section applies.

D. Every business registered under this section shall file a monthly tax return in the manner provided in Section 7. The tax return shall include both taxes levied on sales occurring under pre-

existing contracts, and all other taxes. In addition to the information required by Section 7, the tax return shall also contain the following

1. The total amount of all sales during the month which occurred under pre-existing contracts.

2. The amount of tax due on those sales.

E. The provisions of Section 7 C shall not apply to taxes levied on sales occurring under pre-existing contracts to which this section applies. The amount of said taxes shall not be included when calculating the credit due to a merchant under Section 7 C.

F. Except as otherwise provided in this section, all other provisions of Ordinance 91-05, including but not limited to those sections which impose liability for penalties, interest, and the Borough's administrative costs of collection, as well as those sections authorizing the Borough to enforce this ordinance, apply to

businesses registered under this section and to the taxes levied on sales occurring under pre-existing contracts to which this section applies.

Section 21. [20]. Appeal.

A. A person aggrieved by the application or interpretation of any provision of this ordinance shall present his complaint in writing to the mayor not later than thirty days after the grievant knew, or should have known, of his complaint. The mayor shall investigate the matter and respond in writing to the grievant within a reasonable time. The mayor may either deliver or mail his response to the grievant. If mailed, the response shall be sent to the grievant by certified mail, return receipt requested, at the address contained in the grievance.

B. If the grievant is not satisfied with the mayor's response, the grievant shall file his complaint in writing with the Borough Clerk not later than thirty days after the date on which the mayor mailed or delivered his response to the grievant. The assembly shall hold a hearing on the grievance at which the grievant and the mayor may appear and give evidence, within a reasonable time after the grievance is filed with the Clerk. The assembly shall determine whether this ordinance has been properly interpreted and applied to the grievant and shall grant such relief as may be appropriate in the circumstances. The assembly shall deliver or mail its decision to the grievant and to the mayor, in the manner provided above for the mayor's response, within a reasonable time following termination of the hearing. The assembly's decision shall be the final action of the Borough on the matter. In its discretion, the assembly may appoint a hearing officer to take evidence and report to the assembly, or to hear and decide the matter.

C. A person aggrieved by the final action of the Borough may appeal to the Superior Court in the manner provided in the Alaska Rules of Appellate Procedure for appeals from administrative agencies.

[Section 21. Effective Date. This ordinance shall become effective upon passage by the Denali Borough Assembly, signature of the Mayor, and approval by a majority of the voters in the next regular or special election.]

DATE INTRODUCED:____________________

FIRST READING: ____________________

PUBLIC HEARING: ____________________

PASSED and APPROVED by the DENALI BOROUGH ASSEMBLY this _____day of

_____________________, 1994.

______________________________

Mayor

______________________________

Borough Clerk

ATTEST: