City of Kodiak Sales Tax Review

1. City of KodiakSales Tax Review September 2013

2. KCC Chapter 3.08 Sales Tax • 3.08.010 Levy of Sales Tax • A sales tax of 7% of the sales price or charge is levied on all sales, rentals, and services made within the city. • A bed tax of 5% is levied on all transient room rentals (Bed Tax) within the city. • Considered within the city if: • The sale is made by a business located within the city and delivery occurs within the city. • The sale is made by a business located within the city, the order is received or solicited within the city or payment is received within the city and delivery is made to a purchaser within the Kodiak Island Borough; OR • The sale is made by a business located outside of the city as a result of solicitation inside of the city and payment or delivery occurs within the city.

3. KCC Chapter 3.08 Sales Tax • 3.08.010 Levy of Sales Tax • Services are made within the city if, regardless of the location of the business rendering the services: • The services, or any essential or substantial part thereof, are rendered within the city; OR • The order for the services solicited or received within the city or payment is received within the city, the services are rendered by a business maintaining an office, agent, or employee within the city, and the services benefit or directly relate to any person , property, or organization within the city. • Any building or other place of business shall be considered to be within the city if any part thereof or any substantial part of a contiguous parking area or other supporting facility is within the city. • The sales tax on rentals is applicable for all real property located within the city.

4. KCC Chapter 3.08 Sales Tax • 3.08.040 General Exemptions • The following classes of sales, rentals, and services are exempt from the tax imposed by this code. • Casual and isolated sales and rentals of personal property, and services not rendered in the regular course of business of the seller; • Medical services performed by licensed medical doctors, dentists, osteopaths, optometrists, psychiatrists, psychologist, and chiropractors; sales of medicinal preparations and drugs prescribed by medical doctors; and hospital services; • Sales, rentals, and services to religious and charitable organizations as defined in Sections 501(c) (1), (3), and (4) of IRS , for the conduct of regular religious or charitable functions and activities, and not for the support or maintenance of the general membership or for communal living; • Sales of food in school cafeterias and lunchrooms that are operated primarily for students; • Sales and services by non-profit schools and student organizations within school for support of the school, organization, or extracurricular activities or events; • Sales, rentals, and services to the US, the State of Alaska, and any agencies or political subdivisions;

5. KCC Chapter 3.08 Sales Tax • 3.08.040 General Exemptions • The following classes of sales, rentals, and services are exempt from the tax imposed by this code. • Dues or fees to clubs, labor unions, and fraternal organizations. • Subscriptions to newspapers and periodicals; • Sales of insurance and bonds of guaranty and fidelity; • Funeral charges; • Transportation charges of commercial airlines, air charters, and passenger ship companies; provided, however, that this exemption shall not extend to boat charter operations not affecting interstate commerce; • Services rendered by banking or savings and loan institutions or credit unions; • Services rendered by an employee to an employer in the normal course of employment; • Sales, rentals, and services which the city is prohibited from taxing by the Constitution or laws of the US or the State of Alaska; • Retail sales in dining rooms or cafeterias of food furnished by non-profit organizations under programs wholly or partially supported by government funds;

6. KCC Chapter 3.08 Sales Tax • 3.08.040 General Exemptions • The following classes of sales, rentals, and services are exempt from the tax imposed by this code. • Nursery and Babysitting services; • Long distance transmission of telephone and telegraph messages; • Sales of heating fuel exclusively for residential uses (not to include fuel used in or on watercraft); • Sales of electric service to exclusively residential units; • Sales of propane gas exclusively for residential uses (e.g., cooking, water heating, hearing, clothes drying); • Sale of fuel used in stationary power plants that generate electrical energy exclusively for private residential consumption; • Sales, rentals, and services to non-profit associations or organizations operated primarily for the purpose of planning, and conducting organized group activities for participants who are 18 years of age or less; • Charges for garbage/refuse collection for garbage/refuse generated exclusively by residential uses; • Sales of water and sewer utility services for residential use; and • Sales by religious or chartable organizations, as defined in Sections 501(c) (1), (3), and (4) of IRS, of pull tabs, raffle and lottery tickets, bingo cards, and other tokens of participation in games of chance and contests of skill.

7. KCC Chapter 3.08 Sales Tax • 3.08.055 Senior Citizen Exemption • A person 65 years of age or older who has resided in the Kodiak Island Borough for a continuous period of 30 days or more may obtain a senior citizen sales tax exemption card. • An exemption certificate issued to a person who is prevented or impaired may designate not more than 2 other persons who shall be authorized to utilize the certificate on their behalf. • All purchases, or acquired property, or rentals must be consumed or utilized by the card holder or their dependent. • A dependent means a child of the card holder, or card holder’s spouse who resides with the card holder when not attending school and who receives more than ½ of his or her support from the card holder. • No person may utilize a senior citizen tax exemption card to purchase or rent an item or service which will be used or consumed in a commercial business or enterprise or for the production of income. • Persons making sales or rentals to senior citizen must confirm the identity of person presenting the exemption card. • Senior citizen exemption cards are subject to revocation if card is misused.

8. KCC Chapter 3.08 Sales Tax • 3.08.050 Exemption of Sales for Resale • The following sales of property are exempt from the sales tax: • Sales of property to wholesale dealers located in the city, who deal in property of the type sold, for the purpose of a subsequent sales by such dealer in the city; • Sales to retail dealers located in the city, who deal in property of the type sold, for the purpose of a subsequent retail sale by such dealer in the city, which sale will be subject to the tax imposed by this chapter. • Sales of tangible personal property to a person engaged in manufacturing within the city of products sold primarily within the city, which property is converted into or becomes an ingredient or component part of the manufactured product or a container there for, or otherwise enters directly in the manufacturing process. • Sales to a building or construction contractor or subcontractor, for use on a project within the city of building materials, supplies, and other tangible personal property to be incorporated or used as component parts of a completed structure, driveway, landscaping, and other portions of the project and services utilized directly in the construction, erection, landscaping, and similar work on the project. This exemption shall not apply to tools, equipment, fuel, clothing, food, and similar items of property utilized but not incorporated into a project.