Alaska Internet Sales Tax

Alaska, along with Delaware, New Hampshire, Montana, and Oregon, is one of five states with no state sales tax. Therefore, if you are selling goods or products over the Internet to customers located in Alaska, sales tax for your Alaska customers should be a non-issue.

Alaska Local Sales Taxes

Do keep in mind that although there is no state sales tax in Alaska, Alaska’s Office of the State Assessor states that there are 62 Alaska municipalities with sales taxes. However, unless you happen to be located in one of those municipalities, those local sales taxes should not be a concern.

For States That Do Have Sales Tax

The current default rule throughout the United States is that you must collect sales tax on Internet sales to customers in those states where your business has a “physical presence”—assuming, of course, that the state involved has a sales tax. The physical-presence rule is based on a 1992 United States Supreme Court decision, Quill Corp. v. North Dakota, that addressed the obligations of mail-order businesses to collect sales tax on out-of-state sales; the decision has been extended to include online retailers. Generally speaking, a physical presence means such things as:

• having a warehouse in the state
• having a store in the state
• having an office in the state, or
• having a sales representative in the state

As you might expect, the corollary to the physical-presence rule is that, if you do not have a physical presence in the state, you generally are not required to collect sales tax for an Internet-based sale to someone in that state.

However, because Alaska has no state sales tax, these rules are not relevant to sales you make to Alaska customers.

September 2012