Alaskans who rent out their cars on platforms like Turo and Getaround are no longer required to collect and submit state rental car taxes themselves.
Earlier this year, the state Legislature passed a bill mandating that the car-rental platforms collect the tax on the vehicle owners’ behalf. On Thursday, the bill became law without Gov. Mike Dunleavy’s signature. Bills that the governor fails to sign or veto within a set period of time automatically pass into law.
Last year, Dunleavy vetoed a very similar bill, calling it "unnecessary taxation." His press office declined to explain why he allowed the new bill to become law.
Sen. Matt Claman, an Anchorage Democrat who sponsored last year’s vetoed bill, said the bill does not impose new taxes, it just changes who’s required to collect them.
"They own no cars, so Turo has taken the position that historically, that they don't have a duty to collect the tax," Claman said. "The interest was to make adjustments to the existing laws to make it so that Turo does collect the tax."
Alaska has charged an excise tax on rental cars since 2004, but platforms like Turo were not collecting the tax. Few car owners were following the law and collecting the taxes themselves, the Department of Revenue told lawmakers.
As of mid-2023, Revenue officials said approximately two dozen car owners were delinquent on roughly $470,000 in back taxes.
House Bill 123 wipes the slate clean, preventing the Department of Revenue from going after Turo hosts for back taxes. That’s in the interest of fairness, said Big Lake Republican Rep. Kevin McCabe, who sponsored the bill.
"You sign up as a Turo host, and there's nothing on there that says you're supposed to collect taxes ... outside the platform and send it to the state of Alaska," he said. "You don't even know how to do it. You're just a guy that wants to rent out his car for the two weeks when you're on the (North) Slope."
The bill also cuts rental car taxes. Traditional rental agencies like Hertz, Avis and Enterprise will see their tax rate cut from 10% to 9%. Turo rentals get an additional 2% tax break on top of that, making it a 7% rate, through mid-2028.
Turo and Enterprise both submitted letters supporting the bill. Lawmakers said during committee hearings that they hoped the tax cut would prevent Dunleavy from vetoing it.
The Department of Revenue estimated the brick-and-mortar rental tax cut will reduce tax revenue to the state by at least $1.5 million per year. It’s unclear how much of the market Turo accounts for, but Revenue officials said that if it amounts to more than one-eighth of the total rental car market, the change will bring in more money overall. Claman said a similar ordinance in Anchorage was a boon for local rental car tax revenue.
