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Vehicle Rental Tax

Frequently Asked Questions





Sections:
  • General Questions

  • Tax Returns and Payments

  • Exemptions



  • General Questions

    What are the Vehicle Rental Tax rates?
    What is the definition of a passenger vehicle?
    What is the definition of a recreational vehicle?
    Is the Vehicle Rental Tax charged for the entire length of the rental contract?
    Do I have to pay Vehicle Rental Tax on the lease of new automobiles?
    Do I pay Vehicle Rental Tax on the rental of a trailer that is designed to haul personal property or cargo?
    If I rent my personal vehicle through Craigslist or similar online platform, do I need to file a Vehicle Rental Tax return?
    I own a small business, a bed-and-breakfast. My customers pay for package deals that typically include meals, lodging, fishing charters and a vehicle rental. Are these vehicle rentals subject to the tax?
    What rental/lease fees and costs are subject to the Vehicle Rental Tax?


  • What are the Vehicle Rental Tax rates?

  • AS 43.52.020 levies a tax of 10% of the total fees and costs charged for the lease or rental of a passenger vehicle and 3% of the total fees and costs charged for the lease or rental of a recreational vehicle.

  • What is the definition of a passenger vehicle?

  • A passenger vehicle is defined as a motor vehicle that is self-propelled, but not by animal power and is driven or moved on a highway or other public right-or-way in the state.

  • What is the definition of a recreational vehicle?

  • A recreational vehicle is defined as a motor vehicle or trailer for recreational dwelling purposes, a motor home or other vehicle with a motor home body style, a one-piece camper vehicle or any other self-propelled vehicle with living quarters. A cab-over camper attached to a pickup truck that is rented as a single unit is considered a recreational vehicle.

  • Is the Vehicle Rental Tax charged for the entire length of the rental contract?

  • Yes, the Vehicle Rental Tax is charged for the entire period of the rental agreement as long as it is less than 91 days. However, if the rental agreement is for 91 days or longer, the Vehicle Rental Tax is not charged for any of the days of the contract. The intent of the Vehicle Rental Tax is to tax short-term rentals, not long-term leases.

  • Do I have to pay Vehicle Rental Tax on the lease of new automobiles?

  • Generally, no. As stated above, if the length of the rental/lease contract is 91 days or longer, the Vehicle Rental Tax is not charged for any of the days of the contract. However, if the leased car is turned back to the leasing agency within the first 90 days of the contract, Vehicle Rental Tax is charged.

  • Do I pay Vehicle Rental Tax on the rental of a trailer that is designed to haul personal property or cargo?

  • No. If the trailer is not designed for recreational dwelling purposes, the rental is not taxed. However, if the trailer is designed for recreational dwelling purposes, it is taxed as a recreational vehicle

  • If I rent my personal vehicle through Craigslist or similar online platform, do I need to file a Vehicle Rental Tax return?

  • Yes. Anyone, who conducts vehicle rental activity in the State of Alaska is required to collect from the renter and remit to the department a vehicle rental tax and file a Vehicle Rental Quarterly Tax Return.

  • I own a small business, a bed-and-breakfast. My customers pay for package deals that typically include meals, lodging, fishing charters and a vehicle rental. Are these vehicle rentals subject to the tax?

  • Yes. If the business does not itemize the vehicle rental charges on the customer's invoice, the concept of fair market value is used to determine total fees and costs charged for purposes of the Vehicle Rental Tax.

  • What rental/lease fees and costs are subject to the Vehicle Rental Tax?

  • The following rental/lease fees and costs are subject to the Vehicle Rental Tax:

    a. Total compensation for the lease or rental of a passenger or recreational vehicle without regard to billing practices, credit procedures or bad debts.

    b. Total compensation should not be reduced by commissions or fees charged by travel and other agents related to the leasing or rental of a passenger or recreational vehicle.

    The following rental/lease fees and costs are not subject to the Vehicle Rental Tax:

    1. Fees from the sale of automobile liability insurance, loss damage waiver insurance, and personal property insurance.
    2. Parking tickets.
    3. Sales and excise taxes.
    4. Payment for damages to the vehicle during the rental period.
    5. Concession fees paid to an airport.
    6. Cancellation fees.
    7. Certain adjustments made at the beginning and end of a contract such as for fuel.
    8. Rental of GPS or child car seats.
    9. Separately itemized charges for personal property such as pots, pans, and linens included in the rental of a recreational vehicle.


    Tax Returns and Payments

    Who must file a tax return?
    When is tax return due?
    What if the due date is on a weekend or holiday?
    I did not have any rentals this quarter, do I still need to file a tax return?
    How do I file Vehicle Rental Tax return?
    What happens if I do not file my tax return by the due date?
    When is the tax payment due?
    How can I make a tax payment?
    What happens if I do not submit my payment by the due date?
    Will I be charged interest?


  • Who must file a tax return?

  • The person or business collecting the Vehicle Rental Tax from renters of passenger and recreational vehicles is required to file a Vehicle Rental Quarterly Tax Return

  • When is tax return due?

  • Tax returns are filed quarterly. The tax return is due on the last day of the month following the calendar quarter and must be made no later than April 30, July 31, October 31, and January 31.

  • What if the due date is on a weekend or holiday?

  • If the due date falls on a weekend or holiday, the tax return is due the next business day. A holiday means an Alaska state holiday or a bank holiday observed by the Federal Reserve System. Holidays include Seward’s Day in March and Alaska Day in October but do not include other states’ holidays such as Emancipation Day.

  • I did not have any rentals this quarter, do I still need to file a tax return?

  • Yes. A tax return must be filed each quarter, regardless of whether rentals occurred or not.

  • How do I file Vehicle Rental Tax return?

  • Effective July 1, 2017, all tax returns must be filed electronically using Revenue Online. If you are unable to file a return electronically, please contact the Tax Division at 907.269.6620.

  • What happens if I do not file my tax return by the due date?

  • Returns that are not filed by the due date are subject to a failure to file penalty of 5% of the unpaid tax for each 30 day period or portion of a period the return is late, up to a maximum of 25%.

  • When is the tax payment due?

  • The tax payment has the same due date as the tax return. The weekend and holiday rule also applies to payments.

  • How can I make a tax payment?

  • Payments can be made by Automated Clearing House (ACH) debit payments using Revenue Online. Payments can also be made by wire transfer, check, or cash. Vouchers to include with your payment are available in Revenue Online and include all necessary instructions.

    The Department of Revenue cannot accept ACH credit or credit card payments.

    Please note that if your total payment exceeds $100,000 you are required to pay electronically or by wire transfer.

  • What happens if I do not submit my payment by the due date?

  • If the full amount of tax is not paid when due, a failure to pay penalty of 5% of the unpaid tax may be assessed for each 30 day period or portion of the period the payment is late, up to a maximum of 25%.

    If during any period, or portion of a period, both the failure to file and failure to pay penalties are applicable, only the failure to file penalty is imposed.

  • Will I be charged interest?

  • Under Alaska Statute 43.05.225, interest will be assessed on any unpaid or delinquent tax. Interest is compounded quarterly at the applicable rate each quarter. See here for the current interest rate.

    Exemptions

    Who is exempt from paying Vehicle Rental Tax?
    Are not-for-profit organizations exempt from the Vehicle Rental Tax?
    Does the renter of the vehicle that is exempt from the Vehicle Renter Tax have to fill out a Government Use Exemption Certificate or Other Usage Exemption Certificate for each rental?
    Where can I get copies of the Government Use Exemption Certificate and Electronic Filing Waiver Application?
    What does the rental agency do with the completed Government Use Exemption Certificates and Other Usage Exemption Certificates?
    Who can I contact if I still have questions?


  • Who is exempt from paying Vehicle Rental Tax?

    1. A person who rents or leases a vehicle on behalf of a federal, state, or local government agency for official use and upon taking possession of the vehicle provides the rental/lease agency with a completed Government Use Exemption Certificate is exempt from the Vehicle Rental Tax.
    2. A vehicle that is provided by an automobile dealer to a customer as replacement transportation during warranty, recall or service contract repairs is exempt from the Vehicle Rental Tax. The dealer cannot receive any compensation from the customer and the customer must provide a completed Other Usage Exemption Certificate to the dealer upon taking possession of the vehicle.
    3. Rental trucks with a gross vehicle weight rating greater than 8,500 pounds and used primarily for the transportation of personal property are exempt from Vehicle Rental Tax. What types of vehicles are exempt from the Vehicle Rental Tax? How do I get an Other Usage Exemption for Vehicle Rental Tax on a vehicle that is provided by an automobile dealer to a customer as a replacement vehicle? What type of identification do I need as proof of government employment or official status when applying for exemption from the Vehicle Rental Tax? Do these need to be shown to the rental agency upon receipt of the rental car?


  • Are not-for-profit organizations exempt from the Vehicle Rental Tax?

  • No, unless the renter is an employee or agent of local, state, or federal government and on official business, they are not exempt from the Vehicle Rental Tax.

  • Does the renter of the vehicle that is exempt from the Vehicle Renter Tax have to fill out a Government Use Exemption Certificate or Other Usage Exemption Certificate for each rental?

  • Yes. The renter must fill out the Governmental Use Exemption Certificate or Other Usage Exemption Certificate for each rental that qualifies for exemption from the Vehicle Rental tax. However, if the rental agency's contract incorporates substantially the same contents as the Government Use Exemption Certificate or Other Usage Exemption Certificate, it will be accepted by the Department of Revenue as a substitute.

  • Where can I get copies of the Government Use Exemption Certificate and Electronic Filing Waiver Application?

  • All forms needed to comply with Vehicle Rental Tax can be found online at the following URL: http://www.tax.alaska.gov/programs/programs/forms/index.aspx?60255 If you do not have access to the internet, please call the Department of Revenue at 907-296-6620 and we will gladly provide these documents to you.

  • What does the rental agency do with the completed Government Use Exemption Certificates and Other Usage Exemption Certificates?

  • The completed Government Use Exemption Certificates and Other Usage Exemption Certificates are attached to the rental contracts and kept on file by the rental agency for three years.

  • Who can I contact if I still have questions?

  • If you have any additional questions regarding the Vehicle Rental Tax, please contact: Tax Division
    Alaska Department of Revenue
    550 W. Seventh Ave., Suite 500
    Anchorage, AK 99501
    Phone 907-269-6620
    Fax 907-269-6644