Chapter 4.20 SALES TAX

“Business” means a person or entity engaging or offering to engage in a trade, a service, a profession, or an activity with the goal of receiving a financial benefit in exchange for the provision of services, goods, or other property.

“Business day” means any day which is not a Saturday, Sunday or other day on which City offices are authorized or required by law to be closed.

“Buyer” means a person to whom a sale of property or product is made or to whom a service is furnished.

“Food stamps” means obligations of the United States government issued or transferred by means of food coupons or food stamps to enable the purchase of food for the eligible household.

“Gaming property” means a right to participate in a game of chance regulated under AS 05.15, including without limitation a right to participate that is represented by a pull-tab, bingo card, or raffle or lottery ticket.

“Industrial hemp” has the same meaning as contained in AS 03.05.100(5).

“Marijuana” has the same meaning as set forth in AS 17.38.900(10).

“Marijuana products” means concentrated marijuana products and marijuana products that are comprised of marijuana and other ingredients and are intended for use or consumption, such as, but not limited to, edible products, ointments, and tinctures.

“Marketplace facilitator” means a person that contracts with remote sellers to facilitate for consideration, regardless of whether deducted as fees from the transaction, the sale of the remote seller’s property or services through a physical or electronic marketplace operated by the person, and engages:

1. Directly or indirectly, through one or more affiliated persons in any of the following:

a. Transmitting or otherwise communicating the offer or acceptance between the buyer and remote seller;

b. Owning or operating the infrastructure, electronic or physical, or technology that brings buyers and remote sellers together;

c. Providing a virtual currency that buyers are allowed or required to use to purchase products from the remote seller; or

d. Software development or research and development activities related to any of the activities described in section (2) of this definition, if such activities are directly related to a physical or electronic marketplace operated by the person or an affiliated person; and

2. In any of the following activities with respect to the seller’s products:

a. Payment processing services;

b. Fulfillment or storage services;

c. Listing products for sale;

d. Setting prices;

e. Branding sales as those of the marketplace facilitator;

f. Order taking;

g. Advertising or promotion; or

h. Providing customer service or accepting or assisting with returns or exchanges.

“Newspaper” means a publication of general circulation bearing a title, issued regularly at stated intervals at a minimum of not more than two weeks, and formed of printed paper sheets without substantial binding. It must be of general interest, containing information of current events. The word does not include publications devoted solely to a specialized field. It shall include school newspapers, regardless of the frequency of the publication, where such newspapers are distributed regularly to a paid subscription list.

“Nonprofit organization” means a business that has been granted tax exempt status by the Internal Revenue Service (IRS).

“Periodical” means any bound publication other than a newspaper that appears at stated intervals, each issue of which contains news or information of general interest to the public, or to some particular organization or group of persons. Each issue must bear a relationship to prior or subsequent issues with respect to continuity of literary character or similarity of subject matter, and sufficiently similar in style or format to make evident that it is one of a series.

“Physical presence” means a seller who establishes any one or more of the following within a local taxing jurisdiction:

1. Has any office, distribution or sales house, warehouse, storefront, or any other place of business within the boundaries of the local taxing jurisdiction;

2. Solicits business or receives orders through any employee, agent, salesman, or other representative within the boundaries of the local taxing jurisdiction or engages in activities in this state that are significantly associated with the seller’s ability to establish or maintain a market for its products in the City;

3. Provides services or holds inventory within the boundaries of the local taxing jurisdiction;

4. Rents or leases property located within the boundaries of the local taxing jurisdiction. A seller that establishes a physical presence within the local taxing jurisdiction in any calendar year will be deemed to have a physical presence within the local taxing jurisdiction for the following calendar year.

“Pre-filing” means submitting a return indicating that no sales tax will be collected for a given filing period in advance of the due date for that filing period.

“Price” means the amount of money, and the fair market value of consideration other than money, that the buyer gives to the seller in exchange for property, the right to use or occupy property, or the rendering of services, without any deduction for the following:

1. The seller’s cost of the property or the product sold;

2. The cost of materials used, labor or service cost, interest, losses, all costs of transportation to the seller, all taxes imposed on the seller, and any other expense of the seller;

3. Charges by the seller for any services necessary to complete the sale, other than delivery and installation charges;

4. Delivery charges;

5. Installation charges; and

6. Credit for any trade-in, as determined by state law.

“Quarter” means trimonthly periods of a calendar year established as follows: January-March; April-June; July-September; and October-December.

“Remote seller” means a seller or marketplace facilitator who engages in any transaction that does not constitute a local sale pursuant to HMC 4.20.040(A), and which involves the sale of goods, rentals or the provision of services that are transferred electronically or delivered to a point of delivery within the City. A marketplace facilitator shall be considered the remote seller for each sale facilitated through its marketplace.

“Rental” means any transfer of the right to use or occupy property for consideration.

“Sale” or “retail sale” means any transfer of property for consideration.

“Sales tax” means the tax levied by this chapter.

“Seller” means a person who, as principal or agent, transfers property, or the right to use or occupy property, or provides a service, for consideration.

“Service” means any application of labor, skill or knowledge to produce value in exchange for consideration, and may include the provision of property or the right to use or occupy property, but does not include services rendered to an employer by an employee.

“Service” may include, but is not limited to:

1. Professional, advertising, maintenance, recreation, amusement, and craftsman services.

2. Services in which a product or sale of property may be involved, including personal property made to order.

3. Utility services including but not limited to sewer, water, solid waste collection or disposal, electrical, telephone services and repair, natural gas, cable television, and internet services.

4. The sale of transportation services originating inside the City.

5. Services rendered for compensation by any person who furnishes such services in the course of the person’s trade, business, or occupation including services rendered for which commission is paid on a service or product that has not been charged a Houston sales tax.

“Shipping and freight hauling services” means the service of transporting goods by means other than the United Postal Service.

“Transaction” means any transfer of property, or the right to use or occupy property, or the rendering of a service, for consideration. (Ord. 03-07 § 3, 2003; Ord. 08-04 § 4, 2008; Ord. 13-22 § 4, 2013; Ord. 16-13 § 4, 2016; Ord. 20-08 § 1, 2020; Ord. 21-09 § 4, 2021)

4.20.025 Interpretation.

A. The tax levied by this chapter applies to all sales, rentals and services except those that this chapter expressly exempts from the tax.

B. Exemptions from the tax levied by this chapter are to be construed narrowly. (Ord. 03-07 § 3, 2003; Ord. 08-04 § 4, 2008; Ord. 13-22 § 4, 2013; Ord. 16-13 § 4, 2016)

4.20.030 Levy of tax.

A retail sales tax of two percent of the sales price or charge received is levied on all retail sales, rentals and services made within the City. An additional two percent of the sales price or charge received is levied on all retail sales of fireworks. The additional revenue generated will be appropriated to promote increased public safety. The buyer shall pay the tax to the seller who shall remit collected taxes for the use and benefit of the City. (Ord. 03-07 § 3, 2003; Ord. 08-04 § 4, 2008; Ord. 09-11 § 4, 2009; Ord. 13-07 § 5, 2013 (Res. 13-14); Ord. 13-22 § 4, 2013; Ord. 16-13 § 4, 2016)

4.20.035 Maximum tax per transaction.

Repealed by Ord. 16-13. (Ord. 03-07 § 3, 2003; Ord. 08-04 § 4, 2008; Ord. 13-22 § 4, 2013)

4.20.040 Applicability of sales tax.

Sales tax is applicable to both local sales and remote sales that occur within the City.

A. Local Sales. A local sale or rental occurs whenever a seller engages in any transaction that involves the delivery of goods or services within the City, and the seller either:

1. Maintains a place of business, maintains a business within their home, or maintains any agent or employee in the City;

2. Regularly or repeatedly promotes sales or rentals in the City by means such as advertising, promotional events or solicitation of sales; or

3. Engages in activities in this state that are significantly associated with the seller’s ability to establish or maintain a market for its products in the City.

A rental of real property constitutes a local sale if the real property is located in the City.

A service involving the construction, repair, renovation, improvement, sale or rental of real property constitutes a local sale if the real property is located in the City.

B. Remote Sales. A remote sale occurs whenever a remote seller or marketplace facilitator engages in any transaction that does not constitute a local sale as provided by subsection (A) of this section, and which involves the sale of goods, rentals or the provision of services that are transferred electronically or delivered to a point of delivery within the City. The reporting, remittance, and administration of sales taxes resulting from remote sales shall be governed by the Alaska Uniform Remote Seller Sales Tax Code as authorized by Chapter 4.21 HMC. (Ord. 20-08 § 2, 2020)

4.20.045 Rules applicable to particular businesses or occupations.

A. Real Estate Sales Commissions.

1. Commissions on sales of real property located in the City are subject to sales tax, regardless of the location of the person to whom the commission is payable.

B. Building Construction by Property Owner. When work is performed on real property located within the City of Houston by the owner of the property, employees of the owner of the property, or the owner acting as the owner’s own contractor, the maximum sales tax on all materials, supplies and services purchased by the owner and incorporated in the work is equal to $500.00 multiplied by the sales tax rate in effect when the tax is due under this subsection. Before making any purchases that are to be incorporated into the work, the owner may pay the maximum sales tax to the City ($10.00). Upon such payment, the City shall issue a building exemption certificate showing the payment of the maximum sales tax and specifying the project, its location, and the owner’s name. The certificate shall be effective for the lesser of the duration of the work or one year, and is not transferable or renewable.

By exhibiting a valid building exemption certificate when purchasing materials, supplies or services to be incorporated in the work, the owner will be exempt from paying sales tax, and the seller will be exempt from collecting sales tax on the transaction.

C. Sales of Gaming Property. An amount equal to the gross receipts of the seller from sales of gaming property, less the cost of prizes awarded on each series, set of games, or contest for which gaming property has been sold, shall be subject to sales tax.

D. Sales from Coin-Operated Machines. An amount equal to the gross receipts from each coin-operated machine that the seller operates in the City shall be subject to sales tax. (Ord. 03-07 § 3, 2003; Ord. 08-04 § 4, 2008; Ord. 12-05 § 4, 2012; Ord. 13-22 § 4, 2013; Ord. 16-13 § 4, 2016)

4.20.050 Exemptions.

This section applies only to residents, businesses or properties located within the City of Houston, except for contractors and wholesale/manufacturers who obtain a sales tax exemption certificate and elect to pay an annual flat fee in lieu of collecting sales tax at the point of sale.

The following transactions are exempt from sales tax:

A. The selling price amount of any sale in excess of $500.00; provided, that:

1. This exemption shall not apply to the sale of marijuana, marijuana products, industrial hemp and products made from industrial hemp.

2. Whenever a nonexempt sale or rental of property, or rendering of a nonexempt service, occurs over a period exceeding one month, and payment is made in one lump sum, such sum shall be allocated pro rata to each one-month portion of the total transaction period, or part thereof, and shall be treated as separate transactions for the purposes of this chapter.

B. Sales of real property and interests in real property. Whether a transaction is a sale of real property is determined as of the time of the transaction, and without reference to whether what is sold later will be incorporated into real property. However, commissions on sales of real property are subject to sales tax (see HMC 4.20.045(A)).

C. Casual and isolated sales, rentals or services, not made in the ordinary course of business.

D. Wholesale purchases by a business, where Houston sales tax will ultimately be collected during retail transaction.

E. Sales of tangible personal property and equipment rentals to a person licensed as a contractor under AS 08.18, which property or rented equipment is to be used in the construction of or improvements to real property in the City of Houston.

F. Sales of securities, insurance and bonds of guaranty and fidelity.

G. The following fees charged by banks, savings and loan associations, credit unions and investment banks:

1. Fees associated with deposit accounts, including service fees, monthly account fees, NSF fees, and attachment fees.

2. Fees for the purchase of bank checks, money orders, traveler’s checks, foreign currency and similar products for payments.

3. Fees for, or commissions on, the sale, exchange or transfer of currency, stocks, bonds and other securities.

4. Fees for the use of automatic teller machines and for transactions made through automatic teller machines, notary fees and overdraft protection fees.

H. Contracts to transport elementary or secondary school students to and from school.

I. Sales, rentals and services to a person or organization that the Internal Revenue Service or the state of Alaska recognizes as a nonprofit organization described in Section 501(c) of the Internal Revenue Code, and which holds a current exemption certificate from the City; provided, that the sale, rental or service is not for use in an “unrelated trade or business” of the person, as that term is defined in the Internal Revenue Code.

J. Sales and rentals of hearing aids, crutches, wheelchairs and personal apparatus specifically manufactured for a patient.

K. Sales of food in lunchrooms or cafeterias in elementary, secondary or post-secondary schools that are operated primarily for the convenience of school students and faculty, and not operated for profit.

L. Sales, rentals or services which the City is prohibited from taxing by the Constitution or statutes of the United States or the state of Alaska.

M. Sales of newspapers and other periodicals that are made directly by carriers to consumers or users.

N. Sales, rentals and services to the United States, the state of Alaska, and any of their agencies, instrumentalities, or political subdivisions.

O. Dues or fees to clubs, labor unions or fraternal organizations.

P. Sales of admission to school entertainments, school athletic events, and events conducted for the benefit of charitable or community organizations. This exemption does not apply to sales of gaming property.

Q. Sales of food supplies to food service establishments for incorporation into food products to be sold to the public.

R. Sales related to orbital space facilities, space propulsion systems, space vehicles, satellites or stations, to the extent of the exemption required by AS 29.45.650(h).

S. Sales of property purchased with food coupons, food stamps, or other certificates issued under 7 U.S.C. 2011 through 2025 (Food Stamp Act) or food instruments, food vouchers, or other certificates issued under 42 U.S.C. 1786 (Special Supplemental Food Program for Women, Infants and Children).

T. Sales of property and services required in the course of mental or physical treatment by a health care provider licensed by the state of Alaska, and sales of property and services pursuant to a prescription or written order from such a person.

U. Residential rentals for a term of 30 or more consecutive days. (Ord. 03-07 § 3, 2003; Ord. 08-04 § 4, 2008; Ord. 13-22 § 4, 2013; Ord. 16-13 § 4, 2016; Ord. 21-09 § 5, 2021)

4.20.080 Certificate of exemption.

A. A person shall apply to the City Clerk for a certificate of exemption that is required for an exemption from sales tax under HMC 4.20.050, on a form approved by the City Clerk. The City Clerk may require additional information of the applicant as necessary to determine whether the application should be granted, including without limitation documentation of Internal Revenue Service recognition of the applicant as an exempt organization, or the organization of a church as a nonprofit corporation under the state of Alaska.

A certificate of exemption is issued for a calendar year, and expires on December 31st of the calendar year for which it was issued.

B. The City Clerk may revoke a certificate of exemption after notice to the holder of the certificate and a hearing, if the City Clerk finds that the holder of the certificate:

1. Gave false information when applying for the certificate of exemption;

2. Used the certificate of exemption in a transaction that was not exempt from sales tax under HMC 4.20.050;

3. Permitted the use of the certificate of exemption by a person other than an authorized agent or employee of the holder of the certificate; or

4. Ceases to be entitled to exemption from sales tax under HMC 4.20.050.

C. A vendor’s permit issued in accordance with Chapter 5.06 HMC, Public Vending Licenses, is considered to serve the same purpose as a sales tax exemption certificate. The vendor pays an up-front flat fee in lieu of collecting sales tax at the point of sale. (Ord. 03-07 § 3, 2003; Ord. 08-04 § 4, 2008; Ord. 13-22 § 4, 2013; Ord. 16-13 § 4, 2016)

4.20.090 Determination whether transaction is exempt.

A seller shall require the buyer to pay sales tax on each transaction that is not exempt from sales tax under this chapter. If a buyer pays sales tax on a transaction that the buyer believes to be exempt, the buyer may request that the City determine whether the transaction is exempt by completing a certificate of protest in a form provided by the City. The certificate shall show the names and addresses of the seller and the buyer, the basis for the claim of exemption, and such other information as may be prescribed by the City. A seller shall keep a supply of certificates of protest and provide one to a buyer upon request. After completing the certificate of protest, the buyer shall give it to the seller, who shall deliver it to the City as promptly as possible, but in no event later than 30 days after its receipt from the buyer. The City Clerk will determine whether a transaction is exempt from sales tax based on the information in the certificate of protest, and notify the buyer in writing of the determination, within 30 days after receipt of the certificate. If the City Clerk determines that the transaction is exempt, the City Clerk shall remit a refund with the notice. (Ord. 03-07 § 3, 2003; Ord. 08-04 § 4, 2008; Ord. 13-22 § 4, 2013; Ord. 16-13 § 4, 2016)

4.20.100 Collection of sales tax – Additional and separate statement.

A. Except as provided in subsection (B) of this section:

1. The buyer shall pay sales tax to the seller at the time of payment for a sale, rental or service subject to sales tax. The seller shall collect sales tax from the buyer at the time of payment for a sale, rental or service subject to sales tax. The seller is responsible for remitting sales tax on all nonexempt local sales to the City, regardless of whether the seller collects the sales tax from the buyer. Sellers shall remit all sales tax on nonexempt remote sales pursuant to Chapter 4.21 HMC.

2. The seller shall add the sales tax to the price or charge for the sale, rental or service, showing the tax as a separate and distinct item on any receipt, invoice, statement of account, or other record of the transaction. When it is not feasible for the seller to show the sales tax on each transaction as a separate and distinct item, the seller may elect to add it to the sales price. A seller who has made this election shall notify their customers that “All prices include a 2.0 percent City of Houston sales tax.”

The sales tax on more than one separately priced item may be shown as a total tax on the aggregate price of all items sold or rented, or services rendered, in a single transaction.

3. The amount of sales tax to be added to the price of a sale, rental or service shall be two percent of the first $500.00 of all nonexempt transactions, except for the sale of marijuana, marijuana products, industrial hemp and products made from industrial hemp which is not subject to exemption under this chapter. Sales tax shall be rounded to the nearest penny, and may be determined in accordance with the following schedule:

Amount of Sale	Tax
Under $0.25	None
$0.25 through $0.74	$0.01
$0.75 through $1.24	$0.02
$1.25 through $1.74	$0.03
$1.75 through $2.24	$0.04
$2.25 through $2.74	$0.05
$2.75 through $3.24	$0.06
$3.25 through $3.74	$0.07
$3.75 through $4.24	$0.08
$4.25 through $4.74	$0.09
$4.75 through $5.24	$0.10
Over $5.24, up to $499.74	2% of sale
Sales, other than sales of marijuana, marijuana products, industrial hemp and products made from industrial hemp, of $499.75 to $499.99	$10.00
Sales of marijuana, marijuana products, industrial hemp and products made from industrial hemp totaling $500.00 or more	2% of sale

4. A seller may not assume, fail to add to the price or charge for a sale, rental or service, or refund to the buyer, all or part of the sales tax, or advertise or represent to any person that the seller will do so.

B. Sales tax on sales of gaming property and sales from coin-operated machines is not added to the sales price and collected with each transaction, but is computed and paid as provided in HMC 4.20.045. (Ord. 03-07 § 3, 2003; Ord. 08-04 § 4, 2008; Ord. 13-22 § 4, 2013; Ord. 16-13 § 4, 2016; Ord. 20-08 § 3, 2020; Ord. 21-09 § 6, 2021)

4.20.110 Title to collected sales tax.

With the exception of sales tax collected from remote sellers or market facilitators pursuant to Chapter 4.21 HMC, the title to sales tax vests in the City upon collection by the seller. The seller holds collected sales tax in trust for the City, and is accountable to the City for these funds until they are deposited with the sales tax returns. (Ord. 03-07 § 3, 2003; Ord. 08-04 § 4, 2008; Ord. 13-22 § 4, 2013; Ord. 16-13 § 4, 2016; Ord. 20-08 § 4, 2020)

4.20.120 Tax returns – Filing period – Contents – Penalty for delinquency.

A. Sales tax returns shall be filed monthly, unless the seller has applied for, and the City Clerk has approved, quarterly filing. In determining whether a seller may file sales tax returns on a quarterly basis, the City Clerk shall consider the following factors:

1. Whether at the time of application the seller is delinquent in paying to the City any tax or business license fee;

2. Whether the seller has been delinquent in submitting any sales tax return as required by this chapter during the 12 months preceding the date of application; and

3. Whether the seller has an annual tax liability of $1,200 or less.

The City Clerk shall require a seller that fails to submit a quarterly sales tax return or remit taxes when due to submit sales tax returns on a monthly basis, for a period of months as established by the Clerk pursuant to HMC 4.20.200. The City Clerk’s determination regarding a seller’s request to file sales tax returns on a quarterly basis may be appealed according to the procedures set forth at HMC 4.20.180(D).

B. Acquiring, completing, and filing sales tax returns is the responsibility of the seller. Tax return forms may be obtained from City Hall or downloaded from the City’s website.

C. A seller shall prepare a sales tax return for each filing period. The sales tax return shall state the total amount of the seller’s sales, rentals and services; the amounts of the seller’s exempt and taxable sales, rentals and services; and the amount of sales tax that is due from the seller. The seller shall submit on or with the return such additional information as the City may require to determine the amount of sales tax due for the filing period. The seller shall prepare the return and remit sales tax to the City on the same basis, cash or accrual, that the seller uses in preparing its federal income tax return. The seller shall sign the return, and transmit the return, with the amount of sales tax that it shows to be due, to the City.

D. A seller that filed or should have filed a sales tax return for the prior period shall file a return for the current period even though no tax may be due. The return shall show why no tax is due.

E. Pre-Filing. When a seller knows their business will not be active for a period of time, and will not collect any sales tax during that period, they may submit their sales tax returns in advance of the normal due date(s).

1. For example, if a seasonal business will not conduct any activity during the winter requiring the collection of sales tax, that business may file its sales tax returns for the dormant period in advance. This will alert the City Clerk not to expect normal sales tax returns from this business during the “down” periods, and it may help the seller avoid being assessed with late fees if they forget to file returns while the business is closed.

2. If the seller will not conduct business for several months, extending to the end of the calendar year, instead of pre-filing, they may submit a final tax return for the year when they shut down.

F. A completed sales tax return, and the related remittance of sales tax, is due, and must be received by the City, not later than 5:00 p.m. on the last business day of the month immediately following the end of the period for which the return was prepared. The failure of the U.S. Postal Service or any private delivery service to make timely delivery of a sales tax return or the related remittance of sales tax shall not excuse an untimely filing or remittance.

G. A late filing fee of $25.00 per month shall be added to all late-filed sales tax reports in addition to interest and penalties. The late fee does not bear interest. The filing of an incomplete return, or the failure to remit all tax, shall be treated as the filing of no return.

H. A seller who timely files a correctly completed sales tax return, and the related remittance of sales tax, may retain two percent of the amount of the sales tax to be remitted, as an administrative fee, up to a maximum of $100.00.*

I. Sales tax that is not received on or before the time when due is delinquent. Delinquent sales tax bears interest at the rate of 15 percent per annum until paid. In addition, delinquent sales tax shall be subject to a late payment penalty equal to five percent of the amount of the delinquent sales tax multiplied by the number of calendar months (or portions thereof) that elapse until the delinquent sales tax, interest and penalty are paid in full; provided, that the amount of penalty shall not exceed 20 percent of the amount of the delinquent sales tax. The penalty does not bear interest.

J. The City Clerk may require a seller that fails to submit a sales tax return or remit taxes when due to submit sales tax returns and remit taxes more frequently than monthly.

K. Sales taxes resulting from remote sales shall be reported and remitted pursuant to Chapter 4.21 HMC. (Ord. 03-07 § 3, 2003; Ord. 08-04 § 4, 2008; Ord. 13-22 § 4, 2013; Ord. 16-13 § 4, 2016; Ord. 20-08 § 5, 2020)

* Code reviser’s note: Ordinance 20-08 inadvertently omitted the provisions of subsection (H) of this section concerning the retention of an administrative fee. The subsection has been retained pursuant to the intent of the city.

4.20.130 Duties upon cessation or transfer of business.

A. A seller that ceases to do business in the City without a transfer of the business shall file with the City a final sales tax return, and remit any sales tax due, for the period ending on the date that the seller ceases to do business, within 15 days after that date.

B. When a seller transfers its business in the City:

1. The seller shall file with the City a final sales tax return, and remit any sales tax due, for the period ending on the effective date of the transfer, within 30 days after that effective date, and provide a copy of the return to the transferee.

2. The transferee shall obtain from the City an estimate of the delinquent sales tax, penalty and interest, if any, owed by the seller as of the date of transfer, and shall withhold that amount from the consideration payable for the transfer, until the transferor has produced a receipt from the City showing that all tax obligations imposed by this chapter have been paid.

3. A transferee that fails to withhold the amount required under this section shall be liable to the City for the lesser of the amount of delinquent sales tax, penalty and interest due from the seller as of the date of transfer, and the amount that it was required to withhold.

C. In this section, the term “transfer” means any of the following with respect to a seller:

1. A change in voting control, or in more than 50 percent of the ownership interest in a seller that is a corporation, limited liability company or partnership;

2. A sale of substantially all of the assets used in the business of the seller; and

3. The initiation of a lease, management agreement or other arrangement under which another person becomes entitled to the seller’s gross receipts from sales, rentals or services. (Ord. 03-07 § 3, 2003; Ord. 08-04 § 4, 2008; Ord. 13-22 § 4, 2013; Ord. 16-13 § 4, 2016; Ord. 20-08 § 6, 2020)

4.20.140 Amended returns.

A. A seller may file with the City an amended sales tax return with supporting documentation, and the City may accept the amended return, but only in the following circumstances:

1. The amended return is filed within one year of the original due date for the return;

2. The seller provides a written justification for amending the return;

3. The seller held a current City business license for the period for which the amended return was filed and filed an original return for that period; and

4. The seller agrees to submit to an audit upon request of the City.

B. The City shall notify the seller in writing whether it accepts or rejects an amended return, including the reasons for any rejection. (Ord. 03-07 § 3, 2003; Ord. 08-04 § 4, 2008; Ord. 13-22 § 4, 2013; Ord. 16-13 § 4, 2016)

4.20.150 Tax return – Extension of time.

Upon written application of a seller, stating the reasons therefor, the City Clerk may extend the time to file a sales tax return if the City Clerk finds each of the following:

A. For reasons beyond the seller’s reasonable control, the seller has been unable to maintain in a current condition the books and records that contain the information required to complete the return;

B. Such extension is a dire necessity for bookkeeping reasons and would avert undue hardship upon the seller;

C. The seller has a reasonable plan to cure the problem that caused the seller to apply for an extension, the seller will commence and proceed with diligence to cure the problem, and the problem will be cured within a reasonable time;

D. At the time of the application, the seller is not delinquent in filing any other sales tax return or in remitting sales tax to the City; and

E. No such extension shall be made retroactively to cover existing delinquencies.

F. A penalty/and or fee assessed under HMC 4.20.120(G) for the delinquent remittance of sales tax or under HMC 4.20.120(F) for failure to file a sales tax return may be waived by the City Clerk, upon written application of the seller accompanied by a payment of all delinquent sales tax, interest, penalty and/or fee otherwise owed by the seller to the city, within 45 business days of the assessment of the penalty and/or fee. A seller may not be granted more than one waiver of penalty and/or fee under this subsection in any period of 12 consecutive months. The City Clerk shall report all such waivers of penalty and fees to the Council in writing, at least once each calendar quarter.

G. The Mayor or the Mayor’s designee, who may be a city employee, may forgive the payment of uncollected sales tax, interest and penalty thereon, and penalties for failure to file by owing by a seller to the city upon determination by the Mayor or Mayor’s designee that:

1. Such uncollected sales taxes have never been collected by a substantial portion of a clearly definable class of seller; or

2. Such uncollected sales taxes have never been collected on a substantial portion of a clearly defined class or type of transaction or service; or

3. A reasonable interpretation and reliance upon that the interpretation results in failure to collect a sales tax, which collection is later determined to have been legally required under this chapter.

4. The Mayor or Mayor’s designee shall notify the Council in writing of any such incidence of forgiveness which shall be final unless overridden by the Council within 30 days of such forgiveness. (Ord. 03-07 § 3, 2003; Ord. 08-04 § 4, 2008; Ord. 13-22 § 4, 2013; Ord. 16-13 § 4, 2016; Ord. 20-08 § 7, 2020)

4.20.155 Repayment plans.

A. The City may agree to enter into a repayment plan with a delinquent seller. No repayment plan shall be valid unless agreed to by both parties in writing.

B. A seller shall not be eligible to enter into a repayment plan with the City if the seller has defaulted on a repayment plan in the previous two calendar years.

C. The repayment plan shall include a secured promissory note that substantially complies with the following terms:

1. The seller agrees to pay a minimum of 10 percent down payment on the tax, interest and penalty amount due. The down payment shall be applied first to penalty, then to accumulated interest, and then to the tax owed.

2. The seller agrees to pay the balance of the tax, penalty and interest owed in monthly installments over a period not to exceed one year.

3. Interest at a rate of 15 percent per annum shall accrue on the principal sum due. Interest shall not apply to penalties owed or to interest accrued at the time the repayment plan is executed or accruing during the term of the repayment plan.

4. If the seller is a corporation or a limited liability entity the seller agrees to provide a personal guarantee of the obligations under the repayment plan.

5. The seller agrees to pay all future tax bills in accordance with the provisions of this chapter.

6. The seller agrees to provide a security interest in the form of a sales tax lien for the entire unpaid balance of the promissory note to be recorded by the City at the time the repayment plan is signed. The seller shall be responsible for the cost of recording the tax lien.

D. If a seller fails to pay two or more payments as required by the repayment plan agreement, the seller shall be in default and the entire amount owed at the time of default shall become immediately due. The City Clerk will send the seller a notice of default. The City may immediately foreclose on the sales tax lien or take any other remedy available under the law. (Ord. 20-08 § 8, 2020)

4.20.160 Use of information on tax returns.

A. Except as otherwise provided in this chapter, all returns, reports and information required to be filed with the City under this chapter, and all information contained therein, shall be kept confidential and shall be subject to inspection only by:

1. Employees and agents of the City whose job responsibilities are directly related to such returns, reports and information;

2. The person supplying such returns, reports and information; and

3. Persons authorized in writing by the person supplying such returns, reports and information.

B. The City will release information described in subsection (A) of this section pursuant to subpoena, order of a court or administrative agency of competent jurisdiction, and where otherwise required by law to do so.

C. Notwithstanding subsection (A) of this section, the following information is available for public inspection:

1. The name and address of a person who holds a current City business license; and

2. Whether a holder of a City business license is more than 30 days delinquent in filing a return or remitting sales tax; and, if so, the number of returns not filed.

D. The City may publish the name of any seller that is delinquent in remitting sales tax, and the delinquent amount thereof. The City also may provide the public statistical information related to sales tax collections; provided, that no information identifiable to a particular seller is disclosed. (Ord. 03-07 § 3, 2003; Ord. 08-04 § 4, 2008; Ord. 13-22 § 4, 2013; Ord. 16-13 § 4, 2016)

4.20.170 Tax records – Additional information from seller – Audits.

A. A seller shall maintain records of transactions supporting the information that it submits on its sales tax returns, including, without limitation, records of daily gross receipts from sales, rentals and services, invoices of purchases and sales, bills of lading and bills of sale.

1. A seller also shall maintain records of transactions that are exempt from sales tax, including information that will substantiate the claim of exemption. A record of each tax exempt sale shall be recorded on a Houston tax exempt sales log (form), or electronic form approved by the City Clerk, and shall be submitted with the sales tax returns.

2. The seller shall maintain all such records at their place of business. The seller shall maintain all such records for a period not less than three years after the date of payment of the sales tax to which they pertain, except to the extent that the City has authorized in writing their destruction or disposal at an earlier date.

B. The records that a seller is required to maintain under subsection (A) of this section shall be subject to inspection and copying by authorized employees or agents of the City for the purpose of auditing any return filed under this chapter, or to determine the seller’s liability for sales tax where no return has been filed.

C. In addition to the information required on returns, the City may request, and the seller must furnish, any information deemed necessary for a correct computation of the tax.

D. The City may adjust a return for a seller if, after investigation or audit, the City determines that the figures included in the original return are incorrect, and that additional sales taxes are due; and the City adjusts the return within three years of the original due date for the return. (Ord. 03-07 § 3, 2003; Ord. 08-04 § 4, 2008; Ord. 13-22 § 4, 2013; Ord. 16-13 § 4, 2016)

4.20.180 Estimated tax.

A. If a seller fails to file a sales tax return, or if the City has reasonable cause to believe that any information on a sales tax return is not accurate, the City may estimate the sales tax due based on any information available.

B. The City shall notify the seller in writing that the City has estimated the amount of sales tax that is due from the seller under subsection (A) of this section, stating the estimated amount. The City shall serve the notice on the seller by delivering the notice to the seller’s place of business, or by mailing the notice by certified mail, return receipt requested, to the seller’s last known mailing address.

C. The City’s estimate of the amount of sales tax that is due from a seller shall become a final determination of the amount that is due unless the seller, within 15 days after service of notice of the estimated sales tax, gives the City a written request for a hearing.

D. A hearing requested under subsection (C) of this section shall be conducted before the Mayor or the Mayor’s designee, who may be a City employee. At the hearing, the seller shall have the burden of proving, by testimony or documentary evidence, that the amount of sales tax that is due is less than the amount that the City estimated. After the hearing, the person conducting the hearing shall issue a decision determining the amount of sales tax that is due from the seller. The City shall serve the decision on the seller by delivering the notice to the seller’s place of business, or by mailing the notice by certified mail, return receipt requested, to the seller’s last known mailing address.

E. A decision under subsection (D) of this section determining the amount of sales tax that is due may be appealed to the superior court as provided in the Alaska Rules of Appellate Procedure.

F. The amount of sales tax finally determined to be due under this section shall bear interest and penalty as provided in HMC 4.20.120, from the date that the sales tax originally was due, plus an additional civil penalty of $250.00 for each calendar month for which the amount of sales tax that is due has been determined. (Ord. 03-07 § 3, 2003; Ord. 08-04 § 4, 2008; Ord. 13-22 § 4, 2013; Ord. 16-13 § 4, 2016)

4.20.190 Violations – Remedies.

A. Each of the following is a violation of this chapter:

1. Doing business in the City without a current business license.

2. A buyer failing to pay sales tax to a seller as required by this chapter.

3. A seller failing to collect sales tax from a buyer as required by this chapter.

4. A seller failing to file a sales tax return or remit sales tax when due.

5. A buyer or seller knowingly submitting false information in a document filed with the City under this chapter.

6. A seller falsifying or concealing information related to its business activities in the City for the purpose of avoiding payment of sales tax.

7. A seller failing to permit the City to inspect records of the seller as required by this chapter.

8. A seller failing to maintain records as required by this chapter.

B. Each act or omission in violation of this chapter, and each day in which the act or omission occurs, is a separate violation of this chapter.

C. A seller that fails to file a sales tax return or remit sales tax when due, in addition to any other liability therefor imposed by this chapter, shall pay to the City all costs incurred by the City to determine the amount of the seller’s sales tax liability or to collect the sales tax, including, without limitation, costs of obtaining, reviewing and auditing the seller’s business records, collection agency fees, and actual reasonable attorney’s fees.

D. Pursuant to AS 29.45.650 there is created a lien on the real and personal property of a seller to secure the payment of sales tax, interest, penalty and costs of collection. The City Clerk shall cause notice of the lien to be recorded with respect to the property of a seller when the City Clerk finds that the seller is delinquent in remitting sales tax to the City. The notice shall state the name of the seller; the amount of delinquent sales tax, interest, penalty and cost of collection owed by the seller as of a specified date; and that interest, penalty and costs will continue to accrue until payment is made. Within 10 days after recording the notice, the City shall mail a copy of the notice by certified mail, return receipt requested, to the last known address of the seller; provided, that failure of the City to mail the notice or of the seller to receive it shall not affect the validity or priority of the lien.

E. The City may bring a civil action to:

1. Enjoin a violation of this chapter. On application for injunctive relief and a finding of a violation or threatened violation, the superior court shall enjoin the violation.

2. Collect delinquent sales tax, penalty, interest and costs of collection, either before or after estimating the amount of sales tax due under HMC 4.20.180.

3. Recover a civil penalty of $250.00 for each violation of this chapter.

4. Foreclose a recorded sales tax lien as provided by law.

F. All remedies for violations of this chapter are cumulative and are in addition to those existing at law or in equity. (Ord. 03-07 § 3, 2003; Ord. 08-04 § 4, 2008; Ord. 13-22 § 4, 2013; Ord. 16-13 § 4, 2016)

4.20.200 Administrative regulations.

The City Clerk may adopt policies and procedures providing for the application and interpretation of this chapter and prescribe the use of specific forms to be used in the administration of this chapter, so long as they are approved by the Mayor prior to implementation and do not conflict with any federal, state or local law. (Ord. 03-07 § 3, 2003; Ord. 08-04 § 4, 2008; Ord. 13-22 § 4, 2013; Ord. 16-13 § 4, 2016; Ord. 20-08 § 9, 2020)

4.20.210 Use of sales tax.

The two percent City sales tax levy shall be appropriated through the ordinary public budget process. (Ord. 03-07 § 3, 2003; Ord. 08-04 § 4, 2008; Ord. 13-22 § 4, 2013; Ord. 16-13 § 4, 2016)