City shifts tax collection system online
By Megan Gannon
The City of Nome’s new online system for collecting sales and bed tax went live on Tuesday. Starting January 10, businesses will no longer be able to file their taxes via paper documents and apply for or renew a city business license by filling out a paper application.
City Clerk Bryant Hammond said some business owners have expressed concerns about transitioning to the new method of tax collection, but he hoped that they would find the system easy to use.
“I think people don’t understand that it’s actually going to make their life easier rather than more difficult,” Hammond said. “You can use your phone to file your taxes…It’s a glorified spreadsheet on a web form.”
Businesses are currently required to pay a sales tax of 5 percent on all sales and rental of goods and services in Nome. The City also charges a 6 percent hotel/motel room tax that applies to all rooms rented on a daily basis. The monthly collection of those taxes had been administered by the City Clerk’s office with paper returns and files.
Hammond said his office was having significant issues with taxpayers turning in incorrectly calculated tax amounts. “We would spend a significant amount of staff time correcting people’s mistakes,” he said. This led to people overpaying or the city having to send invoices when taxes were underpaid. Hammond hopes that the online system, which automatically makes those calculations, would eliminate such errors. Hammond added that the new system could also help the city cut down on its paperwork storage. “We’ve got six file cabinets that are overflowing with sales tax returns,” he said.
The Nome Common Council had unanimously approved a resolution in July to hire Azavar Government Solutions to help streamline tax collections with an online platform called Localgov. The rollout was supposed to occur in September but was pushed back after ex-typhoon Merbok, Hammond said.
Local Certified Public Accountant Mark Johnson, also a member of the Nome Common Council, said he had heard some concerns from clients and was mostly worried about the transition period.
“There are a number of businesses that like to do things as they have done for the past 25 years or longer,” Johnson said. “It’s not always easy to make that change, from doing some routine thing you’ve done for 25 years—bringing a paper filing to City Hall—to a different method.”
Johnson noted that other entities in Alaska are following the trend of shifting paper filings into online-only systems—state mining reports, for instance, are now required to be filed online. However, he also noted that not everybody has internet or computers that they can use to file their taxes. The City has promised to have a kiosk set up in City Hall to accommodate taxpayers who need such facilities to file their sales taxes.
The change also means that the City will be moving its tax payment system away from paper checks as well. Taxpayers will have to pay their bill by electronic transfer, such as an eCheck, which will “auto draft out of your bank account, just as if you had written a check, except there is no piece of paper,” Hammond said. He said the City will be absorbing the 25-cent fee that comes with eCheck transactions. Payment by debit and credit card is also possible, but customers will incur a 2 percent fee.
The first tax due date under the new system is Jan. 20.
The Nome Common Council in its meeting on Monday evening approved a resolution allowing the city clerk or city manager to forgive small amounts of interest and penalty incurred as a result of the transition to Localgov. For the first quarter of this year, the administration can forgive penalty and interest fees up to $500.
Taxpayers can create an online account to prepare for their filings and payments at https://tax.localgov.org/login
Localgov is offering two free online training sessions over Zoom at 12 p.m. and 5 p.m. on Jan. 18.