Moderated by Sherry, Financial Technology Advisor at Hyperbots
Sherry: Hello, and welcome to all our viewers on CFO insights. I am Sherry, a financial technology consultant at Hyperbots, and I am very excited to have Jon Naseath here with me, he is an accomplished executive with expertise in AI, machine learning, and computer vision driving impactful technology solutions in education, healthcare, and business. Thank you so much for joining us today, John. We’ll be discussing a niche topic, which is Alaska’s State sales and use tax rates. To get us started with the interview, could you provide an overview of Alaska’s State sales and use tax rates? And how do these rates differ across goods and services?
Jon Naseath: I will first just want to start out by saying that, you know, a lot of states have different complexities. Over the past two weeks, we’ve spoken about a few different states. We started with California, which is where I was born and raised, and have worked through most of my career—a lot of complexities there. We then spoke about Arizona, where my wife’s family is all from, and my family was mostly from California mostly, and now we’re talking about Alaska, my son has been living in Alaska for the last two years, and it’s a beautiful state. Ironically, each of these states has its own unique complexities for sales tax. So with Alaska, what’s unique is, that everyone thinks about Alaska as not having income tax and not having sales tax because they have so much oil revenue and different things as the primary reason but separate from the State, the local jurisdictions are permitted to impose their own local sales tax, and they often do. For example, Juneau has a 5% sales tax, which applies broadly across most of the goods and services. Wasilla, for example, imposes a 2.5% tax. So the local taxes create a patchwork of systems across the State that require businesses to know the exact rate based on the local jurisdiction. The services are usually taxed at a local level, creating additional variability.
Sherry: Could you discuss some of the jurisdictions in Alaska with notably high or low sales tax rates? And how does this affect businesses?
Jon Naseath: Sure. Well, it’s important to note that Alaska is just huge, and as far as the geography, it covers more than most states, obviously. Some examples are Wrangell and Cordova, where their combined local rates reach up to 7%. So it’s quite high—or actually, compared to California, that’s quite average—but it’s high for Alaska. And then other remote areas or unincorporated regions, don’t have sales tax at all. So it just really depends on where you are and how you do your business. These variances require business operations across the locations to adjust their rates frequently. Companies serving in high-tax areas may consider pricing strategies to support their businesses and avoid extra costs if possible. It could impact some of their business decisions.
Sherry: How often do Alaska’s local sales tax rates change? And how do businesses keep up with these updates?
Jon Naseath: Most changes are going to happen on an annual basis with the new budgets. Oftentimes they are announced at the beginning of the year. But really, the local jurisdictions have the freedom to adjust the sales tax as they see fit. In some cities, seasonal adjustments are made—for example, increasing rates during or having rates specific for the tourist seasons could come into play in different parts of Alaska. Businesses typically monitor rate changes through local government announcements, or they may rely on automated systems to pull the rate data from tax databases. There really isn’t a centralized state system because there isn’t a state tax, so it becomes pretty challenging to stay up to date for the local city taxes that are required. Especially for a small business, it can become quite burdensome.
Sherry: What are some of the primary resources available to businesses to stay informed about sales and use tax changes in Alaska?
Jon Naseath: Yeah, again, since there’s no state tax, it really is about how you pull together the different municipal and city tax requirements. There’s the Alaska Municipal League, which is a resource that tracks the tax changes across the different areas.There’s also local city websites, local jurisdiction websites that you’d have to go to. And then third-party tax tools—an example is Avalara—and different sales tax handbooks. Really just trying to figure out how to get the information that you need for your local taxes.
Sherry:: What challenges do companies face when managing compliance with Alaska’s unique sales and use tax rules? And could you share some examples of the same?
Jon Naseath: Well, one of the main ones is just the local jurisdictional complexity. Each locality has its own rate. Businesses have to apply the rate based on wherever their customer’s location is. So just getting that lined up right is complex. A company that’s selling in both Juneau at 5% and Wasilla at 2.5% has to adjust their invoices accordingly. Also, the seasonal variability—some towns adjust based on whether you’re in the peak season and have a lot of tourists coming through. And also figuring out what items need to be taxed. Not all goods and services are consistently taxed across the locations. It just gets pretty complex when you consider timing, location, product, and all the different things that go into individual taxable items.
Sherry: How can artificial intelligence help businesses manage sales and use tax compliance more efficiently, especially in Alaska’s decentralized tax environment?
Jon Naseath: Well, there aren’t many tools that are doing it, but figuring out an AI tool that can help automate rate updates and get the local information that’s required—figuring out where the sales are happening. AI tools can help with geolocation to figure out where the sales occurred, and then monitor the changes. So as things happen with the timing of seasonality, as we mentioned, AI can help with that. I’m personally not aware of any other tools besides Hyperbots that can handle all these things and just manage all the changes in Alaska tax.I’ve been in businesses where we just didn’t do business in Alaska because of this. As we were growing, it wasn’t worth the complexity, or we just decided, “We’ll wait till Alaska comes knocking on our door.” Later, they came knocking, so we had to figure it all out. To clarify, that’s what the prior management had decided, and when I came in, we cleaned it all up. It was quite painful to figure out.
Sherry: How can AI support companies during audits for sales and use tax compliance in Alaska?
Jon Naseath: Well, the favorite thing about audits, especially with tax audits, is they love asking for information, and you have to go dig into your stuff. AI can help with that. It can access your information, find the right files, and find the right data that you need. It can perform document retrieval, error detection, and look through files. I’ve been in a situation where the state auditor came knocking for a tax audit. We were able to show our information, demonstrate how we had prepared it all, and convince them it wasn’t worth their time to do a full audit.
Sherry: And what do you see as the future role of AI in handling Alaska’s sales and use tax compliance?
Jon Naseath: Sales and use tax is really one of those processes where, if you have it under control, it’s a non-issue. If not, it can be very painful and require a ton of resources. An AI tool can help manage those resources, ensure compliance, perform predictive analysis, and manage risks.It can provide real-time dashboards to monitor compliance in different jurisdictions and proactive compliance alerts if something changes locally.
Sherry: It’s always a pleasure learning from you, Jon. Thank you so much for indulging us in these conversations and being as insightful as you always are.
Jon Naseath: My pleasure. I do need to call out again, I’m not a tax specialist. Talk to your own tax auditors and specialists. It’s exciting to see a company like Hyperbots tackling unique areas with AI.
Sherry: Thank you so much, Jon.
Moderated by Srishti, Financial Technology Consultant at Hyperbots
Srishti: Hello, everyone! My name is Rishi Rajre, and I’m a Fintech advisor here at Hyperbots. Today, I’m delighted to have John Silverstein as one of my guests. Thank you so much, John, for taking out the time today. It has been amazing working with you in the past, and hopefully, we can continue that from here. So for our viewers, a little bit about John. He is the VP of FP&A at Extreme Reach, and today we will be discussing Georgia’s sales tax rules and how companies can keep updated with all the tax changes. Whenever you’re ready, John, let’s get started.
John Silverstein: All right. Let’s get started. Happy to be here.
Srishti: Of course. Thank you. John, let’s start with a very basic question. Can you provide an overview of Georgia’s state and local sales tax structure?
John Silverstein: Sure, I can. In Georgia, there’s a base rate. Every state’s different, as we’ve talked about before, but there’s a base sales tax rate of 4% in Georgia. However, because that’s just the base, local jurisdictions are allowed to add up to 5% in additional taxes. The combined rate could be up to 9% in some areas. For instance, cities in Muskogee County have a combined sales tax of 9%, while some areas in Glenn County may be closer to 6% due to fewer additional levies. This layered approach allows for flexibility in funding local projects but can be more complex for businesses to keep on top of.
Srishti: I see that, and that perfectly makes sense. That brings me to the next question. Are there any specific exemptions from sales tax in Georgia that companies should typically be aware of?
John Silverstein: Yes, similar to other states, Georgia has some exemptions too. Groceries, for example, are exempt from the state’s portion of the tax, although they may still be subject to local tax. Prescription drugs are entirely exempt from both state and local sales tax. Medical equipment, such as prosthetics or other prescribed devices, is also exempt if prescribed by a licensed professional. This helps reduce the financial burden of essential goods but requires companies to correctly categorize and track such items.
Srishti: That is very interesting and definitely a good initiative by the Georgia government. How does Georgia handle sales tax on digital goods and services?
John Silverstein: In Georgia, digital goods are taxable, similar to physical goods. Downloadable music, eBooks, and streaming services are subject to the same sales tax as physical equivalents. If a company is selling digital content in Georgia, you need to account for sales tax, which can add complexity to operations across states with varying tax policies. For example, if your customer is in Georgia, you have to calculate the sales tax and are liable to collect it.
Srishti: I see, and that brings me to the next question. Can you share some examples of jurisdictions within Georgia that have notably high or low combined sales tax rates?
John Silverstein: The combined sales tax in Georgia can range widely. For example, in Muskogee County, it goes up to 9% due to the local options added on top of the 4% state rate. On the other hand, Glenn County’s combined rate can be around 6% or slightly higher. These local rate variations can impact pricing strategies and tax compliance for businesses operating in different counties.
Srishti: I see, understand. Now, if we compare Georgia to other states, how does it compare in terms of its sales tax rates and frequency of changes?
John Silverstein: That’s a good question. Georgia’s state sales tax is 4%, which is relatively low, ranking around the middle compared to other states. However, local taxes bring the combined average rate closer to 7.75%, which is slightly above the national average. The state has maintained a consistent 4% base rate for many years, but local jurisdictions occasionally adjust rates. For example, states like California see more frequent changes due to district and municipality taxes, especially in areas with voter-approved measures for local funding.
Srishti: That’s very interesting. How frequently do changes in sales tax rates occur, and are there any tools to stay updated?
John Silverstein: Georgia doesn’t adjust its state rate often because it’s slightly above the national average and hasn’t needed to increase for more revenue. However, companies turn to tools like the Sales Tax Handbook, Georgia’s Department of Revenue website, and automated tax management solutions to stay updated. These tools help businesses remain compliant and avoid non-compliance issues.
Srishti: That is definitely very helpful. Now, let’s talk about challenges. What challenges do companies face when managing sales tax for different goods and services in Georgia?
John Silverstein: One of the key challenges is compliance across diverse categories such as groceries, digital goods, and medical devices. Each has its own sales tax rules. For example, groceries are exempt from state tax, but prepared foods are fully taxable. This differentiation requires accurate categorization and tracking systems. Another challenge is keeping up with changes across counties, especially for companies with statewide operations. If you’re selling digital goods or operating across multiple counties, tax rates can vary significantly, making compliance even more complex.
Srishti: That’s really something to look out for. Given your experience, can you share how AI can help businesses stay updated on sales tax changes and improve tax compliance?
John Silverstein: AI is already playing a key role in helping companies remain compliant. It continuously scans legislative updates, rate changes, exemptions, and tax holidays. AI can alert companies to new exemptions or rate changes and ensure categories are accurately aligned with state rulings. Additionally, AI can integrate with ERP systems to automatically adjust calculations, reducing the risk of manual errors. For businesses operating in multiple states—or even multiple counties, as in Georgia—AI is invaluable for managing the complexity of tax compliance.
Srishti: That’s amazing. AI has really made strides in this area. With that, we come to the end of today’s discussion on Georgia sales tax and keeping up with all these changes. Again, thank you so much for joining us, John, and sharing your insights. Also, a big thanks to our viewers. I’ll see you around. Goodbye, and have a very good day.
