Doing the math from sales taxes turned in by out-of-town merchants, Wrangell shoppers placed orders totaling more than $7.5 million online, by phone or mail in the fiscal year that ended June 30.

The tax on those orders generated $460,000 in revenue for the borough, after fees paid to the statewide organization that handles collections for 54 Alaska municipalities.

That $460,000 represents about 12% of the borough’s total sales tax receipts.

The percentage would be much higher than 12% if measured against only retail sales in town — after utilities, accommodations, restaurants, fuel and other purchases are removed from the total — but the borough does not maintain that detailed of a breakdown of sales tax categories.

The borough last year collected about $4 million from sales taxes, on par with the average revenue over the past four years. Borough code designates 20% of sales tax revenue to schools, with the rest for general government and public services.

The $460,000 received in taxes collected by out-of-town merchants — referred to as “remote sellers” in the sales tax world — is 18% higher than in the budget year that ended June 30, 2024, and almost triple the collections from the year that ended June 30, 2021.

The sharp and steady increase does not mean Wrangell shoppers are spending three times as much online as they did four years ago. Collections from remote sellers started in fiscal 2020 after the Alaska Municipal League set up the Alaska Remote Seller Sales Tax Commission, which serves as a central administrator to collect and distribute tax receipts for cities and boroughs around the state.

The municipalities joined together after a 2018 U.S. Supreme Court decision said states and municipalities could enforce their sales tax laws on remote sellers that did not have a physical presence in the tax jurisdiction. That meant that communities could start requiring Amazon, Walmart, Eddie Bauer and other online shopping sites to collect and remit local sales taxes.

Before the court decision, many online merchants refused to collect local sales taxes.

The Alaska Remote Seller Sales Tax Commission collected $31 million in sales taxes on behalf of its 54 participating municipalities in the fiscal year that ended June 30. After fees, the commission distributed more than $27 million to the cities and boroughs, reported Clinton Singletary of the commission.

That’s triple the first full year of the program.

Wrangell pays fees for the commission’s services — same as everyone else — but will get a bit of a lift this year with a lower fee, said Rob Marshall, the borough’s acting finance director. The borough paid $61,000 in fees for the past fiscal year.

Reaching the threshold to pay a lower fee will save the borough about $20,000 a year, Marshall said.

All consumers — whether online or on Front Street in Wrangell — will see a change in the borough’s sales tax code on Oct. 1, when the tax will apply to the first $5,000 on an order for goods or services, up from the previous cap that shut off the tax after $3,000 in a single purchase.

The assembly approved the change in May, to take effect Oct. 1.