The Dark Store Loophole Explained

Tax attorneys for big box stores like Target, Walmart, Meijer, Menards, Home Depot, and Lowes, use what has traditionally been called the “dark store loophole” to argue that the value of a new store in a busy commercial district should be based on the value of former retail properties in unpopular areas that are now closed and vacant. While courts in Wisconsin have not yet endorsed the dark store theory, that has not stopped tax attorneys for big box stores and other commercial retail chains from using the argument before assessors in Wisconsin.

 

A real example: A Lowe’s store in Wauwatosa is assessed for taxes at $13.6 million. Lowe’s claims the property is only worth $7.1 million, even though it spent over $16 million to acquire the land and build the structure. Lowe’s argues that the land alone was devalued from $9 million to $3 million once the big box store was constructed and insists that only vacant dark stores can be used as comparable properties.

 

Police Calls to Big Box Stores: Big box retail stores demand more police service than any other commercial properties and certainly much more than residential properties. Municipal police are frequently called to respond to thefts and other issues at big box stores. As big box stores fight to avoid paying their fair share of property taxes, they actually use more of the services property taxes pay for. Meanwhile, more of the burden of paying for police services gets shifted to homeowners, the class of property using such services the least.

FACT
Dark Store Loopholes allow big box retailers to avoid paying their fair share of property taxes.
FACT
Wisconsin homeowners already pay a too-high 68% of property taxes, and may soon pay an even bigger share.
FACT
Big box retailers use more municipal services like police & fire, but soon will pay even less for them.
FACT
Closing the Dark Store Loopholes has broad bipartisan support, but bills need to be allowed a vote.