Dark Store Tax Loophole 

The Issue:  The “Dark Store” strategy of property tax assessment is looming large over communities throughout the state of Wisconsin and unfortunately could soon be coming to your city or village.  In fact, it may already be there.

In essence, the Dark Store strategy is a tax loophole being used by Big Box retailers and other national chains to lower the amount they pay in property taxes. Retailers such as Lowe’s, Target, Meijer, Home Depot, Menards, Walgreens, and CVS are arguing that the market value of their thriving store should be based on the sales of similar size “comparable” properties that are vacant and abandoned.

What? You mean a fully operational store, like a new Target, gets to pay the same property taxes as a closed, empty and “dark” K-Mart down the street? Yes, that’s exactly what the retailers are fighting for and it’s what is starting to happen more and more frequently.

Some courts in Wisconsin have upheld this “Dark Store theory” and cut property tax assessments in some cases by as much as 50 percent – resulting in a tax shift to homeowners or a cut in local services. These rulings could result in a shift of millions of dollars in tax burden across Wisconsin unless the loop hole is closed by the legislature.  

The Solution: Follow the lead of the Indiana state legislature and pass legislation in Wisconsin closing off these tax strategies and stopping the tax shift to home owners. Pass legislation clarifying that leases are appropriately factored into the valuation of properties and prohibiting assessors from valuing thriving big box stores the same as abandoned buildings in a different market segment.


Should this new thriving store be valued for property tax purposes like the abandoned store in the photo below?  That’s what many big box chains are successfully arguing to reduce their property taxes.  The result is that other taxpayers like you have to pick up the slack.  Not fair, is it?  Tell your legislator to do something about it.  Support legislation banning the dark store tax strategy.  


Big Box Dark Store Documentary


A highly informative documentary film explaining the complex, yet devastating “Dark Store” tax loophole issue facing Wisconsin communities. This is a hot topic the League of Wisconsin Municipalities has been fighting for more than a year and at a compact 24-minutes it is great film to show in your local communities when explaining this issue.

“Boxed In” is a 2016 documentary by Northern Michigan University Professor Dwight Brady, an Emmy Award winning producer, and 14 NMU students.

Dark Store Resources

Dark Store Issue Briefing.

Dark Store Model Resolution calling on the Legislature to pass legislation Closing Tax Loopholes Causing More of Property Tax Burden to Shift from Commercial to Residential.

Big-Box Stores Battle Local Governments Over Property Taxes.

Nice summary of the dark store issue in the September 2016 issue of Governing.

Should Lowe's 'dark store' strategy in Texas concern D-FW taxpayers?

An article on the just beginning process in Texas.  Dallas News

'Dark stores' argument allows big businesses to skimp on property taxes.

An account of the 'Dark Store' Janesville situation.  Janesville Gazette

Dark Store Strategy surfaces in Alabama.

An account of Lowe's actions in Alabama.  AL.COM Article

West Bend WI asks governor to close tax loopholes.

Facing two lawsuits and the prospect of a significant decline in tax revenues from larger retailers, area administrators have officially petitioned state officials for assistance.  Daily News Article

Wauwatosa, WI -- Mayor and many local governments asking the state for help.

Local municipalities are losing millions each year, and thousands of dollars are being spent on legal fees. It's an issue that's been steadily creeping into Wisconsin -- big box stores appealing their assessed values to pay lower property taxes. 
FOX6 story HERE.

Brookfield, WI sends message to combat big retail loopholes.

City of Brookfield – Worst-case scenario: Property tax bills for the average resident go up $233.50.
Brookfield Elm Grove NOW article HERE.

How Big-Box Retailers Weaponize Old Stores

Tucked away on the northern edge of Michigan’s rugged Upper Peninsula, Sault Ste. Marie is bracing for the battle of its life. The tourist town is heading to court in early 2017 to fight Walmart Stores, which seeks to cut $286,000 off its annual property tax bill on a local store. Using what critics call the “dark store loophole,” Walmart is following in the footsteps of big-box merchants including Lowe’s and Target by arguing that its bustling store should be assigned about the same value for tax purposes as one that’s been vacant for years, hundreds of miles away.  Bloomberg Businessweek Article Here.

Retailers Exploit ‘Dark Store Loophole’ to Lower Taxes

Bloomberg’s Shannon Pettypiece discusses a novel tax ploy that pits big-box retailers against cash-strapped towns.
Bloomberg Video Here.

Cities brood over 'dark store' tax lawsuits

Big-box retailers are suing Oshkosh, Fond du Lac and other Wisconsin cities to lower their property tax load with a legal loophole that opponents say will cause cities to raise residential taxes to make up the difference.  Sheboygan Press article here.

Retailers file successful legal challenges to tax assessment

OSHKOSH (AP) — Some big-box retailers in Wisconsin have successfully challenged their tax assessments by claiming they should pay the same rate as a store that's closed and remains vacant.  The Star article here.

Texas Panel Rejects Lowe’s Dark Store Tax Strategy

A Bexar County arbitration panel rejected arguments by Lowe’s Home Centers to value some of its San Antonio area stores as if they were empty instead of functioning businesses, according to a seven-page decision issued Wednesday.  San Antonio Express News article here.

Retailers seek tax cuts with 'dark store' theory

To Menard Inc., the store it opened in the Village of Howard in 2012 is worth $5.8 million — roughly the amount the Eau Claire-based home improvement retailer believes it would fetch if it were closed and sold off as an empty shell like, say, the former Home Depot in Beaver Dam.  To the Village of Howard, just outside Green Bay, the Menards is worth more than twice that amount, precisely because it’s not vacant, like the Home Depot was for five years, before a sheet-metal fabricator bought it.
Milwaukee Journal Sentinel article here.