LANSING, Mich. (WZMQ) – State lawmakers are hoping to create a solution for the ‘dark store tax’ loophole. Before leaving for the summer, representatives introduced the legislation, but it’s not the first time state lawmakers have attempted to address the issue.
‘Dark store’ tax loopholes have been around since the great depression, allowing big box retailers to reduce what they pay in property tax by claiming stores should be assessed based on sale prices of vacant, often deed-restricted stores.
Invest UP’s CEO, Marty Fittante explained that the loophole has created a tax burden in many rural areas that depend on property tax revenue from big box stores.
New bipartisan legislation would prohibit retailers from using vacant, deed-restricted stores as comparables, and create more requirements surrounding how the taxable value of a property is determined.
State Representatives from the Upper Peninsula, Jenn Hill and Greg Markkanen, are both a part of the latest attempt to close the loophole. Hill explained that it’s the job of Michigan Tax Tribunals to hear tax appeals for state and local taxes.
Hill said the bills would expand their powers, specifically surrounding deeds and deed restrictions.
“There’s a direct cost to us because the counties have had to spend, at this point, hundreds of thousands of dollars on attorneys to negotiate new tax rates. Our local units of government have lost funding, and they’ve lost that funding once it’s cut, it’s then cut ongoing. So that affects our police, our fire, our parks and our local roads.” Hill explained. “The dark stores were a long legal fight to figure out what we could actually do to make a difference. Turns out we have to literally change the definition of what attracts tribunal can do.”
The cost to smaller communities like ones in the Upper Peninsula, and the uneven playing field for small businesses have made the loophole a recurring issue in the U.P.
“It’s really the way that big box retailers are able to take advantage of tax policy as it’s been interpreted in the state.” Fittante said.”From the perspective of equity from the perspective of impact, this really deserves and needs a change.”
Similar legislative fixes have received support in the past sessions, but haven’t been signed into law. Hill said the Legislature will return to Lansing in September and November, she hopes to see the bill passed then.
