Dark Store Information

Download PDF Dark Store Presentation, July 17, 2018 (PDF)

What is the Dark Store Loophole?

The Dark Store Loophole is a tax break trick that commercial and manufacturing property owners use to save themselves from paying their fair share of property taxes.

Tax attorneys for big box stores use the dark store loophole to argue that the value of a new store in a busy, popular area should be based on the value of empty stores.

How is a property's market value determined?

A property's value is usually set on an apples-to-apples basis; in other words, the assessed and taxable value of the property is based on properties similar in size and construction.

To cut their taxes, big box stores get an apples-to-rotten-apples appraisal of some of their properties, meaning that they use the Dark Store Loophole to argue that new properties have the same value as old, empty, or vacant properties. These properties are worth less, so big box stores can pay less in local property taxes than they should be.

Why are property taxes important?

Every year property taxes are collected from homeowners, landlords, and business owners and used to provide city services like police and fire protection, snow plowing, garbage collection, recycling services, street and road repair, library services, and to support schools. Property taxes provide most of a city's budget.

So if a big box store pays less in property taxes, how does that impact me?

Cities prepare their annual budgets based on the amount of property taxes they expect to receive from taxpayers. If there is a shortfall in property taxes collected, cities need to find ways to make up the difference, like raising taxes or cutting services.

If a big box retailer uses the Dark Store Loophole to cut the amount they pay in property taxes, cities are forced to cut services to the entire community, or increase taxes across the board, which impacts homeowners and residents.

Why do I have to pay more in taxes if a big box store pays less?

Think of a city's budget as a series of buckets. Property taxes are the biggest bucket in the budget, and all property taxes go into this bucket. Homeowners, landlords, and businesses large and small pay property taxes into this bucket. If one tax payer pays less, others must pay more to keep the bucket full and keep the budget balanced. A balanced budget means that city services can continue to be provided.

Can I lower my property taxes by using the Dark Store Loophole?

No: no other taxpayers receive the special treatment these companies have. A homeowner, for example, could not claim that the assessed value of his or her home should be half the amount for which it was purchased. A landlord could not argue that his or her occupied duplex is worth the same amount as an empty duplex up the street.

Walgreens storefrontIs this happening in West Allis?

Yes. The City of West Allis is currently engaged in litigation on this issue.

What can I do about this issue?

In the Aug. 14, 2018 Partisan Primary, 91% of West Allis voters voted "yes" on an advisory referendum advising the State Legislature to enact state wide legislation to require big box properties to pay their fair share of the accurate assessed value of their property. Other cities in Wisconsin will vote on similar advisory referendums in November. You can continue to encourage legislators to take action on this issue.

How can I help other people learn about this?

The Dark Store Loophole is hard to understand, but we all understand that we don't want to pay more in taxes while big box stores pay less. Talk to your friends, family, neighbors, and elected officials. With elections coming up this fall, there's no time to waste.

Contact your local legislator here or contact the Wisconsin State Legislature Members here.

Learn more from the League of Wisconsin Municipalities website.