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Michigan Supreme Court Declines to Hear Menards Tax Case

The Michigan Supreme Court on Friday declined to hear a case from big-box home improvement retailer Menards regarding its property taxes, reports the Detroit Free Press. The order lets a previous decision by the Michigan appeals court stand.

The Detroit Free Press reports that Menards used the dark store theory of property tax evaluation to lower its tax assessment on one of its stores in Escanaba, Michigan. The theory suggests that retail properties should be taxed as if they are empty because the buildings are too unique to serve other retailers. According to the Free Press, retailers’ use of the argument “has led to budget cuts in many communities.” Menards has also used the argument and received lower tax assessments in its home state of Wisconsin.

The Michigan Tax Tribunal voted in favor of Menards, and the city of Escanaba appealed the decision, the newspaper reports. The appeals court decided in favor of the city, which prompted the retailer to take the case to the state’s high court last October, according to the article.

The Free Press reports that the tax case has been returned to the Michigan Tax Tribunal for both parties—Menards and the city of Escanaba—to present additional evidence and determine a property value for the retailer’s store.

“No longer can big-box stores obtain unfair and substantial tax reductions based upon unrealistically low artificial values, while our other taxpayers contribute based upon the value of their properties,” says attorney Stephanie Simon Morita in the article. Simon Morita wrote a brief on behalf of the Michigan Municipal League.

The Supreme Court’s order does not outlaw the dark store argument, although legislators in Michigan are working on bills “to tilt the scale to local governments in commercial property valuations,” reports the Free Press.

The newspaper reports that $100 million of local tax revenue throughout Michigan has been lost since 2013 because of large chain retailers appealing using the dark store argument, according to the Michigan Association of Counties.

About Melanie Moul

Melanie is the communications and content manager for the North American Hardware and Paint Association. She joined the NHPA team in 2016 as an editor for Hardware Retailing and now helps lead the communications team to deliver relevant, timely content to the industry.

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