Nationwide, lawyers for big-box retailers such as Walmart and Home Depot are contesting local property tax assessments, which they argue should be based on the value of a store as if it were vacant, up for sale and likely unappealing to prospective buyers, even while they’re in business.

It’s called the dark store theory, and a bill in the Maine Legislature aims to head off the practice before it gains traction in Maine’s courts and depletes local tax revenue.





In the 2017-2018 tax year, the town of Brunswick assessed the property taxes of its local Walmart at about $17 million. But attorneys for the retailer said that because of the dark store argument, its taxes should be nearly half that amount.

Walmart is also arguing for a 75 percent reduction in Farmington and an 80 percent reduction in Sanford.

Last week, Democratic state Rep. Ryan Tipping of Orono told lawmakers on the Taxation Committee that the retailers are shortchanging local budgets and increasing taxes for everyone else.

“Dark store theory is being used to give big corporations tax breaks and increase the burden on our communities to make up for the revenue shortfall,” he said.

Tipping is sponsoring a bill that could limit the use of the dark store argument, ensuring that stores larger than 20,000 square feet are valued based on their current use.

But Curtis Picard of the Maine Retailers Association said the proposal is effectively a tax increase on big retailers.

“The reality is that retail property is being overassessed,” he said.

Picard said one reason big retailers are fighting town assessments is that their buildings may have value to the current owners, but not to many other businesses.

“The reality is that large-format retailers are unique, single-use facilities that have very few prospective buyers,” he said.

That argument was shared in testimony submitted by the Council of State Taxation, an industry group that includes representatives from large corporations, including Walmart.

It’s also the central thrust of an aggressive legal tactic used by big retailers that has gained a foothold in some courts in other parts of the country, so much so that the credit ratings agency Standard and Poor’s warned in a report two years ago that a proliferation of tax appeals by big retailers could hamper the finances of local governments.

Use of the dark store argument in property tax appeals also appears to be on the rise in Maine.

Sarah Austin, an analyst for the left-leaning Maine Center for Economic Policy, said the tax reduction requests by Walmart and other large retailers have grown in recent years — $184 million since 2015, according to a limited statewide survey of municipalities.

Austin said that, so far, local assessing boards have defended their tax evaluations of large retailers, but a successful legal challenge could change the dynamic, as it has in other states.

“And once that does happen, it’s much harder to put that genie back in the bottle,” she said.

Local governments in midwestern states have been among the hardest hit, so much so that the dark store argument has spawned legislation in Indiana and Michigan and was highlighted as a priority in Wisconsin Gov. Tony Evers’ State of the State speech last month.

But this kind of legislation faces legal obstacles, including potential conflicts with what are known as uniformity clauses in state constitutions. These provisions require that taxation is applied evenly within a local jurisdiction.

Critics of Maine’s bill said it creates different tax rules for specific businesses — a violation of the uniformity clause.

Supporters acknowledged that it may need some changes, but Austin said the proposal is designed to give legal support for local assessors.

“So that courts and assessors have firmer ground to stand on when they’re looking at how box stores should be valued,” she said.

The Legislature’s Taxation Committee is expected to hold a work session on the proposal on Feb. 18.

This article appears through a media partnership with Maine Public.