Walmart loses 1st round to reduce its property taxes

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Walmart has lost the first round of its bid to reduce its property taxes in Pulaski County, a decision with implications across Arkansas.Arkansas Times is reporting Pulaski County Judge Barry Hyde, sitting as the county court considering appeals of appraisals of property for tax purposes, has determined Walmart failed to meet the burden of proof to reduce its tax bill in the county by about $4.5 million.

Baxter County Assessor Jayme Nicholson said in July the case is one like many across the country where big-box retailers including Walmart, Home Depot, Target and Walgreens are seeking to slash their property taxes through a loophole known as the “dark store theory.”

The concept behind the case is called the “dark store theory” because working stores are compared to closed ones. The large retailers contend they’re fully operational, often thriving businesses should be assessed the same as vacant buildings or “dark” stores.

Nicholson said if a business, such as Walmart, can successfully challenge an assessment using the loophole, it can mean a repayment going back as far as three years. She says a recent decision in Johnson City, Kansas, has led to a reduction in value of 60 million resulting in millions of dollars in lost tax revenue.

Judge Hyde found flaws in Walmart’s evidence on the value of comparable properties in setting its stores’ market value. He says some of those properties differed significantly from the Walmart and Sam’s Club stores for which reduced valuations were sought.

The Constitution requires that property be assessed according to its market value. The appraisal by the assessor is not presumed to be correct, but a challenger must prove by preponderance of evidence the correct valuation. Hyde said Walmart had fallen short.

While the reductions can be a shock to tax receiving entities, particularly school districts, Nicholson said earlier there is nothing wrong with companies and individuals challenging an assessment if they feel it is unfair. But she says the “dark store theory” is different.


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The decision is expected to be appealed to circuit court and ultimately to the Arkansas Supreme Court.

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