The Michigan Retailers Association, which represents more than 15,000 stores and websites is speaking out against proposed legislation to change tax assessment practices on large retail outlets.
When big box stores appeal their assessments, a "dark stores" methodology is often used, which treats the buildings as if they are vacant. The result is a lower property assessment and tax bill.
Senate Bill 524
Senator Tom Casperson introduced Senate Bill 524 in an effort to restrict "dark stores" assessment. If approved, it will be retroactive and impact assessments on or after March 1, 2014, while incorporating several components from legislation enacted by a neighboring state.
This year, Indiana passed laws to regulate dark store comparables in appeals. Indiana now requires tax assessments for big box retail to be based on the cost approach. It forbids the assessment from being based on comparable properties that have been vacant for more than a year or have restricted deeds.
Retailers Say Proposed Law is Unconstitutional
Michigan Retailers Association President and CEO James P. Hallan testified against SB 524 before the House Tax Policy Committee. He said the legislation amounts to "assessor overreach" and an unconstitutional tax increase.
"Make no mistake, the idea put forth by assessors is a tax increase, and by singling out retailers it violates the uniformity provision of the Michigan Constitution," Hallan said. He warned that allowing assessors to assess retail property differently also would create a slippery slope that could extend similar unconstitutional treatment to other types of businesses, including manufacturers.
"Municipalities should concentrate on attracting investment, not discouraging investment and penalizing those who have invested in their communities," Hallan added. "For these reasons and more, Michigan Retailers Association strongly opposes any attempt to change current law and long-standing appraisal principles."