Baraboo argues Walmart defaulted on excessive taxation claim

Attorneys for the city of Baraboo are arguing that a corporation within the municipality has no claim for excessive taxation after the paperwork was incorrectly filed.

According to court documents filed in Sauk County Circuit Court civil court, Walmart filed its claim six days before paying its 2021 tax bill. An affidavit from City Clerk Brenda Zeman, supported by documentation, shows Walmart lawyers filed the claim Jan. 18. A receipt of payment shows Walmart paid its property taxes Jan. 24.

The argument by attorney Storm Larson, of Boardman & Clark LLP, of Madison, was heard by Circuit Court Judge Michael Screnock during a motion hearing Wednesday.

According to Wisconsin Statute 74.37(2)(a), “a claim for an excessive assessment may be filed against the taxation district…which collected the tax.” The Wisconsin Court of Appeals decided that claims have to be filed after tax is collected because the claim is to recover unlawful taxation against the entity, Larson argued.

The case filed May 23 is the second in two years brought against the city by Walmart Real Estate Business Trust. The first was filed in August 2020.

These cases use what opponents have dubbed the “dark store loophole.” Corporations which operate big box stores make claims against municipalities that their property should be assessed as its value if it were “dark” or not operating and receiving any revenue.

Those opposed to the tax practice are hanging hopes for a stop to the “dark store” method via the Wisconsin Supreme Court. The judicial body is expected to make a ruling later this year which could stop retailers, such as Walmart, from avoiding paying the amount municipalities assert is the company’s tax burden.

One of the most vocal opponents has been the League of Wisconsin Municipalities, which has pushed the issue in the courts. Members of the organization argue the loophole allows corporations to skirt their tax burden and instead hand the bill over to residents already paying for their own property within cities.

Walmart has a number of ongoing lawsuits in counties throughout Wisconsin. The company filed a similar case last year against the city of Burlington in Racine County, arguing that its store there should see its assessed value reduced from $8.6 million to $4.5 million. If it were to win that case, the taxes paid for that store would drop from $160,000 to roughly $80,000. Like in any municipality, the local government would either have to reduce services provided to its citizens or increase taxes on property owners.

According to Sauk County Land Records, Walmart in Baraboo sits on nearly 22 acres of land. City Assessor Michael Weymir, of Tyler Technologies Inc., assessed the building. Its taxable value was more than $9.48 million in 2020.

Attorney Christopher Strohben of Gimbel, Reilly, Guerin & Brown, of Milwaukee, argued in the initial lawsuit that the store should not be valued at more than $5 million.

Attorneys in that case met Aug. 1 to argue over the inclusion of documents. The lawsuit remains ongoing. Circuit Court Judge Wendy Klicko set the next hearing for Nov. 1.

In 2021, the property was assessed at more than $9.53 million. Walmart attorneys objected via the Board of Review, which evaluated and determined the assessment as correct. At more than $22,000 per $1,000 of assessed value, the city taxed Walmart a total of $212,859 for the property.

Again, attorneys with Gimbel, Reilly, Guerin & Brown claim that the assessment is too high and instead the tax bill for the property “should be no higher than $132,423.” The difference is about $80,500.

Larson argued that not only has Walmart defaulted due to its misstep in timing, but that because the deadline for filing a claim was Jan. 31, its lawyers cannot proceed and the case must be dismissed.

Screnock told Walmart attorney Russell Karnes and Larson that if the documents are reviewed and he finds the claim was served before taxes were paid, he is bound to rule to dismiss both a claim for excessive taxation and a claim for nonuniform tax assessment, which were brought forward by Karnes. He ordered Karnes to produce an affidavit from the corporation by Sept. 30 and gave Larson the chance to respond by Oct. 14.

Karnes has until Oct. 28 to respond, after which Screnock will provide a written decision.