Walmart has sued just about every county in Colorado where the corporate giant has a store location, an aggressive legal tactic many big-box retailers are taking in an attempt to shrink their property tax bills.
Every year, Colorado county assessors are tasked with taking inventory of a business’ personal property – such as furniture, cash registers, refrigerators and equipment used in daily operations – and determining a value of those items, which are then taxed at a rate that differs with each county.
This year, Walmart’s parent company, Walmart Stores Inc., filed a protest after taking issue with the values Colorado’s county assessors placed on items in its stores, claiming the items were valued too high. Also included were Walmart Stores Inc.’s Sam’s Club and Neighborhood Market locations.
But Walmart’s petition was denied in July by the Colorado Board of Equalization, the committee tasked with reviewing assessor protests.
On Sept. 4, Walmart slapped a lawsuit on 32 counties (Colorado has a total of 64 counties) to reduce the value of its personal property at 95 of its stores, as well as to recoup attorney fees. Included on the list of counties sued were La Plata, Montezuma and Archuleta counties.
Walmart’s Littleton-based attorney Brian Huebsch declined The Durango Herald’s request for comment for this story, saying he doesn’t speak about open cases.
In its lawsuit, Walmart claims county assessors’ valuations do not accurately reflect the fact its stores are usually open 24 hours a day, seven days a week, causing equipment to wear out faster.
Also, when the items need to be replaced, Walmart says it is having a harder time reselling them because its retail competitors are closing, reducing the amount of interested buyers. And, Walmart says resale prices have fallen even further because of an oversaturated market thanks to Amazon and other online retailers.
But Carrie Woodson, La Plata County’s assessor, said she and her staff have never seen evidence of Walmart reselling its equipment after it is replaced, despite years of monitoring the store’s operations.
“We believe they just throw it away,” Woodson said.
Woodson also said Walmart’s story has changed: When the store first filed a complaint with La Plata County, it claimed it was because “brick and mortar” stores were going out of business, and because of the oversaturated market, its equipment was worth less and less.
But once the complaint reached the state level, Walmart instead started arguing its items should be priced lower than what county assessors determined because the items wear out faster as a result of the store’s around-the-clock hours, she said.
How much money Walmart is trying to save is hard to quantify, as the tax rate is different in each county.
In La Plata County, though, Walmart’s personal property at its single-store location was valued at an estimated $1.9 million in 2019, which results in just over $20,000 in taxes to the county.
In Archuleta County, Assessor Natalie Woodruff said Walmart’s personal property at its single-store location there was valued at about $1.8 million. Because Archuleta County has a lower tax rate, about $9,700 is paid in taxes.
“They still wanted to continue on (with the lawsuit),” Woodruff said. “They don’t think it’s depreciated enough.”
Montezuma County Assessor Leslie Bugg did not return calls seeking comment.
Lawrence Pacheco, spokesman for Colorado Attorney General Phil Weiser, said the state of Colorado is not going to become involved in the statewide lawsuits.
“These are county issues,” he said.
Megan Graham, spokeswoman for La Plata County, said it’s likely attorneys for counties across the state will band together.
“We are very likely to coordinate with other counties in defending the suit,” she said.
A report from S&P Global Ratings tracked how big-box retailers and corporate giants are increasingly using aggressive legal tactics to cut tax bills, at the cost of local governments.
Among researchers, the practice has been called the “dark-store theory” – when a retailer intentionally undervalues its own properties so it can pay less in taxes. The S&P Global Ratings report focused mainly on how the corporations are fighting their property tax values.
“But it does fit the pattern,” Scott Nees, co-author of the report, said of Walmart’s protest of its personal property. “Big boxes are looking at their property values and how they are assessed, and looking for ways to save a little bit of money on their tax bills.”
It’s hard to quantify just how much Walmart thinks it’s overpaying and how much communities stand to lose if the lawsuits don’t go their way.
According to a report in The New York Times in January 2019, “In Michigan, the state association of counties estimated that dark-store appeals reduced local revenue from 2013 to 2017 by $100 million. In Texas, the comptroller said such appeals could end up costing local governments $2.6 billion a year.”
Woodson said this is not the first time Walmart has challenged the county’s valuations.
Walmart also protested the valuations of its personal property in the Durango store in 2017 and 1999.
Walmart protested the value on its store’s property tax value in 2010, 2011, 2017 and this year. In 2019, the value on the Walmart store’s property was about $13.6 million, bringing in about $142,600 in taxes to the county.
Woodson said Walmart has never won an appeal.
A previous version of this story erred in saying Walmart sued 31 Colorado counties. It was 32 counties.
Durango Herald, Nov. 13, 2019