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Kansas Supreme Court Pushes Back on Walmart's Drive for Lower Property Taxes

Walmart argued to the Kansas Supreme Court that Johnson County overtaxed its 11 properties in 2016 and 2017. (Photo by Lynn Horsley, KCUR 89.3)


The Kansas Supreme Court on Friday dealt a blow to what’s known as dark story theory, an idea used by big box retailers to reduce their property taxes.

The decision reversed a previous ruling in favor of Walmart’s argument that its properties in Johnson County were overtaxed by tens of millions of dollars.

For now, the ruling effectively rejects the dark store theory big box retailers pursue to lower their tax rates. The theory says that big box stores should be valued as if they were an empty building, not an operating business.

The case has much larger implications beyond simply Walmart and Johnson County, because it could determine whether the dark store theory gains a foothold across Kansas.

In an unanimous decision, the court said the Kansas Board of Tax Appeals wrongly ruled in Walmart’s favor. The court said the board had disregarded evidence from Johnson County on how to value Walmart’s properties.

The court sent the cases back to the Board of Tax Appeals to fully reconsider the county’s evidence. However, it’s possible the board could again rule in Walmart’s favor.

“Though BOTA may reach the same result on remand, that decision must be based on its own determinations of the facts and witness credibility,” Justice Dan Biles said in the ruling.

Cities and counties in Kansas feared a ruling in Walmart’s favor would have opened the floodgates for other big box stores to recoup millions of dollars in property taxes. That may have ultimately led cities and counties to raise property taxes on residents to cover the shortfall in revenue.

John Goodyear of the League of Kansas Municipalities said a ruling in Walmart’s favor would allow other retailers to push for similar reductions.

“The fear is that this will spread to any community where there is a single-tenant big box retail store,” Goodyear said before the decision was issued.

The dark store theory argues that property owned by large retailers should be valued as if it were a vacant building ready to be sold. Attorneys for the retailers compare it to the sale of a home, where a buyer does not consider the financial well-being of the seller to decide the value of the property.

Walmart made that argument before the Kansas Board of Tax Appeals. The panel agreed and said the company’s 11 Johnson County stores were overtaxed by roughly $60 million in both 2016 and 2017.

Johnson County appealed that decision. Ryan Carpenter, an attorney for the county, told the Supreme Court that the board misapplied the law. He argued the dark store theory does not tax big retailers on their fair market value. That’s how other properties are taxed.

County and city officials feared the theory could lead to huge drops in tax revenues. Other retailers like Targets, CVS, Walgreens and Bass Pro won similar tax appeals cases against Johnson County before.

"This could be like a tsunami," Johnson County Commissioner Becky Fast said in 2019. "It's just one after another."


Dylan Lysen reports on politics for the Kansas News Service. Follow him on Twitter @DylanLysen. The Kansas News Service is a collaboration of Kansas Public Radio, KCUR, KMUW and High Plains Public Radio focused on health, the social determinants of health and their connection to public policy.  Kansas News Service stories and photos may be republished by news media at no cost with proper attribution and a link to


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