COLUMBIA – Menards and representatives of the CenterState Transportation Development District are continuing to wrangle over the home improvement store's failure to collect an extra half-cent sales tax for the TDD during its first six months of operation from March through Oct. 15 of 2009.
The issue has been on the agenda of the TDD board's past three annual meetings, including the most recent meeting on Oct. 25. The district estimates Menards failed to collect $50,000 to $70,000 in sales tax that the district would use to help pay for road projects in the area, which includes Bass Pro Shops, restaurants and other businesses at the east end of Vandiver Drive near U.S. 63.
Robert Klahr, legal representative of CenterState TDD and a lawyer with St. Louis’s Armstrong Teasdale LLP, said at the meeting that because Menards did not collect the sales tax, it would have to repay the tax out of its own pocket.
Menards, however, is unwilling to do so.
“Our decision is unchanged that we were not aware of the obligations, we didn’t collect the tax from our customers, and we don’t have to pay,” said Eric Skille, corporate counsel for the Eau Claire, Wis.-based company.
In two letters from Menards’ tax managers, Dan Michlig and Jeff Poeschel, to Heather Guess, senior budget analyst in the city of Columbia's Finance Department, Menards claimed it had no idea the TDD tax existed until it received a notification letter from Guess on Oct. 9, 2009.
Klahr, however, said the obligation to collect and remit the tax is made clear in the purchase agreement Menards made when it bought the property near Vandiver Drive from Columbia Bass Properties, LLC.
“They should have done their due diligence,” Chad Hager, board member of Bass Properties and the Centerstate TDD, said at the October meeting. “It’s their responsibility to check with the city and the district, not the seller’s responsibility to tell them how to run the business.”
Skille fired back. “It’s for the benefit of the property seller to say that we have disclosed everything to you so don’t come back afterwards to get damages,” he said, adding that the purchase agreement wasn’t enough for Menards to go forward and set up a tax collecting team.
City Counselor Fred Boeckmann said in a March 20 letter to Skille that the city is authorized to enforce sales taxes levied by the TDD under an intergovernmental cooperation agreement established in August 2002 and an amended agreement established in September 2003.
In addition to the lost sales tax revenue, the district is asking Menards to pay penalties and interest accrued over the past three years. Missouri statutes regarding sales tax indicate the penalty could equal the amount of tax not collected.
Skille said at the meeting that he thought the TDD board had agreed not to include the penalties and interest because Menards immediately addressed the issue after being notified of the problem in October 2009. District Chairman David Frances, however, said he did not want to waive penalties and interest at this point.
Menards spokesman Jeff Abbott issued a statement about the issue earlier this week.
“When our Columbia Menards store opened in March 2009, we began collecting sales tax at the rate the city required us to," he wrote. "Six months later, the city asked us to collect an additional 0.5 percent TDD sales tax which we began collecting immediately. We are surprised that the city is asking us to collect additional sales tax because we have collected exactly what the city has told us to collect since the day the store opened.”
Klahr said that although the obligation to collect TDD sales tax is clear in the purchase agreement, he was unsure what information the city had provided when Menards opened. Boeckmann said he didn’t have that information either.
Skille said Menards is willing to engage in a three-party meeting with the District and the city at a later date. But he reiterated: “We don’t have tax to pay.”
Boeckmann said the city would pursue the matter in court if it fails to reach an agreement with Menards.
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