With city-approved $250,000 incentive, grocer Okmulgee’s decision on second store unclear

Warehouse Market will restore its Cox Cash Saver grocery store to its previous location at 420 E. 8th St. after Okmulgee City Council unanimously approved a $250,000 incentive program on Tuesday, Jan. 18, 2022. (NonDoc)

After Okmulgee City Council unanimously passed a $250,000 incentive package on Jan. 18 for Warehouse Market to reestablish a grocery store at its former 420 E. 8th St. location, it’s unclear whether the business will continue to operate from its current location, which has been embroiled in a state-tribe dispute over sales tax jurisdiction.

The incentive program is intended to renovate the 8th Street location, which originally closed in 2017. The food company opened its location at 1701 S. Wood Dr. in late 2016 under a separate brand: Cox Cash Saver. Now, five years later, the company will reopen its previous location, which is in a central part of town and a five-minute drive north of the Wood Drive location.

Okmulgee leaders hope the development will allow more town residents access to fresh groceries and eliminate the risk that the Cox Cash Saver store could close and leave the community with just one grocery store. Walmart.

This uncertainty stems from the fact that the Wood Drive store is located on land leased from a private company by the Bureau of Indian Affairs. As a result, the store has been the subject of a lengthy legal battle over whether sales tax collected at this store should be sent to the state of Oklahoma – and the city and county – or to the Muscogee nation.

The 8th Street property is directly owned by Warehouse Market, which purchased the site in November. If the company decides to close its Wood Drive site, the legal question of sales tax jurisdiction over those BIA leased lands would likely remain unanswered for now.

“Give people options”

Okmulgee grocery store
The Cox Cash Saver – operated by Warehouse Market – is located at 1701 S. Wood Dr. in Okmulgee, Oklahoma. (Joe Tomlinson)

In an email to NonDoc, Steve Davis – the owner, executive vice president and chief financial officer of Warehouse Market – said that “Cox Cash Saver would like to open its 8th Street location this fall in time for the holidays”, although opening may be delayed by supply issues.

According to Davis, the 8th Street location is 40,000 square feet, 25% larger than the Wood Drive store.

The city’s $250,000 incentive program will be donated to the Cox Cash Saver on its first day of operation at the 8th Street location, Okmulgee Mayor Richard Larabee said.

However, the deal is conditional on the completion of repairs and renovations, as well as a requirement that the store remain open and operating for 10 years. If the store closes before the 10-year period is up, Cox Cash Saver will pay the Town of Okmulgee $25,000 for each year remaining in the 10-year period.

Larabee, who won re-election Feb. 8 with 54.4% of the total 709 votes, said he thought the move would help the community by bringing a grocery store to another area of ​​town.

“Right now the grocery store is right across from Walmart, and it really doesn’t serve a lot of Okmulgee citizens having them so close together, so that will be fine,” he said. “It will separate our two main grocery stores and give people options that maybe, if they’re going to walk to the store or something, should help them.”

Tax issues create uncertainty for new store

Davis declined to say whether Warehouse Market would continue to operate its location at 1701 S. Wood Dr., citing nondisclosure agreements. But he said the store “is a very successful place for Cox Cash Saver.”

Asked about the prospect of vacating the property that has dragged his business into four years of litigation, Davis said, “Cox Cash Saver has a great landlord/tenant relationship with the Muscogee (Creek) Nation and their representatives and with the City of Okmulgee. ”

“All businesses learn to support their many relationships, including their suppliers, vendors and owners,” Davis said.

Larabee said he would be surprised if Warehouse Market continued to operate the site at 1701 S. Wood Dr., due to the underlying tax issue.

“The impression that Steve (Davis) has given us – the owner of Cox Cash Saver – is that he doesn’t want to deal with tax issues anymore,” Larabee said. “So it would surprise me if he kept that other place.”

Muscogee Nation communications director Jason Salsman said NonDoc tribal leaders had no comment on the situation. It’s unclear if the nation is still seeking to collect sales tax from the current Wood Drive store.

Larabee noted another potential development that he believes could affect the issue of taxation at the Wood Drive store.

“They remade their LLC for this property as Muscogee Nation LLC,” Larabee said. “So now there’s a question because they’re formed under the Muscogee Nation, whether there would be a tax challenge or not.”

Davis said the Wood Drive store is owned by Warehouse Market, Inc., an LLC registered with the state of Oklahoma.

Asked about the new LLC Larabee mentioned, Davis said, “There is an LLC registered with the Muscogee Nation, but it is not owned by Warehouse Market or its officers or owners.”

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Context of the litigation

The sales tax dispute between Warehouse Market, the Oklahoma Tax Commission and the Muscogee Nation dates back to 2018, about two years before the July 2020 U.S. Supreme Court ruling in McGirt v. Oklahoma that ruled confirmed the Indian Country reservation of the Muscogee Nation and raised additional questions regarding tax jurisdiction in eastern Oklahoma.

In September 2018, Warehouse Market received a letter from the Muscogee Nation Tribal Council stating that effective October 1, 2018, sales at the store would be subject to a 6% sales tax from the Muscogee Nation. Additionally, the letter stated that Warehouse Market was only required to collect taxes for the Muscogee Nation Tax Commission and had no obligation to pay taxes to any city, county or state agencies. .

The company then notified the Oklahoma Tax Commission that, pursuant to the Muscogee Nation’s notice, the grocery store would stop remitting sales tax to the OTC after October 2018. The store had previously collected from customers and returned to the OTC a combined total of 10.083%. sales tax for state and local jurisdictions.

In November 2018, Warehouse Market received two letters within days of each other. The first, from the OTC, said the store was still required to submit local and state sales taxes and that failure to do so “would result in closure of the business and/or revocation of the sales tax license. of the company”.

The other letter, from the Muscogee Nation, stated that “Warehouse Market violated Tribal Sales Tax rules and would be subject to interest, fines, and/or revocation of license(s) if corrective action is not taken.” were not taken”.

Warehouse Market filed a lawsuit in Okmulgee County District Court in December 2018. In February 2021, the lawsuit had gone to the Oklahoma Supreme Court, which ruled that the case should be considered as a tax protest and left to the three Oklahoma members. Tax Commission to decide.

The OTC ultimately ruled that the state, Okmulgee County and the City of Okmulgee are entitled to grocery sales tax collections, Larabee said.

But the CTA’s decision on the matter is protected as “confidential taxpayer information,” said Cassandra Sweetman, public information and press liaison officer for the state agency.

Throughout the litigation, Cox Cash Saver continued to collect 10.083% sales tax from customers and placed it in receivership.

After the OTC decision, the City of Okmulgee received its share of these collected sales taxes. Soon after, Warehouse Market approached the city asking for $250,000 to help reopen its store on the 8th Street property.

Now Warehouse Market has approval from Okmulgee City Council to return to its 8th Street location. The business will eventually decide to continue operating at its current location in the face of ongoing tax issues.

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