5. Sales Tax, Other Taxes and Eminent Domain
There is safety in numbers. Texas operators, particularly, have shown that having an active, financially healthy state association makes all the difference in communication with the state legislature, governor and judiciary. While this article was being written, it also appeared that Michigan operators may have temporarily stopped the imposition of sales tax on their occupants, a battle other states have lost.
It’s only a matter of time before most states try to impose sales tax on rents or additional taxes on self-storage activity. Ohio has imposed a commercial activity tax along with sales tax on rents, and other states are following. Even in Michigan, while sales tax may have been repealed on storage rents, the government is scurrying to reclaim the loss, perhaps by imposing other taxes on land ownership. Many older facilities are falling victim to eminent domain.
Many operators fail to align themselves with state associations because they think the organizations are too small, not effective, or they don’t want to share data with competitors. Additionally, they don’t want to reveal data about true ownership of the facility to have salespeople calling and peddling services and products.
Every state could—and should—have a strong self-storage association. There is no more effective voice in your state legislature than a group of facility owners who do business, pay taxes and employ people within the state. No national lobbying group, legislative watch or representative organization will represent your interests in front of your legislature better than your own state association comprised of self-storage owners/operators.
This doesn’t mean you have to serve as an officer; just join, pay your dues, lend a hand when asked, be involved when necessary. This way, if a state decides to impose a new tax or regulation (like Illinois did several times last year in various cities), your association will know about the problem early and have resources available to react quickly. Being involved in legislation at its inception is much more powerful than trying to knock something out of a bill on its second or third reading.