Retail giant Toys “R” Us is expected to close many of its locations as early as next week. The struggling business has had trouble competing with big-box stores including Walmart, as well as with online sales from websites such as Amazon. Another hurdle for them has been declining demand for traditional toys as more children plug into electronics.
Founded in 1948, Toys “R” Us grew in popularity, eventually opening up locations in several countries and starting the offshoots, Babies “R” Us and Kids “R” Us. Toys “R” Us accounts for a large part of U.S. toy sales — 15-20% last year, according to Jefferies analyst, Stephanie Wissink. She predicts that business will not shift entirely to other sources and that total sales could decline by as much as 15%.
Investors noticed and reacted negatively. The stock prices of two large toy manufacturers, Hasbro and Mattel, fell on Friday.
The upcoming closures were not unforeseeable. Toys “R” Us filed for Chapter 11 bankruptcy in September 2017.
The exact number of closures is still unknown, but it could be more than 200.
U.S. Supreme Court ruling on internet sales tax will likely mean consumers pay more
Illinois consumers can expect to pay more when shopping online after the U.S. Supreme Court ruled that states have the authority to require out-of-state online retailers to collect sales taxes.
In a 5-4 decision in South Dakota vs. Wayfair Inc., the court ruled states can require sellers to collect sales taxes even when the seller has no physical presence in the state. The court sided with the government. Concurring with the majority opinion, new Justice Neil Gorsuch wrote that the ruling is meant to “rightly end the paradox of condemning interstate discrimination in the national economy while promoting it ourselves.”
Chief Justice John Roberts dissented.
“Any alteration to those rules with the potential to disrupt the development of such a critical segment of the economy should be undertaken by Congress,” he wrote.
Illinois already requires consumers to self-report sales taxes for online sales. The ruling shifts that burden to sellers.
Michael Leonard, a tax professional based in Oak Park, Illinois, said he knows of virtually no one who self reports online purchases on tax filings. He said the ruling could put small businesses that sell online in a bind.
“Now that’s going to be implemented on the internet and paying the sales tax, now you’ve got to employ and accountant, there’s more money involved, you’ve got to pay tax, it’s gonna make them not want to do it, of course,” Leonard said.
Small businesses can’t navigate the different rules of the 10,000 taxing bodies across the country, said Jessica Melugin, associate director of the Center for Technology & Innovation at the Competitive Enterprise Institute. She said the ruling is a tax increase for consumers.
“The whole point of this whole exercise from states and localities is to get more tax money in their coffers so that’s going to come out of consumers’ pocket books,” Melugin said.
The Illinois Department of Revenue also praised the ruling, estimating it will bring in $200 million to state coffers annually.
“To be clear, this is not a new tax. Illinois residents are already obligated to pay a Use Tax on out-of-state purchases and this prudent decision will allow states the ability to enforce Use Tax laws that are already in existence,” revenue department spokesman Terry Horstman said in an email. “With this decision, we level the playing field for Illinois brick and mortar retailers.”
The high court’s ruling was cheered by brick-and-mortar retailers that have complained that online sellers had a tax advantage. The decision also was welcomed by Illinois municipalities, said Bill McCarty, Springfield’s budget director.
“This will provide a little bit of a cushion, but more importantly it provides a stepping stone we need to eventually bring those tax dollars home, which is where we need to get to,” he said.
McCarty said the ruling could mean Springfield will get an estimated $300,000 from the state, which hands out state sales taxes to municipalities on a per capita basis.
Illinois Retail Merchants Association President Rob Karr said the ruling is a win for his 20,000 members.
“This simplifies life for retailers and for consumers and it levels the playing field for retailers and their internet competitors,” Karr said.
“All eyes will now shift to Congress and the states,” the nonpartisan Tax Foundation said in an email. “One thing that will be important to remember as states look to grapple with today’s decision: This ruling is not a blank check. The Court specifically observed that South Dakota’s law, and its tax laws generally, minimizes the burden on interstate commerce. Other states should craft their laws accordingly.”
Article by Greg Bishop, Illinois News Network. For more INN News visit ILnews.org
Property owners weigh in on Jacksonville historic districts
The Jacksonville Historic Preservation Commission wants to create two historic districts in the downtown area. Their efforts to get on the National Register of Historic Places are almost complete, and the city council has been asked to support a new Local Landmark district. Only one potential hurdle remains: winning over the downtown property owners. Wednesday night, the Commission held a public hearing to help inform them what the districts would mean for their properties, and answer questions and take feedback from them.
Cody Right, a consultant for Jacksonville Main Street, started the meeting with a presentation explaining the history of the proposal, and how the districts work. Initially there were supposed to be two meeting scheduled, but they covered much of the same material and so were combined in the interest of time.
The Two Districts
Although they appear similar, the National Register and the Local Landmark District do different things. By having a property in the National Register, property owners can get generous tax credits for approved renovation projects. If the project meets the correct requirements, the owner can get a 20 percent tax credit for the cost of the project. However, the register offer virtually no restrictions if the tax credits are not sought. State agencies have already approved the district for the register, and it is likely to go through in the near future. Still, the Preservation Commission is seeking a resolution of support from the City Council to further strengthen their application.
Creating a Local Landmark district is far more impactful for property owners. This district is created by local ordinance, and can be done with or without the National Register designation. If approved, it would create guidelines for how the appearance of historically significant buildings can be changed. To the greatest extent possible, buildings would need to retain their original styles on facades that face a street. This includes walls which were originally hidden by other structures that have since been demolished.
Both districts only apply to the exterior of the buildings. The insides can be updated and reconfigured to suit the needs of the current owners.
Business owners were skeptical of any measure which might add additional regulatory burdens. Many of the owners who attended the meeting stated that they had not been well informed that the Commission was attempting to create these districts. One man stated plainly that he felt as a property owner, he should have the right to modify his property as he saw fit. He also was concerned that while the National Register offers no restriction today, that new restrictions might be added in the future.
Members of the Historic Preservation Commission worked to put these fears to rest. They explained that while the Commission has rules and standards, they know that every project is different. The limitations of the building itself as wells the financial considerations, all go in to making a final recommendation. As Steve Hochstadt said,” the members of the commission are your neighbors.” There is already a residential historic district in Jacksonville, and few projects are rejected outright. If a project is rejected, owners can still petition the city council for approval. He went on to invite some of the property owners to join the Commission.
Even if the Local Landmark district is created, local building standards for the district will still need to be drafted. Jacksonville Main Street Executive Director Judy Tighe said that some restrictions might actually be loosened in the new standards.
The two districts are scheduled to be discussed at the next Jacksonville City Council meeting. It will start at 6:00 PM on Monday, June 25th, in the Municipal Building, located at 200 West Douglas, Jacksonville. You can watch the full meeting in the player above, or read the National Register and Local Landmark Historic Districts application and FAQ.
White Oaks Mall remains confident after anchor losses
White Oaks Mall is a very important location in Springfield. While consumers may see it as a hub for shopping and recreation, the mall is also critical for the city’s finances. The mall is one of the largest tax generators in the whole region, both in terms of property and sales taxes. Since Springfield is heavily reliant on local sales tax, city leaders like to keep a close eye on the mall’s health.
So when two of the anchors in the mall announced they were closing, there was reason to be concerned. Both the Bergner’s and Sears will be closing this year. Sears had been in financial trouble for some time, but the loss Bergener’s was unexpected. City revenues were already stagnate; losing the mall could be devastating to an already precarious budget.
But these fears were somewhat allayed at last night’s Committee of the Whole meeting. Mall manger Clay Emerich spoke the council about the state of the mall. Not only did Mr. Emerich state that the mall was not planning to close, he pointed to the opportunities these closing present. Most of the mall is owned by Simon Property Group, but they did not own the two anchor locations. Simon potentially having access to far more space in the mall presents a number of options which are still being explored.
Emerich explained some of these future possibilities. Adding more entertainment options to balance out apparel was one. Other stores are already moving into the mall area, including a Pasta House that will replace the old Denny’s. He also stressed that malls across the region have taken hits of late. Their loss might be Springfield’s gain, if Simon can execute some of the strategies they are working on.
You can watch the full presentation in the player.
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