PORTLAND – Cabela’s has dropped its insistence on a controversial sales tax waiver and plans to move forward with plans for a 125,000-square-foot store that will anchor a $75 million development in Scarborough.
The decision ends months of speculation as to whether the Nebraska-based outdoor equipment retailer would follow through on its threat to scuttle the project unless Maine officials agreed to forgo sales taxes on Cabela’s catalog and Internet sales in the state.
State law says a retailer with a physical presence in Maine must collect those taxes, but Cabela’s maintained that its retail business is separate from its catalog and Internet operations.
In a brief letter Tuesday to Maine Revenue Services, Cabela’s said it was withdrawing its request for a ruling on its sales-tax liability and was proceeding with its expansion plans.
“We look forward to opening a Cabela’s retail store in Scarborough,” Mike Callahan, senior vice president, said in the letter, which gave no reason for the company’s change of heart. Cabela’s said previously that it would abandon the project unless it received the waiver.
“Cabela’s is presently re-evaluating its expansion strategy in the Northeast, which may result in a modification of our approach in Maine. We would like to withdraw our pending ruling request as it will not accurately reflect any changes caused by any new approach,” Callahan wrote.
Copies of Callahan’s letter also were sent to the project’s developer, New England Expedition LLC, and to the Scarborough Planning Board, which began its review of the project on Haigis Parkway.
The development, expected to generate hundreds of jobs, also includes office buildings, a 200-room hotel, restaurants and a bank.
While the letter did not spell out how Cabela’s may change its expansion plans, lawmakers who were talking to Cabela’s officials about creative ways to preserve the Scarborough project suggested that the company could move part of its catalog or Internet business to Maine.
A Maine call center or distribution center could allow Cabela’s to collect the tax without fear that it might set a precedent for states in which it has only retail stores, said state Sen. Lynn Bromley.
Bromley, D-South Portland, said the precedent was a bigger issue than the cost of collecting sales taxes on the $10 million worth of catalog orders received from Maine each year.
Other companies, most notably outdoors outfitter L.L. Bean, had objected to the idea of a waiver for Cabela’s, saying such a ruling would give that business an unfair advantage.