Tax dispute shutters Mattress World stores

Company owes $1.7 million, says Washington Department of Revenue

By Cami Joner, Columbian retail & real estate reporter

Published:

Updated: January 4, 2012, 5:45 PM

 

Portland-based Mattress World has announced it will shutter all seven company-owned stores within the next month, after being served a warrant by the Washington state Department of Revenue for roughly $1.7 million in delinquent sales taxes.

The warrant was filed on Nov. 15, according to Mike Gowrylow, a spokesman for the department. Confidentiality laws prevented him from disclosing the circumstances leading up to the warrant. However, in a letter posted on the Mattress World website, spokeswoman Sherri Hiner blamed a contractor that did not charge sales tax when making merchandise deliveries to Washington on behalf of Mattress World.

Gowrylow said it is up to the primary business to collect the state's sales tax if the company has "Economic Nexus" in Washington — meaning they are not located in Washington but occupy physical space within the state or deliver goods into the state.

"If you're delivering it here, that means you should be collecting the tax from the customer here," Gowrylow said, even if the business hires a separate contractor to make the deliveries.

Hiner called Washington's tax assessment "excessive and unfair" in her written statement. However, she also said her 15-year-old company was caught off-guard by the economic downturn that caused sluggish sales at most area retailers.

Gowrylow said Washington's revenue department tries to work with business owners to help them comply with state sales tax laws.

"Typically what we try to do is engage in partial payment arrangements where the business agrees to pay a certain amount back monthly," he said.

The seven Mattress World stores that are closing employ about 90 people. The store locations include a store at the Jantzen Beach Center mall, just across the Interstate 5 bridge from Vancouver. According to the mall's webiste, "Many Washington residents take this path for the no sales tax shopping in Oregon." Mattress World will also close its store at the Cascade Station retail complex, near the Portland International Airport, just south of Vancouver off Interstate 205.

Cascade Station's website also promotes its stores for offering "a diverse selection of tax-free local, regional and national retail and dining unlike any other shopping experience in Oregon."

Hiner said two independently owned Mattress World stores will remain open in Canby, Ore., and in downtown Portland.