Wal-Mart loses North Carolina tax refund case
Bentonville, Ark.-based Wal-Mart has lost its case in North Carolina to recoup more than $30 million in tax refunds from the state.
The company argued that the state had assessed its tax revenues improperly for four fiscal years ended Jan. 31, 2002, according to the Wall Street Journal. But Wake County appellate court Judge Clarence Horton Jr. agreed with state revenue officials’ claims that the retailer was using tax shelters to hide true income and dismissed the case.
At issue was the company’s use of real estate investment trusts (REITs). Four years ago, Wal-Mart transferred ownership of its stores to two REITs, of which Wal-Mart owned 99 percent. The company then paid tax-deductible rent for the use of the stores.
According to the Wall Street Journal, at least three other states are also challenging Wal-Mart’s tax strategy, and in the last year at least six states have passed laws prohibiting the practice.