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Wal-Mart loses NC tax refund case

January 6, 2008

Walmart_exterior_2
Wal-Mart has lost its attempt to get a $30 million tax refund from North Carolina.

The retail giant had argued that the state improperly assessed its
corporate income tax bill for four fiscal years that ended Jan. 31,
2002.

But on Friday, Wake County Judge Clarence Horton, Jr. agreed with state Department of Revenue officials that Wal-Mart was trying to
game the system by using tax shelters to hide its "true earnings" in North Carolina and dismissed the case.

The issue was Wal-Mart’s use of real-estate investment trusts (REITs). A decade ago, the company transferred ownership of its stores to two REITs, of which Wal-Mart owned 99 percent. The company then paid tax-deductible rent to the REITs to use the stores.

According to the Wall Street Journal, at least three other states are challenging Wal-Mart’s use of the tax strategy; in the last year, at least six states have passed laws seeking to prohibit the tax maneuver.

"We are pleased with the ruling in the Wal-Mart case because it
validates the Department’s position that taxes must be applied fairly
and equitably to everyone who lives or does business in our state,"
North Caroline tax office spokeswoman Kim Brooks told The News & Observer. "This isn’t just a victory for the Department of Revenue, it is really a victory for every North Carolina taxpayer."

Wal-Mart made no immediate announcement as to whether it would appeal.

Additional blog reaction to the ruling at Money-Rx Blog.

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TAX-SAVVY WAYS 
TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

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