Wal-Mart has lost its attempt to get a
The retail giant had argued that the state improperly assessed its
corporate income tax bill for four fiscal years that ended
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.
Roth & Company, P.C.
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