Wal-Mart challenged by N.C. tax authorities

The Wall Street Journal reports that Wal-Mart Stores, Inc. has used a complicated property-ownership scheme to duck taxes in 25 states, including North Carolina. A story in the Feb. 1 issue of the Journal says that “North Carolina tax authorities are challenging Wal-Mart, saying its REIT strategy was intended to ‘distort [the company’s] true net income,’ according to its filings in the case in Superior Court in Raleigh, N.C.”

The scheme involves placing ownership of store property in a Real Estate Investment Trust, with 99 percent ownership of the trust held by the parent corporation. The company-owned store pays rent to the REIT and the rent is a deductible business expense. Under state law, a REIT doesn’t pay any income tax if it distributes its profits as dividends and those dividends are delivered tax-free to shareholders. So the company gets tax-free income while reducing its taxable income for the store.

The Journal reports that in 2005 the state “ordered Wal-Mart to pay $33 million for back taxes, interest and penalties stemming from the REIT. The company paid it and last year sued the state for a refund.”

Wal-Mart has disputed the charges and defends its round-about rental plan as good business.

— Cecil Bothwell, staff writer

SHARE

Thanks for reading through to the end…

We share your inclination to get the whole story. For the past 25 years, Xpress has been committed to in-depth, balanced reporting about the greater Asheville area. We want everyone to have access to our stories. That’s a big part of why we've never charged for the paper or put up a paywall.

We’re pretty sure that you know journalism faces big challenges these days. Advertising no longer pays the whole cost. Media outlets around the country are asking their readers to chip in. Xpress needs help, too. We hope you’ll consider signing up to be a member of Xpress. For as little as $5 a month — the cost of a craft beer or kombucha — you can help keep local journalism strong. It only takes a moment.

About Cecil Bothwell
A writer for Mountain Xpress since three years before there WAS an MX--back in the days of GreenLine. Former managing editor of the paper, founding editor of the Warren Wilson College environmental journal, Heartstone, member of the national editorial board of the Association of Alternative Newsweeklies, publisher of Brave Ulysses Books, radio host of "Blows Against the Empire" on WPVM-LP 103.5 FM, co-author of the best selling guide Finding your way in Asheville. Lives with three cats, macs and cacti. His other car is a canoe. Paints, plays music and for the past five years has been researching and soon to publish a critical biography--Billy Graham: Prince of War:

Before you comment

The comments section is here to provide a platform for civil dialogue on the issues we face together as a local community. Xpress is committed to offering this platform for all voices, but when the tone of the discussion gets nasty or strays off topic, we believe many people choose not to participate. Xpress editors are determined to moderate comments to ensure a constructive interchange is maintained. All comments judged not to be in keeping with the spirit of civil discourse will be removed and repeat violators will be banned. See here for our terms of service. Thank you for being part of this effort to promote respectful discussion.

Leave a Reply

To leave a reply you may Login with your Mountain Xpress account, connect socially or enter your name and e-mail. Your e-mail address will not be published. All fields are required.