Wal-Mart Tax Evasion Strategies Revealed in Court Documents

Corporations don’t usually like to reveal how they evade taxes, but a lawsuit by the state of North Carolina over Wal-Mart’s tax practices has produced the detailed game plan for how the company has manipulated the law to cut their state taxes. As the Wall Street Journal detailed Tuesday, the court case highlighted how the company used tax shelter strategies designed by corporate accounting firm Ernst & Young, a company where four current and former partners were indicted this year for illegal tax-shelter work. The key to many of the tax evasion strategies used by Wal-Mart, like many other companies, was to manipulate the reporting of national profits and expenses in different states tailored to wherever reporting them would minimize the taxes owed. The end result was that instead of paying the 6.9% average tax on corporate profits paid by most companies to state authorities, Wal-Mart paid only half that rate. As we discussed earlier this year, one key strategy has been using real estate trusts owned by Wal-Mart to “rent” property to itself. Six states this year passed laws to prohibit this maneuver and encourage combined reporting of all profits by subsidiaries in a state. Four other states are challenging the practice in court. Image source: progressivestates.org. > Continue.

News selected by Covalence | Country: USA | Company: Wal-Mart | Source: Progressive States Network