Wednesday, August 29, 2007
According to the state of Wisconsin, Wal-Mart has avoided paying millions of dollars in state taxes by paying rent on 87 Wisconsin properties. The Wisconsin State Department of Revenue call this behavior “abusive and distortion of income.”
Wal-Mart is doing this by setting up one subsidiary to run all its stores and setting up another subsidiary to own its real estate. The operating subsidiary then pays the rental cost to the real estate subsidiary and takes a tax deduction for the rent. This money will, however, end up in the corporation’s own pocket.
As a result of Wal-Mart’s actions, the state tax auditors say that Wal-Mart owes more than $17.7 million in back corporate income taxes, interest and penalties from 1998-2000.
The Wal-Mart corporation claims that they are doing nothing wrong, rather they are taking advantage of an overlap of state and federal tax laws in an effort to reduce their taxes and costs.