Wal-Mart's Tax Fight

North Carolina's Superior Court has ruled against Wal-Mart Stores, Inc. in a tax shelter case. Back in 2005, North Carolina government officials said the world's largest retailer was not eligible for tax breaks on its store rents because the company used in-house REITs to essentially pay rents to itself. In response, Wal-Mart filed a lawsuit seeking $33.5 million in refunds. But in January, Emergency Special Judge Clarence Horton Jr. agreed with the state, saying the rent transaction did not have “any real economic substance.” In the past four years, Wal-Mart saved more than $200 million in taxes by using the strategy in other states.