Wal-Mart Stores Inc. has avoided millions of dollars in state taxes by paying rent on 87 Wisconsin properties in a way that the state Department of Revenue calls an "abuse and distortion of income."As a result, state tax auditors say, Wal-Mart owes more than $17.7 million in back corporate income taxes, interest and penalties for 1998, 1999 and 2000. More could be due for later years.
Revenue Department lawyer Mark Zimmer argues that the world's largest retailer is not paying its fair share of taxes that support public schools, local police and fire departments and the highways it uses to transport what it sells in Wisconsin.
As a result, Wal-Mart shifts the burden of paying for those services "to individuals and small businesses who are unable to set up such elaborate mechanisms," Zimmer told the Tax Appeals Commission, which is considering the matter.
The charges are unusually aggressive for the state's tax-collection agency, and the case is being closely watched by tax professionals. Legislators, too, have become involved; some want to change state law to end the technique Wal-Mart is using.
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