Back in October, I wrote about the Beast of Bentonville’s propensity to figure out all sorts of dodges around paying taxes. Don’t you love it–Wal-Mart talks about being part of the community but only believes that its obligations to a community involve how that community can fatten its bottom line, which also means trying not to pay any taxes.

    Well, one state judge was having none of that, as a number of media outlets (not The New York Times) reported at length. This from The Wall Street Journal yesterday:

A North Carolina state-court judge ruled against Wal-Mart Stores Inc. in a closely watched tax-shelter case involving an arrangement in which the retailer essentially paid rent to itself and then deducted the amount from its taxes.

In an attachment to an order filed Friday, but signed on Dec. 31, Emergency Special Judge of Superior Court Clarence E. Horton Jr. wrote that Wal-Mart’s structure had no "real economic substance" other than cutting taxes. The judge dismissed Wal-Mart’s suit, in which it sought a refund of $33.5 million in taxes, interest and penalties that it paid after state tax authorities determined it had underpaid by that amount.

    As the judge said:

"There is no evidence that the rent transaction, taken as a whole, has any real economic substance apart from its beneficial effect on plaintiffs’ North Carolina tax liability," he added. "It is particularly difficult for the court to conclude that rents were actually ‘paid,’ when they are subsequently returned to the payor corporation."

    I’m sure that the Beast will appeal the decision–it has no desire to see a precedent set because three other states are challenging the same tax dodge, and six other states have passed legislation in the past year to stop the kind of tax dodge the Beast engages in.

    Do the Waltons of Wal-Mart ever believe that there is a limit to how much they line their pockets at the expense of communities?