The collection is from an undisclosed company - unnamed because of state tax confidentiality laws.
The REIT loophole issue, which focuses on the use of captive real estate investment trusts to avoid paying state corporate income taxes, has been in the national spotlight for going on two years now. In North Carolina, Wal-Mart saved millions of dollars in state tax bills by essentially transferring its properties to its own REIT and paying rent to itself, then writing it off as a tax deduction. These transactions were frequently followed by rather suspicious looking characters in black masks trudging back to Bentonville with big old gobs of money that could have gone to funding state programs.
North Carolina got wise to the scheme and assessed Wal-Mart for back taxes. Additional states have sought ways to close the loophole up, either through attacking it directly or by adopting combined reporting. Maryland is one of those states - last year Maryland Comptroller Peter Franchot announced that his state would no longer allow payments to captive REITs to be deducted from state tax returns. Now following its first publicized audit since then, Maryland will receive $10.8 million in back taxes for a 3-year period from the unnamed company.
We’ve chronicled again and again that Wal-Mart is one of the worst offenders in this area. Simply closing the loophole is one way to fix it. Adopting combined reporting is another. At least in Maryland’s case, the effort has already resulted in nearly $11 million coming back into the state treasury.
Maryland collects millions after closing tax loophole [Washington Post]
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Posted by Corey Himrod | Permalink
Wal-Mart has, unsurprisingly, been the target of more lawsuits than one can count over the years. The company’s treatment of its workers and “save money at all costs” mentality has resulted in a flood of legal challenges ranging from single plaintiff suits to multi-million dollar class actions. Dukes v. Wal-Mart is of course one large example (the largest class action in American history, actually), as are the myriad wage/hour/overtime class actions the company faces.
Just as important as those large class actions, however, are the countless suits filed by individual plaintiffs – the tiny David trying to win justice over Wal-Mart’s Goliath. We at Wal-Mart Watch will be focusing on one of these stories each week, highlighting those cases that warrant further attention because of the light each sheds in its own way on how Wal-Mart does business.
Mrs. Magen Davidson-Nadwodny of Baltimore, Maryland never expected she would be yet another victim of sexual harassment at her local Wal-Mart. She was hired on in the Women’s Jewelry Department, in October of 2005. Mrs. Davidson, who was working to support her family and disabled parents, alleges that she was subjected to repeated and continued sexual harassment by her female co-worker. Additionally, she claims that Wal-Mart not only knew about the behavior and did not stop it, but Wal-mart had previously transferred another employee to the shoe department for the same problem.
Mrs. Davidson filed a 49 page complaint on September 26, 2007 in the Circuit Court of Maryland for Baltimore County. She is suing Wal-Mart for Battery, Sexual Harassment / Hostile Work Environment, Harassment, Breach of Implied Employment Contract, Intentional Misrepresentation, Intentional/Negligent Infliction of Emotional Distress, Defamation, Invasion of Privacy – Placing a Person in a False Light, Negligent Hiring or Retention, Respondeat Superior, and Retaliation.
(What the heck does Respondeat Superior mean? …basically an employer is responsible for the actions of its employee under the law).
As early as November of the same year Mrs. Davidson was hired, she reports experiencing sexual advances and harassment from her co-worker, an Assistant Department Manager for Jewelry.
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Posted by Christina Clark | Permalink
It’s not just lobbyists that Wal-Mart wants to send to Washington - it’s supercenters as well (and not just to give Leslie Dach a good place to shop).
Earlier this year, we read that Wal-Mart had designated the Washington area as a “Jobs and Opportunity Zone” (JOZ). Basically, the JOZ program is a way for Wal-Mart to spread some money around large urban centers and buy the love of a few small businesses that threaten to block future Wal-Mart stores who fear they would squash local business and drive down wages and benefits. A little money now, a few supercenters later - at least that’s the idea.
Today’s Washington Post article mentions only one other Wal-Mart JOZ area - Chicago - but doesn’t mention that Wal-Mart was recently shut out of the Windy City for one reason: because it refused to pay its employees a living wage. Today’s article also failed to mention that Chicago Tribune debunked Wal-Mart’s JOZ program last year:
Local business owners say they are disappointed with a program Wal-Mart launched aimed at helping them survive in the shadows of its new store. And the retailer’s efforts to open a second Chicago store are bogged down.
Jeffrey Goldberg in the New Yorker, wrote about the JOZ program:
A company source told me that the Zones idea was intended by Edelman as a public-relations maneuver to soften Wal-Mart’s image among minority communities; the entire budget for the program is five hundred thousand dollars over two years.
Local Business owners and policymakers ought to be wary of Wal-Mart’s money- the company’s effect on local communities and business is well documented.
When Wal-Mart Moves In, Neighborhood Businesses Suffer. Right? [Washington Post]:
Anthony Ramdass used to worry about Wal-Mart.
For more than a decade, he has watched from behind the counter of his pharmacy in a converted pool hall as businesses slowly blossomed along Annapolis Road in Prince George’s County. Then the biggest retailer in the world arrived, offering $4 prescriptions and always low prices. Ramdass braced himself for legions of defections.
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Posted by Eric Bull | Permalink
More news from Wal-Mart’s Department of Ironic Double Standards: mere hours after promising to raise toy quality standards, Wal-Mart got slammed today by the Baltimore Health Commissioner for selling kids’ jewelry with 117 times the legal limit of lead in it. Because as long as Wal-Mart can put out press releases with appealing promises, it doesn’t actually matter what the company is doing.
Before Wal-Mart tries to raise the quality standards for its toys, it needs to meet its current standards first. More testing, more oversight, fewer corners cut in overseas factories and fewer press releases.
Children’s jewelry with high lead levels found in city stores [Baltimore Sun]
Two city businesses have received citations for selling children’s jewelry with excessively high levels of lead, Baltimore health officials announced today.
The Wal-Mart at 2701 Port Covington Drive was cited for selling stud earrings with blue hearts produced by Girl Connection, which were found to have 70,400 parts per million of lead. The Murray’s at 2317 E. Northern Parkway was cited for two vending machine necklaces that had lead levels of 2,940 parts per million and 3,740 parts per million, according to the Baltimore City Health Department.
The products were identified as part of 17 items of children’s jewelry tested last month by the health department. City regulations adopted in September limit children’s jewelry to no more than 600 parts per million of total lead content.
As a result of the citation, Wal-Mart management has stopped selling Girl Connection merchandise at stores across the nation, according to city Health Commissioner Dr. Joshua M. Sharfstein.
City officials say they have banned the items from being sold in Baltimore and also alerted the Consumer Product Safety Commission.
Posted by Alex Goldschmidt | Permalink
In 2005, Al Wynn voted for Wal-Mart. Now Maryland Democrats have voted against Al Wynn.
Three years ago, Representative Albert Wynn of Maryland voted against an amendment to the 2006 labor appropriations bill put forward by Rep. Rosa DeLauro of Connecticut. As explained on TomPaine.com at the time, “This bill barred any spending of money by the Department of Labor to implement the part of the deal the department had made with Wal-Mart calling for advance notice of inspections any time the DOL planned to investigate Wal-Mart.”
Rep. Wynn, who voted against this amendment, wanted to give Wal-Mart full warning when the Labor Department was coming for a visit. This would allow the company to clean up any labor law violations before inspectors arrived. Maryland voters, it turns out, won’t stand for this kind of corporate fawning. Yesterday Wynn lost Maryland’s Democratic primary to newcomer Donna Edwards.
Perhaps if Wynn had stood up against Wal-Mart, he’d still be in office. Instead of protecting the interested of multi-billion dollar corporations, Wynn would have done better to side with working class Americans and to see that our labor laws are fairly implemented. Ms. Edwards: we wish you luck in your campaign. May Al Wynn’s legacy be a cautionary tale.
Posted by Alex Goldschmidt | Permalink
Many communities are eager to see a new Wal-Mart come to town, but few think of the effect the retailer will have if and when it leaves. This article from Minnesota’s St. Cloud Times gives a local perspective to the retailer’s global prospects. Visit Battle-Mart for more information about fighting Wal-Mart in your local community.
Wal-Mart’s exit is boon, bane for communities [St. Cloud Times (Minn.)]
An empty Wal-Mart building sits along a stretch of road in Little Falls and shoppers have been rerouted to a newer, bigger Wal-Mart down the street.
Its owners have taken care of the old building after the Wal-Mart Supercenter was built in August. It’s been repainted a shade of light green, masking signs of what once thrived there.
At any given time, about 300 to 400 former Wal-Mart stores sit empty around the nation, in some cases for as long as five to seven years, said Ken Stone, a retired professor from Iowa State University who has studied Wal-Mart for about 20 years. Those empty buildings can be a blight to a community and area businesses if they sit untouched for too long.
“It’s a real problem, there’s no question about it,” Stone said.
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Posted by Alex Goldschmidt | Permalink
Wal-Mart’s recent decision to improve its health care plan makes sense for the company’s employee’s AND its shareholders. Read more about Wal-Mart’s revised health care plan in this blog post on Monday’s NYT article.
Wal-Mart wises up [Atlanta Journal-Constitution]
Whether driven by pressure from union activists and politicians or just good business sense, Wal-Mart has finally decided to help its employees get affordable health care.
Since becoming the nation’s largest retailer, the Arkansas-based company has often been portrayed as the Ebenezer Scrooge of corporate America, especially when it comes to employee health care. For years, the company systematically declared tens of thousands of its 1.4 million workers ineligible for health benefits.
And at an average yearly wage of $20,000, many of those who were eligible couldn’t afford the high-priced group health plan the company offered.
To its credit, though, the company has gradually created a menu of affordable insurance options that has increased participation in its health benefit plans by 100,000 employees, the New York Times reported Tuesday.
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Posted by Alex Goldschmidt | Permalink
Opinion, yes, but still an interesting take on the growth of Wal-Mart stores into giant supercenters. The accompanying picture is of a supercenter mid-construction, by the way.
This new Wal-Mart is larger than life [The Baltimore Sun]
Let’s face it: We like big things in this country.
We like big cars, big houses, big burgers we can stuff in our big mouths and Big Gulps to wash ‘em down.
We like big TVs, big malls and big sales. Who gets excited about a regular sale anymore? Now it has to be “THE BIGGEST LABOR DAY SALE EVER! DON’T MISS THIS SPECTACULAR EVENT!”
Sometimes, even big won’t do. Sometimes we need bigger than big.
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Posted by Corey Himrod | Permalink
Last year, Maryland garnered headline after headline for its Fair Share bill, a bill requiring private companies with more than 10,000 employees to spend at least 8 percent of their payroll on employee health benefits or make a contribution to the state’s insurance program for the poor. The bill, which ultimately effected only Wal-Mart, was shot down in federal court. Now, as the national debate over the health care crisis continues, the name on everyone’s lips isn’t the Governator, Hillary, or one of the myriad of GOP candidates jockeying for pole position on the issue - its a little fella named ERISA.
And, by little fella, I mean huge hulking piece of federal legislation likely to solve any insomnia issues you may have, should you choose to put it to the test and read it. Still, ERISA, or the Employee Retirement Income Security Act, has already shot down state attemps to solve their own health care woes in Maryland and New York. And California might be next on the list to test ERISA’s mighty reach.
From The Christian Science Monitor:
ERISA, which stands for the Employee Retirement Income Security Act, shields businesses from state and local regulation of the benefits they offer workers, including health insurance. Without the law, national companies in particular could achieve little uniformity in their benefit plans.
But that uniformity comes at a cost: The law limits the abilities of state legislatures to serve as laboratories for healthcare solutions. Courts have already applied ERISA to strike down efforts in Maryland and Suffolk County, N.Y., that would compel employers to cover more people.
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Posted by Corey Himrod | Permalink
You’d think, of all companies, one that bills itself as “the place for one stop shopping” would champion the merits of placing everything under one roof.
Yet, when word of “combined reporting” makes its way down to a Bentonville boardroom, its enough to make a Wal-Mart executive reach for a $4 generic vicadin. Combined reporting is a tax policy that treats parent companies and its subsidiaries as one corporation for state income tax purposes - profits are combined, and then a share of that income is taxed by a state based on a formula calculating the corporation’s level of activity within that state.
Lawmakers in Wisconsin and Maryland are the latest to jump on the combined reporting bandwagon. Apparently in Wisconsin, $90 million is on the table should the state decide to reform its tax law and adopt combined reporting. Its a tough question for a state strapped for cash, and whose revenue department has already gone after WalMartopia for more than $17.7 million in back corporate income taxes, interest and penalties for 1998, 1999 and 2000.
According to the Milwaukee Journal Sentinel:
Ninety million dollars is how much officials estimate could gush into state coffers annually if Wisconsin institutes combined reporting on corporate income tax returns. That’s about a 10% increase in corporate tax collections - a tempting prospect for some legislators at a time when Madison is striving for every nickel.
Maryland Governor Martin O’Malley had proposed the measure in his state as well, according to the Baltimore Sun:
The O’Malley administration estimates that by moving to “combined reporting,” the state would receive an additional $25 million per year in revenue, with three-fourths available for operating expenses and the remainder reserved for the Transportation Trust Fund. Some legislators believe that the annual fiscal impact could be much greater, perhaps $100 million or more.
Opponents of the measure counter that it will stifle growth, and that businesses facing higher taxes will simply shift jobs and investment to other states. Personally, I can’t wait to watch business after business pack their bags and flee the evilness that is combined reporting in California, New York, Texas and Illinois...the sound of them flocking to Mississippi, Alabama and South Carolina will be deafening. The number of combined reporting states is growing so fast - five states proposed the measure this year alone - it is this expert’s opinion that by 2010, every single corporation will be located in Oklahoma. Go Sooners.
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Posted by Corey Himrod | Permalink
Wish lists for Crofton [Baltimore Sun]
Crofton residents want to see a park, hotel or nothing at all built on the property along Route 3 last eyed by Wal-Mart, according to the results of a new survey, but local leaders and the landowner quickly said the chances of any of these are “zero.”
The unscientific survey conducted in May and June reports that 35 percent of Crofton residents would most like to see a park in the 20-acre plot.
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Posted by Beth Gostanian | Permalink
A ‘mixed-use’ box of ideas [Baltimore Sun]
While Crofton residents expressed jubilation two months ago when Wal-Mart announced it would scrap its plan to build a store along the Route 3 corridor, the property owner and developer didn’t necessarily scrap his plan to bring in a big-box retailer.
William D. Berkshire has pressed ahead on seeking key state approvals to build on the forested 20-acre parcel within the 121,000-square-foot Wal-Mart footprint, all the while talking with several suitors on a variety of projects.
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Posted by Beth Gostanian | Permalink
Concerns raised over Wal-Mart store expansion [Maryland Gazette]
Wal-Mart wants to expand its store in Laurel by more than a third, a move that has Russett residents concerned the retailer will complicate traffic patterns.
Residents say they have expected the store to grow in size, but since it opened in 1994, nearby roads have become busier than ever.
Wal-Mart wants to add another 40,000 square feet to its 115,000 square-foot-store, improve the facade, lighting and store interior, said Rhoda Washington, a spokesman for the Arkansas-based retailer.
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Posted by Beth Gostanian | Permalink
Wal-Mart expansion creates traffic concerns [The Capital (Md.)]
Wal-Mart wants to expand its store in Laurel by more than a third, a move that has Russett residents concerned the retailer will complicate traffic patterns.
Residents say they have expected the store to grow in size, but since it opened in 1994, nearby roads have become busier than ever before.Wal-Mart wants to add another 40,000 square feet to its 115,000 square-foot-store, improve the facade, lighting and store interior, said Rhoda Washington, a spokesman for the Arkansas-based retailer.
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Posted by Beth Gostanian | Permalink
NORTH CAROLINA: TAX TOO HIGH AT LOCAL WAL-MART
Tax was too high at area’s new Wal-Mart [Southeastern North Carolina Star-News]
Wal-Mart shoppers, take out your receipts. The mega-chain might owe you some money...Hudkins said he called the store that night and an employee told him the staff had looked into the issue earlier in the day and determined it was just a display problem, that the cash registers were calculating correctly. But his receipt showed otherwise, and he went back to the store Saturday morning.
MARYLAND SITE FIGHT: STORE OPENING POSTPONED
Wal-Mart Postpones Store Opening in Md. [Washington Post]
Wal-Mart postponed today’s anticipated opening of its first store inside the Capital Beltway because of last-minute permit problems, the company said yesterday.
The store was scheduled to open this morning, complete with a ribbon-cutting and news conference to be attended by high-level executives from Wal-Mart and several local officials. A new date has not been set.
MARYLAND PROTESTORS PLAN TO GIVE WAL-MART A COLD WELCOME
Community, Labor, Faith-Based Leaders to ‘Welcome’ Wal-Mart to Prince George’s County [PR Newswire]
A broad-based group of Prince George’s County community leaders, union members, clergy and members of area congregations will hold a press conference to “welcome” a newly-opening Wal-Mart to the Capital Plaza Mall and urge the world’s largest retailer to become a responsible, community-minded corporate citizen.
They will call on Wal-Mart to provide its workers with health benefits, stop burdening Maryland taxpayers with $27 million in the cost of providing care to the company’s employees, and
stop burdening Prince George’s County Hospital Center with the cost of uncompensated care.
MARYLAND SITE FIGHT: STORE OPENING POSTPONED
Wal-Mart delays opening of Prince George’s store [Baltimore Business Journal]
Wal-Mart’s first store inside the Washington Beltway will open a bit later than expected.
Officials with Wal-Mart are still working out permitting issues for the 144,000-square-foot store, which was slated to open Wednesday. The new store is expected to employ about 330 people.
MARYLAND SITE FIGHT: STORE OPENS QUIETLY
Without Fanfare, Wal-Mart Opens in Landover Hills [Washington Post]
Wal-Mart quietly opened its first store inside the Beltway yesterday after permit problems forced the retailer to cancel a grand-opening celebration earlier in the week.
Posted by Alex Goldschmidt | Permalink
The Washington Post reports that:
Wal-Mart postponed today’s anticipated opening of its first store inside the Capital Beltway because of last-minute permit problems, the company said yesterday.
The store was scheduled to open this morning, complete with a ribbon-cutting and news conference to be attended by high-level executives from Wal-Mart and several local officials. A new date has not been set.
“With the continued support of all of the county agencies, we are diligently working to finalize the necessary requirements and approvals to open as soon as we can,” Restivo said. “We look forward to serving the community very soon.”
The store is strategically important to Wal-Mart, which is seeking to open more locations in urban areas to boost sluggish sales and woo new shoppers. But labor groups have vehemently opposed those moves, criticizing the nation’s largest retailer for its health benefits and wages and saying it runs mom-and-pop shops out of business. Wal-Mart stores are not unionized.
It is particularly interesting to note that several local community groups had planned to turn out for the ribbon cutting ceremony.
Posted by Alex Goldschmidt | Permalink
First, let me say that our weekly blog round-up for state elected officials will now be appearing regularly on Wednesday in order to create space between it and our weekly newsletter to our Elected Officials Taskforce. The round-up will focus on big stories from the end of the previous week that you may have missed, in addition to what has been going on issue-wise over the last few days.
A Wal-Mart spokesman defended use of the captive REIT, saying it is permitted under
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Posted by Corey Himrod | Permalink
From the Baltimore Sun:
State Comptroller Peter Franchot will join other states in changing a policy that’s costing Maryland “tens of millions” of dollars in taxes by allowing businesses to use investment trusts to deduct rent expenses.
“It’s an abuse that allows big companies to cheat on state taxes, and it’s wrong, so we’re going to begin to audit these companies,” Franchot said. “These practices are going to no longer be permitted, and we’re going to seek to level the playing field for all Maryland businesses.”
Franchot declined to name the companies he believes are involved. He is scheduled to formally announce the plan this morning.
In 2003, Wal-Mart, which has more than 50 stores in the state, transferred ownership of its Ellicott City store to a Delaware holding company. That set up a “captive rent” relationship, which allows the discount giant to pay rent to itself, then deduct those payments as a business expense from its taxable income in Maryland.
It was a largely ignored legal shelter until a Wall Street Journal article last month highlighted the practice, and its use in 24 other states, leading Franchot’s office to study the matter.
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Posted by Russ Fagaly | Permalink
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