In its 2009 decision Wal-Mart Stores East, Inc. v. Hinton, the North Carolina Court of Appeals held that the North Carolina Secretary of Revenue had the statutory authority to force combination of Wal-Mart Stores East and its related corporate entities. This action led to Wal-Mart Stores East paying nearly $30 million in back taxes, interest, and penalties resulting from a complex corporate tax avoidance strategy. This Recent Development argues that although the North Carolina Court of Appeals reached the correct result from a public policy standpoint in Wal-Mart Stores East, it did so after conducting an incomplete statutory analysis. Underlying this incomplete analysis was the inability of the state’s tax statutes to respond to new and evolving corporate tax avoidance strategies. In future cases, North Carolina courts should apply anti-tax avoidance judicial doctrines to egregious cases of tax avoidance in which state officials lack clear statutory authority to intervene. Applying these doctrines would help North Carolina achieve important policy benefits, including protecting state revenues, providing for simpler tax law, promoting fairness between individual and corporate taxpayers, and promoting economic efficiency.
Statutory Interpretation in Wal-Mart Stores East, Inc. v. Hinton and Why North Carolina Courts Should Apply Anti-Tax Avoidance Judicial Doctrines in Future Cases
DOWNLOAD PDF | 88 N.C. L. Rev. 1471 (2010)