“Our old report showed there was an octopus. (Walmart called the group’s findings “incomplete and erroneous.”) ![]() A 2015 report by the Americans for Tax Fairness campaign group alleged that Walmart had placed assets worth at least $76 billion in tax havens where it had no retail stores-a figure equal to 37% of the company’s total assets at the time. Its owners, the Waltons, reportedly the world’s richest family, are said to add $100 million per day to their $191 billion fortune. Walmart, with annual revenue hitting $501 billion in 2018, has topped the Fortune Global 500 every year since 2014. An IRS spokesperson declined to comment for this story, citing a federal law that prohibits the agency from discussing specific taxpayers. While the structure might not stand up as a tax-avoidance mechanism, there’s no allegation that Walmart broke US law, since tax avoidance on its own is not illegal. He added that he couldn’t be sure of the strength of any legal challenge, since the files don’t include the legal opinion commissioned by Walmart, which, the former executive’s memo says, argued the structure would hold up in court. “I think there is a good argument based on the facts presented by the whistleblower that the structure actually does not work ,” said Omri Marian, a tax-law professor at the University of California, Irvine. ![]() If the IRS took Walmart to court, it would have a good shot at recovering at least some of the $2.6 billion, tax experts said. “ arrangement is aggressive-there’s no question about that.” “The idea is that they create an entity that did nothing, completely a piece of paper,” he said. Some of the machinations are “egregious,” said Wei Cui, an expert in American and Chinese tax law and professor at the University of British Columbia, who reviewed the files for Quartz. Much of the structure can also be seen in internal Walmart files obtained in the Paradise Papers leak, which the International Consortium of Investigative Journalists shared with Quartz. A person familiar with the arrangement confirmed that the structure was set up as described in the documents. The former executive’s files include the legal contract for the “tax nowhere” entity-an ostensibly Chinese “joint venture”-and a lengthy slide deck and detailed legal memo explaining why the IRS has a claim to the money, both written by the former executive. It’s unclear, however, if they were ever actually sent to the agency. The former executive, who declined to comment on this story, citing a confidentiality agreement with Walmart, wrote the documents with a view to sending them to the IRS, which gives financial rewards to whistleblowers. The documents were shown to Quartz by a third party who had been sent the documents by the former Walmart executive. (EY, the accounting firm that helped Walmart devise the arrangement according to the former executive’s documents, declined to comment for this story.) If the IRS closed the 2014 tax year for Walmart, it’s possible it wouldn’t be able to go after the $2 billion. ![]() Walmart avoided around $2 billion in tax through a “deemed dividend,” obtained in 2014, and then dodged around $200 million per year thereafter, the former executive argued. Project Flex started in 2014, and would become unnecessary by 2017 under US tax law changes. The Walmart spokesman declined to comment on when the independent investigation took place and which law firm conducted it, whether the IRS was aware of the structure’s legal viability in China, and which tax year the IRS has closed.
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