Wal-Mart tapped charity to ease market entry, critics say in complaint

Tue Jun 16, 2015 12:26am EDT
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(Reuters) - A collection of labor and community groups filed a complaint with the Internal Revenue Service accusing Wal-Mart Stores Inc's charitable foundation of violating its tax exempt status by using donations in an attempt to facilitate store openings in urban areas.

In the complaint, dated Monday and addressed to IRS Commissioner John Koskinen, the group claims the Walmart Foundation made donations to ease public opposition as it sought to expand in key markets like Los Angeles and New York.

Wal-Mart spokesman Kevin Gardner said the company takes IRS regulations "very seriously" and the complaint lacked merit.

The group claimed donations spiked around efforts to open stores in a community. For example, it said donations in Los Angeles jumped to $1.4 million in 2011 as plans for a new store in Chinatown gathered steam before dropping off to $230,000 in 2013, the year it opened, the complaint said.

The complaint alleges the foundation violated IRS regulations by acting in the interests of a private company and not solely for charitable aims.

It was signed by 13 groups, including long-time critics like the union-backed New York Communities for Change which has been active in pushing for higher worker pay and has campaigned against the opening of Wal-Mart stores.

"It's sad that groups aligned with professional critics of Walmart, who are more interested in advancing their own narrow agenda, are ignoring the millions of people who've benefited from the good works of the Walmart Foundation over many years," Wal-Mart's Gardner said in a statement.

Last year Wal-Mart and the foundation gave $1.4 billion in cash and in-kind donations.

In recent years Wal-Mart has targeted urban areas for growth as it invests in smaller-format stores. But it has faced public opposition in cities where community groups fret over the potential impact on wages and competition with local stores.   Continued...

A family shops at the Wal-Mart Neighborhood Market in Bentonville, Arkansas, June 4, 2015.  REUTERS/Rick Wilking