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NC Appeals Court Rules Tax-Avoiding Food Lion Owes

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(Photo by Joe Raedle/Getty Images)

(Photo by Joe Raedle/Getty Images)

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RALEIGH, N.C. (AP) — A North Carolina appeals court is backing up the power of tax collectors to recalculate the returns of multi-state companies that shift assets to try avoiding or diminishing corporate income bills.

A unanimous three-judge panel of the state Court of Appeals ruled Tuesday against Food Lion’s parent company, saying the grocery store chain owes North Carolina $10 million in back taxes and penalties.

The court also reversed a lower court and said the state’s Revenue Department could assess Food Lion a penalty of more than $1 million because its improper deductions understated its tax obligations by nearly 90 percent.

North Carolina tax collectors have for nearly five decades combined and recalculated corporate returns to prevent big companies from moving money to out-of-state units to avoid state taxes.

(© Copyright 2011 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

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