Wal-Mart decided to hire Ernst & Young to help devise complex tax strategies to use in at least four big states. The accounting firm, for example, helped Wal-Mart take tax deductions in California for dividends it never actually paid. And in Texas, Ernst & Young advised, the giant retailer could exploit a wrinkle in the tax law involving limited partners from out-of-state -- a maneuver subsequently shut down by the state's legislature. Big companies hardly ever discuss how outside accountants, lawyers and investment bankers help them cut their tax bills. But Ernst & Young's contributions to Wal-Mart's state-tax minimization project are outlined in a raft of documents filed in recent months in North Carolina state court, where the state's attorney general is challenging a Wal-Mart tax-cutting structure involving real-estate investment trusts.

In addition to the strategy of over-powering small state and local tax departments with large invading armies of accountants and lawyers in pinstripe suits, the story explains Wal-Mart's previous use of a Delaware-based "intangibles" holding company to hide profits by renting out brand names to its stores in other states, its transfer of "ownership of its stores to various in-house real-estate investment trusts or REITs, again, to hide profits, and even efforts to call tax programs "domestic restructurings" not "tax savings" strategies, to further obfuscate efforts to avoid paying their fair share. On the positive side, the story shows that while states are sometimes playing whack-a-mole as Wal-Mart morphs its strategies, that aggressive state enforcement efforts continue.