Toys 'R' Us looses tax suit

from the NewOrleans NOLA bq. State officials scored two wins in Baton Rouge Monday, as judges in separate cases involving Toys "R" Us Corp. and The Gap Inc. ruled that Louisiana can go forward on a claim that theretailers are paying too little taxes because of what the state considers a clever dodge. bq. More than $800,000 in state taxes, penalties and interest are at stake in the Toys "R" Us case, while the tax bill in The Gap suit is $976,552. and a description of what they were doing: bq. The heart of the dispute is what has come to be known as the Geoffrey issue or the Geoffrey loophole, so named for the Toys "R" Us mascot, a giraffe named Geoffrey. bq. Geoffrey Inc. is a subsidiary owned by Toys "R" Us. Geoffrey owns various trademarks and rights including the giraffe character, and Toys "R" Us stores pay royalties to Geoffrey. Because those royalties are business expenses, they are claimed as deductions that escape Louisiana taxation. Geoffrey pays no state taxes because it is incorporated in Delaware. bq. The state claims Geoffrey is a device to evade paying state taxes. The company claims Geoffrey is a legitimate business that shouldn't be taxed because it is not located in Louisiana. Dang - another loophole bites the dust...