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These community groups have a major beef with Walmart

June 16, 2015, 3:07 PM UTC

According to a group of community organizations, Walmart (WMT) has been using its charitable arm, effectively, as a lobbying operation.

The groups filed a complaint with the Internal Revenue Service on Monday alleging that the Walmart Foundation breached its tax exempt status by using millions of dollars in charitable donations to help it expand into big cities such as New York, Washington, D.C., Chicago, Boston, and Los Angeles, among others.

The grievance, sent to IRS Commissioner John Koskinen, contends that the retailer would pump more funds into markets where it sought to gain entry, the New York Times said. That includes boosting its donations in Los Angeles to $1.4 million at a time when the company planned to open a store there. Once the store opened two years later, those donations plummeted back down to the $200,000 range where they stayed in the years preceding the company’s plan to open a store.

The same pattern can be seen in other cities, the complaint alleges. The foundation “appears to target its donations and influence its grantees primarily to assist Walmart to achieve those expansion goals, ultimately providing Walmart more than an incidental benefit. Walmart Foundation’s activities are impermissible under the Code,” the Washington Post reported, citing the document.

The retailer, however, argues otherwise.

“We provide support for these and other important causes in communities across the U.S. and around the world, not just to particular areas or cities, and it’s unfortunate to see criticism of the Foundation’s charitable giving,” said Tricia Moriarty, global responsibility communications director, in a statement, according to the paper. “The Walmart Foundation takes the Internal Revenue Code and regulations very seriously and the allegations made have no merit.”

In total, the Walmart Foundation doled out $1.4 billion last year.

More: Read about Wal-Mart in the new Fortune 500 list