A big Charlotte-area employer is long-gone. So why is it getting an $11M tax refund now?
Philip Morris, once one of the biggest employers and taxpayers in Cabarrus County, is suddenly in line to get more than $11 million from the state nearly 16 years after it abruptly closed its Concord cigarette plant.
That’s all thanks to a recent N.C. Business Court case involving taxes. Specifically, export tax credits.
The dispute between the N.C. Department of Revenue and Philip Morris goes back over decade. It centered on the technical issue of whether the company could carry over millions of dollars in export tax credits to subsequent years.
Julianna Theall Earp, special superior court judge for complex business cases in North Carolina Business Court said yes, Philip Morris could do that. She reversed a previous decision that had been in favor of the state.
A 1999 North Carolina law gave tax credits to companies that manufactured cigarettes in North Carolina but exported them for sale outside of the state as an incentive to manufacture cigarettes and support North Carolina’s long history in the tobacco industry.
About the Philip Morris case
Philip Morris manufactured cigarettes from 1983 to 2009 at its vast facility in Concord, just down the road from Charlotte Motor Speedway.
The cigarette giant was one of Cabarrus County’s largest employers with more than 2,900 workers when it closed in 2009 to consolidate operations to Richmond, Virginia. The company has over 14 brands including Marlboro, according to Philip Morris’ website.
The Business Court’s “order of remand” filed last week reversed a 2021 decision of the court and the Office of Administrative Hearings, which holds hearings on state rules, personnel disputes and other administrative matters.
The Business Court’s latest decision came a month after the Supreme Court of North Carolina in December sided with Philip Morris on its interpretation of the export credit tax law.
The administrative office erred in its November 2021 decision in favor of the Revenue Department, and concluded that the use of the term “credit allowed” created ambiguity, Earp’s order stated.
“Philip Morris is entitled to the export tax credits carried forward,” Earp said.
N.C. Business Court ordered the Revenue Department to refund Philip Morris over $11.2 million, plus interest, for tax years 2013 and 2104.
The Revenue Department told The Charlotte Observer it does not comment on ongoing litigation.
The tax credit cap law
The courts clarified the interpretation of the export tax credit law that had led to the dispute between the Revenue Department and Philip Morris.
The tobacco export tax credit annual cap is in “excess of $6 million,” according to court documents.
The law’s calculation and amount of credit was intended to be based on the volume of export. There was no annual cap limiting the amount of credit a taxpayer could claim in a tax year or be carried over for the next five years, according to the state Supreme Court. And an amendment to the cap allowed credit to carry forward over a 10-year period, Supreme Court filings state.
The ruling lets Philip Morris reclaim taxes and penalties it paid after it was denied export tax credits from 2005 to 2007 on its 2013 and 2014 tax returns.
This story was originally published February 5, 2025 at 6:06 AM with the headline "A big Charlotte-area employer is long-gone. So why is it getting an $11M tax refund now?."