Kimberly-Clark, maker of Kleenex and Huggies, loses Massachusetts tax court case

By Todd Wallack, Globe Staff

The maker of Kleenex and Huggies lost a bid Friday to reduce its state tax bill in Massachusetts.

A state appellate court panel upheld earlier rulings by the Commissioner of Revenue and appellate tax board denying Kimberly-Clark Corp.’s bid to reduce its corporate excise taxes by $2.6 million from 2001 to 2003.

Kimberly-Clark, a Fortune 500 consumer products maker based in Dallas, had asked the court to let it write off certain expenses, including royalty and other payments to related corporate entities. But tax officials argued the company had structured its business -- and created the related payments -- simply to reduce its tax bill, something not allowed under the law.

The record ultimately provided little support for an argument that the transactions in question had a legitimate business purpose or ‘economic substance apart from the asserted tax benefit’,” wrote Associate Justice Joseph A. Trainor in the decision. “Rather, the record and the board’s findings supported the conclusion that tax avoidance was ‘a principal purpose’ of the transactions.”

The company didn’t immediately offer a comment.