There are more than 4,500 Walmart stores in the U.S., but the nation’s largest retailer continues to expand. The company, once associated with rural communities, has recently made pushes into urban markets. And a new complaint to the IRS accuses Walmart of wrongfully using its tax-exempt Walmart Foundation charity to get a foothold in those cities.

In a lengthy and detailed complaint [PDF] to IRS Commissioner John Koskinen about the Walmart Foundation, more than a dozen community groups from around the country raise concerns about the retail giant’s potential use of a tax-exempt charity to further its corporate ends.

They claim that an analysis of Walmart Foundation giving between 2008 and 2013 shows that donations from the foundation “skyrocketed” in cities like New York, Boston, Washington, D.C., and Los Angeles whenever the retailer attempted to enter those cities.

Here are the relevant charts from the complaint for NYC and Boston:

Additionally, the groups say that the Walmart Foundation used localized pages on WalmartCommunity.com to both dangle the potential for increased charitable donations if Walmart stores were allowed to open in the city and the threat of those donations not materializing if the stores weren’t allowed.

For example, the page pushing for a Walmart in Salt Lake City lists $10 million in “Donations to charitable organizations” under the headline of “What’s at Stake.”

A What’s at Stake page for Chicago doesn’t name the Walmart Foundation, but lists millions in charitable donations to local groups, all of which came from the Foundation, according to the complaint.

The groups also contend that the Walmart Foundation has questionable expectations of grant recipients.

It cites a Foundation Memo [PDF], dubbed “Recognizing The Walmart Foundation For Its Good Works,” as encouraging recipients to promote the Walmart store brand.

“Incorporating ‘Walmart’ into the name of programs being supported by the Walmart Foundation helps ensure that those being served and others recognize Walmart whenever the program is referred to by name,” reads the document, which the groups note carries the Walmart logo and not the Walmart Foundation logo.

The complaint also takes issue with the foundation’s stated position to not donate to groups that may position Walmart or the Foundation in a negative light.

This means that if a group wants to continue receiving Foundation funds, it can’t do anything that might highlight a non-positive aspect of the retailer, not just the Foundation. Or a group that may have been ready to join in criticism of Walmart may now back off that choice in order to receive grant money.

The complaint notes that the Walmart Foundation, has no independent directors and is governed entirely by senior Walmart executives and Foundation staff members, implying that the goals of Walmart are ultimately the foundation’s goals.

Thus, contend the groups filing the complaint, the Walmart Foundation is in violation of several rules governing tax-exempt charities.

The senior Walmart executives involved with the Foundation benefit financially in their for-profit jobs from the work they do through the Foundation, alleges the complaint, which says this is a violation of the prohibition against “private inurement” and “private benefit” at tax-exempt charities.

The groups have asked to IRS to review their complaint and open an investigation into the Foundation, and to sanction the charity if it is found to be non-compliant.

[via Washington Post]

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.