CarMax’s $2.6 Million South Carolina Tax Bill Proper, State Says

CarMax Auto Superstores Inc. and its related entities must file combined South Carolina tax returns to accurately reflect their business there, the state revenue department told an appeals court.

CarMax wants the South Carolina Court of Appeals to overturn an administrative law judge’s 2024 opinion upholding the state’s assessment of $2.6 million in additional corporate income tax and interest. The judge ruled that CarMax’s intercompany transactions artificially and significantly reduced one unit’s taxable income, making the default method of separate entity reporting inaccurate.

The default method often achieves a reasonable approximation of the proportion of a company’s business that is ...