AUGUSTA – A real estate arrangement that allows some big businesses to avoid paying state income taxes probably would not work in Maine.

The arrangement, detailed in a Wall Street Journal story last week, allows a company’s subsidiary to pay rent to a real estate investment trust, which is owned by another subsidiary of the same company. The company then claims the rent payments as a business deduction on its state income taxes, despite the fact that money has essentially stayed within the same corporation. The tactic has allowed some companies such as Wal-Mart to avoid paying hundreds of millions of dollars in state income taxes, according to the report.

“The so-called ‘captive REIT’ strategy alone cut Wal-Mart’s state taxes by about 20 percent over one four-year period,” wrote Lee Scott, the WSJ reporter who filed the story.

But according to David Bauer, tax policy analyst with the Maine Revenue Service, a business couldn’t get away with that strategy here because Maine requires corporations to file information about all their subsidiaries.

“It’s not likely a problem for Maine,” Bauer said. “We’re a mandatory combined reporting state.”

Maine is one of about 13 states that require an affiliated group of corporations to file a combined income tax return with the state. The filing would disclose any rent payments made to subsidiaries.

Bauer said he was instructed to research the captive REIT strategy when the WSJ story broke, and it seems Maine is in the clear. But he cautioned that companies are always looking at new ways to reduce taxes and that the only guarantee against unscrupulous tactics is an audit.

“We routinely audit businesses with a big presence in Maine who pay big taxes,” he said, noting he could never comment about a specific company’s tax return. “We can’t be sure about any company until we do an audit of the taxpayer and the details are examined.”