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US Review Finds Deliberate Tax Fraud at Caterpillar

March 8, 2017
A new report posits that Caterpillar acted deliberately, not negligently, in failing to report for tax purposes close to $8 billion in overseas income.

A U.S. government-commissioned review concluded that Caterpillar intentionally committed tax and financial reporting fraud, according to a Wednesday report published in The New York Times.

Last week, federal agents raided the Illinois headquarters of the industrial giant, which failed to account for $7.9 billion in overseas income for tax purposes, according to a report by Leslie Robinson, an accounting professor at Dartmouth College.

Robinson said Caterpillar's actions were “deliberate” and “fraudulent rather than negligent,” according to the newspaper. Robinson was hired by an unspecified U.S. agency to review Caterpillar's finances, which have been probed by tax authorities and Congress over the accounting of a Swiss subsidiary. The Times story said it was unclear if government agencies agreed with Robinson's conclusions.

Federal investigators descended on three Caterpillar facilities in Illinois on March 2, including its Peoria headquarters. Caterpillar said the search warrant was “broadly drafted," but it believed the investigation was over its Swiss affiliate, CSARL.

CSARL was the subject of an April 2014 Senate investigation indicating the unit's purpose was tax avoidance and found Caterpillar avoided paying $2.4 billion in U.S. taxes.

The Internal Revenue Service notified Caterpillar in November that it owed about $2 billion in adjustments and penalties connected to returns from 2010 to 2012, Caterpillar said in a securities filing last month.

Caterpillar said in that filing that it is “vigorously contesting” the IRS stance and that “we believe that the relevant transactions complied with applicable tax laws and did not violate judicial doctrines.”

Caterpillar declined to comment on the New York Times story, and a spokeswoman told AFP the company has not seen Robinson's report. Shares of Caterpillar fell 2.2% to $93.86 in pre-market trading.

Copyright Agence France-Presse, 2017

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