Touted Caterpillar accused of tax fraud in report to federal investigators
- Author: Zachary Reyes Mar 08, 2017,
Mar 08, 2017, 17:55
Caterpillar Inc., the bellwether USA equipment maker praised just last week by President Donald Trump, now finds itself a government target as federal tax and banking authorities raided its IL offices.
Caterpillar failed to comply with United States tax and financial reporting rules in an effort to keep its stock price high, according to a government-commissioned report reviewed by The New York Times. In a filing last month, Caterpillar said it is "vigorously contesting the proposed increases to tax and penalties" of about $2 billion. "These actions were fraudulent rather than negligent".
The federal government has commissioned a report which says the heavy equipment company avoided paying billions in USA taxes through its Swiss subsidiary. In Switzerland, the company negotiated a tax rate of 4 to 6%, compared to its effective US tax rate of 29%.
"Caterpillar did not comply with either US tax law or USA financial reporting rules", Leslie Robinson, accounting professor at Dartmouth College, wrote in the report, according to the Times.
Caterpillar, which makes construction equipment products, said it wasn't given a copy of the report, which was viewed and reported by The New York Times late Tuesday.
Caterpillar shares slid 1.1% to 94.84 in morning trade on the stock market today, back below the 50-day moving average.
A Caterpillar spokesperson said the company does not comment on pending litigation. The company, in the past, has defended its tax practices, The Times reported.
Federal officials searched three Caterpillar locations, including its headquarters in Peoria, Ill.
Agents from the Internal Revenue Service, the Federal Deposit Insurance Corp. and the U.S. Department of Commerce participated in last week's searches, according to a spokeswoman for the U.S. attorney's office for the Central District of IL.
No arrests were made and the company said it was cooperating.