Forbes is reporting: Caterpillar Inc. is about as American as you can get, except that these days it’s not, having been partially shuffled off to Switzerland. But it still must deal with the IRS, and the IRS isn’t happy with the heavy equipment maker. In fact, the IRS is trying to add $1 billion in taxes and penalties to the company’s 2007-2009 year.
President Trump’s “love” of Caterpillar, Inc. apparently wasn’t deep enough to spare the Illinois-based manufacturer from a multi-agency federal raid linked to its overseas subsidiaries and tax practices. On Friday, U.S. Commerce Secretary Wilbur Ross confirmed that the raids were part of an ongoing probe against the company. Agents from the Internal Revenue Service, the Federal Deposit Insurance Corp. and the U.S. Department of Commerce participated in Thursday’s searches, according to a spokeswoman for the U.S. attorney’s office for the Central District of Illinois. Federal officials searched three Caterpillar locations, including its headquarters in Peoria, Ill. The other two warrants were served at facilities in East Peoria and Morton.
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Though details remain sketchy on what exactly the feds are after, the raids apparently are tied to Caterpillar’s overseas business practices and tax strategies.
Initially, Caterpillar only confirmed the raids had taken place. The company later acknowledged the raids were connected to its use of a parts subsidiary based in Switzerland as well as tax practices that sparked a Senate investigation and led to shareholder lawsuits and even a $1 billion penalty.
Caterpillar is currently contesting an Internal Revenue Service demand that it pay $2 billion in taxes and penalties for profits assigned to the subsidiary between 2007 and 2012.
Trump, as a candidate, repeatedly vowed to use Caterpillar and John Deere equipment to build his promised border wall.Caterpillar and Deere both have extensive international manufacturing facilities, and sell equipment globally.
New company CEO Jim Umpleby apologized to employees and pledged to continue cooperating with federal authorities after the raids. Umpleby said he was surprised by the turn of events and that management, including himself, did not have enough information to determine what the feds were after.