Caterpillar has responded to reports by the Internal Revenue Authority (IRS) that the company has not been paying its taxes in full. In early March, a number of federal agencies, including the Internal Revenue Authority (IRS) raided the company’s headquarters and other facilities, with the IRS claiming that Caterpillar owed the tax body in excess of $2 billion.
But Caterpillar has now come out guns blazing, accusing the IRS of spreading false information. According to the company, they have been paying their taxes without failure.
Speaking just a week after the raid which has caused Caterpillar widespread negative publicity, a spokesman for the company said;
“The IRS has challenged Caterpillar’s taxes for years 2010 to 2012. We want to make it clear that we disagree with IRS’ position. We are compliant with every tax law and stand by our financial reporting.”
The spokesperson also revealed that they have fully cooperated with IRS’ requests for information in an attempt to speedily resolve the issue.
Apparently, the IRS and Caterpillar have been at loggerheads for some time now with regards to its accounting policies. The recent raid, in particular, is said to have been related to a Swiss business called CSARL. CSARL was first created in 1999 by Caterpillar. But it appears that Caterpillar hasn’t been paying taxes for additional profits made from the Swiss based company.
In a filing with the Securities and Exchange Commission last month, the IRS informed Caterpillar that they needed to pay the outstanding taxes for their overseas company. But Caterpillar didn’t respond.
Then, just two days before the raid, a report by Dartmouth College accounting Professor Leslie A. Robinson which was cited in the New York Times revealed everything forcing the authorities to act. In the report, Professor Robinson detailed how Caterpillar had been using the Swiss company to avoid taxes by shifting billions of dollars in profits away from the U.S. to Switzerland.
The Times says that the report was commissioned by one of the government agencies though they haven’t stated categorically which agency it was. However, it’s likely to be one of the agencies that raided Caterpillar’s facilities. Other than the IRS, the other agencies that participated in the raid were the Federal Deposit Insurance Corporation office of the inspector general and the Department of Commerce office of export enforcement.
Caterpillar was furnished with a copy of the report one week after the raid.