2017-03-08nytimes.com

For years, federal investigators have been scrutinizing Caterpillar's overseas tax affairs with no resolution to the examinations of the complex maneuvers involving billions of dollars and one of the company's Swiss subsidiaries.

Now, a report commissioned by the government and reviewed by The New York Times accuses the heavy-equipment maker of carrying out tax and accounting fraud. It is extremely rare to accuse a big multinational company of tax fraud, which could result in high penalties.

"Caterpillar did not comply with either U.S. tax law or U.S. financial reporting rules," wrote Leslie A. Robinson, an accounting professor at the Tuck School of Business at Dartmouth College and the author of the report. "I believe that the company's noncompliance with these rules was deliberate and primarily with the intention of maintaining a higher share price. These actions were fraudulent rather than negligent."

...

In the report, Dr. Robinson estimated that Caterpillar has brought back $7.9 billion into the States, structured as loans, over and beyond the income that had already been taxed overseas. She concluded that the company failed to report those loans for tax or accounting purposes, and she wrote that those profits should be subject to federal taxes.

Caterpillar failed to report those loans as taxable distributions of cash, thus avoiding the tax on earnings brought home from Switzerland, while "enjoying the use of those earnings to meet U.S. cash needs," she wrote.



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