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Caterpillar Inc. (sometimes shortened to CAT) is an American Fortune 100 corporation which designs, develops, engineers, manufactures, markets and sells machinery, engines, financial products and insurance to customers via a worldwide dealer network. It is the world's largest construction equipment manufacturer. In 2018, Caterpillar was ranked #65 on the Fortune 500 list and #238 on the Global Fortune 500 list. Caterpillar stock is a component of the Dow Jones Industrial Average.
According to The New York Times, A new report has accused Caterpillar Inc. of avoiding taxes on billions of dollars of income,
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.”
No charges have been filed, and it is not clear whether investigators agree with the findings or intend to act on them. The report, which has not been made public or made available to Caterpillar, outlines a company strategy for bringing home billions of dollars from offshore affiliates while avoiding federal income taxes on those earnings.
Corrie Heck Scott, a Caterpillar spokeswoman, pointed out that the company had not been provided with a copy of the report and declined to comment further. The company, which makes heavy construction and mining equipment, has defended its tax strategies in previous years by calling the arrangements prudent and lawful among large United States companies.
Caterpillar’s strategies for reducing the taxes it must pay in the United States have saved the company billions of dollars. Last week, federal agents raided three Caterpillar buildings near its headquarters in Peoria, Ill., as part of the investigation. Caterpillar said it was cooperating with law enforcement.
Thanks for reading The Times. Subscribe to The Times The company’s tax practices have been a focus of government investigators since a 2014 Senate hearing found that the company cut its tax bill by $2.4 billion over 13 years, moving earnings out of the United States and into a Swiss subsidiary, despite internal company warnings that the strategy lacked a business purpose, other than tax avoidance.
Less than a year later, Caterpillar disclosed it received a subpoena from federal investigators seeking documents and information relating to the movement of cash among domestic and overseas subsidiaries, as well as other matters involving its foreign units, including the Swiss entity.
The company has since disclosed in securities filings that the Internal Revenue Service is seeking more than $2 billion in income taxes and penalties on profits earned by the Swiss unit. Caterpillar has said it is “vigorously contesting” the I.R.S.’s proposed increases.
Reached by telephone, Dr. Robinson declined to comment. Her report focused on one specific part of Caterpillar’s offshore tax arrangement. It concluded that the company failed to pay taxes on billions of dollars brought home primarily from its Swiss unit and its affiliates, and thus failed to comply with United States tax law and financial reporting rules.
It is not clear which federal agency hired Dr. Robinson. In her report she wrote that she was asked to provide a written opinion of Caterpillar’s financial reporting related to various tax accounting standards, “as pertaining to” the investigation of Caterpillar by the Federal Deposit Insurance Corporation Office of Inspector General.
“I was provided with all documents available to the case agents assigned to the investigation,” Dr. Robinson wrote. She also wrote that she spent approximately 200 hours reviewing the evidence and performing calculations.
The investigation is being conducted by the United States attorney’s office for the Central District of Illinois as well as the Inspector General of the F.D.I.C., which investigates criminal activities affecting financial institutions. Agents from that office, as well as from the I.R.S. and the Department of Commerce’s office of export enforcement joined the raid on Caterpillar’s offices last week.
A spokeswoman and a spokesman for the agencies confirmed last week’s law enforcement activity and the agencies involved, but declined to comment further.
United States companies owe corporate income taxes at a rate of 35 percent on profits earned around the world. However, they are permitted to defer the taxes owed on the profits generated offshore until they bring those earnings back to the States, a process known as repatriation. Once they bring cash back, they generally owe federal income taxes, with a credit for any income taxes they have already paid overseas.
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.
In one example, she cited correspondence between the company and the Securities and Exchange Commission in which Caterpillar said it had $2.5 billion of income eligible to be brought to the United States tax-free. Dr. Robinson wrote that her research showed that the company did not have “anywhere near” that sum still available to be brought in tax-free.
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.
Dr. Robinson’s 85-page analysis is based on publicly available and internal financial data of the company, she wrote in the report, as well as bank data tracking wire transfers from Switzerland into the United States.
The report does not explain whether Caterpillar used the type of creative, and often legal, transactions that United States multinationals use to avoid tax on earnings brought home from offshore.
For instance, while companies typically owe tax on earnings brought home, there some exceptions. For instance, they do not owe tax on short-term loans made by their offshore subsidiaries to their domestic parent company. In her report, Dr. Robinson does not mention this legal exception, and it is unclear if Caterpillar used such transactions.
In 2012, the same Senate committee that examined Caterpillar’s taxes found that Hewlett-Packard stitched together a series of such loans to bring home billions of dollars tax-free.
The 2014 Senate report on Caterpillar said the company worked with the accounting firm PricewaterhouseCoopers, to set up its Swiss tax-cutting strategy. PwC was also the company’s auditor, which raised “significant conflict of interest concerns,” according to Senate investigators.
The report by Dr. Robinson makes a passing reference to PwC but does not address what role, if any, it had in these transactions.
Caroline Nolan, a spokeswoman for PwC, said, “We don’t comment on client matters or pending investigations.”
Companies like Caterpillar, Google, Apple and Pfizer have accumulated at least $2.3 trillion offshore, much of it in subsidiaries located in tax havens like Bermuda, Luxembourg and the Cayman Islands. President Trump has said he supports a holiday of sorts that would permit companies to bring those profits back to the United States at a low rate.
Driver (Former Employee) says"managers don't care about the drivers, low salary, don't respect their promise, many errors of the pay. Always want you to stay OTR, no home time, layover low"
Thiefs (Former Employee) says"Didn't pay my bonus for the whole year as they should, every month they said we will pay it next month(thiefs), change rules before Christmas with out letting us now, when I left the company the manager use the f word, owner"
AZ Driver (Former Employee) says"Hated working here they lied to your face about what u would be doing and tried to work u 24/7 dispatch would lied to the higher up to try and make u to work pass your hours aloud DO NOT WORK here !!!!"
National Account Manager (Former Employee) says"An ok place to work. Not very professional and no clear direction on broker vs. assets selling.\"
Driver Class A CDL (Former Employee) says"Need I say more? Long hours, all hands on loading and unloading my own trailer unassisted."
Chauffeur (Former Employee) says"Cat aurait pu etre une tres bonne compagnie mais tres mal gerer competence a la repartition 3 sur 10 tres grand manque d experience beaucoup d erreur sur la paie je ne recommanderais pas il te dise des promesse mais rien n est fait. Cons: Ne respecte pas leur parole"
Operations Coordinator (Former Employee) says"I worked there for approximately 5 months, until I was thrown under the bus for an issue that was out of my control. Work events are fun, your bar tab is paid for but its probably not worth it for the amount of after-hours work expected. Management will make rash decisions based purely on emotion or whether the company is performing well financially in a given quarter with little regard to their employees."
CUSTOMER SERVICE IN TRANSPORTATION (Former Employee) says"schedule is brutal. Cons: everything else...."
OTR Driver (Former Employee) says"Long haul trucking is not for everyone. It's a life style only but a few get used to. Your not home very much as well the money for your being on the road isn't very comparable to a 9 to 5 job here at home."
Emergency Management Consultant (Former Employee) says"This temporary contract is good but short. Minimal training and oversight. Work mostly remote. Completely enjoy the work of helping people recover from a disaster event."
Truck Class 1 driver (Former Employee) says"•Conducted security checks and inspections along the way ."
Superviseur, Service à la clientèle (Current Employee) says"Parfois difficile l'ambiance au travail Cons: Ambiance de travail"
Account Manager (Former Employee) says"The job responsibilities were perfect for what I was looking for as an account manager: managing current customer relationships and growing business. However, the environment was uncomfortable at best and toxic at worst. The supporting employees were set in their ways and management was disrespectful and fostered unrealistic expectation for mid level managers, but pardoned the laziness and attitudes of the supporting members."
Former Employee - Finance says"I worked at Holt CAT full-time Cons: Finance managers and VPs are shady."
Former Employee - Anonymous Employee says"I worked at Holt CAT full-time for more than 10 years Cons: Many middle and upper management could careless how the worker gets the job done. They only look at the dollars. People mean nothing to them."
Former Employee - Mechanic says"I worked at Holt CAT full-time for less than a year Cons: Poor working environment Bad Mangement No training even though they promise that Co workers will back stab you and screw you over to get ahead No ethnic diversity Poor pay"
Former Employee - Outside Sales Representative says"I worked at Holt CAT full-time Cons: It’s extremely hard to make any money. They have a couple of reps that have all of the accounts. They tell you it’s territory based but the major customers in your territory belong to another rep. Large contractors on job sites are owned by other reps. Management does not have your back. They track your every move. They have great technology but don’t know how to utilize it. The people in sales leadership have never lead a team before. They are scared of upper management and will micromanage you. You will never get any positive feed back from leadership only the negative. If you are considering working at Texas First Rentals, I would strongly advise against it. But if you do make sure you have ask the right questions."
Former Employee - Service Coordinator says"I worked at Holt CAT full-time for more than 10 years Cons: Managers are never present, lack of leadership at local level, if you don't suck up to your manager you're on the bad list. If your behavior isn't like your managers you don't fit in either. It's not what you know or how loyal or committed to your job you are...your manager has to like you. No room for advancement...way to much favoritism and you feel like you're in high school with all the drama. Moral of employees is very low. Vision, Mission and Values is a joke because very few people there abide by them."
Former Employee - Wash Rack Technician says"I worked at Holt CAT full-time for more than a year Cons: No good wage increase, management"
Former Employee - Anonymous Employee says"I worked at Holt CAT full-time for more than 5 years Cons: Not a good place for women to advance and still has many sexist comments being made to women from very high levels of leadership. In addition, this is the most politically charged environment I have ever worked--all of the SR VPS are trying to win the owners' approval and it causes a very toxic working environment. They do not pay market value and managers are not empowered. Leadership gets angry if you try to move ahead in the company. Titles don't mean anything here and incompetence is rewarded. In addition the "Values Based Leadership" is a joke--leadership only uses the values when they are convenient. Some departments do not agree with work-life balance."
Current Employee - Field Service Technician says"I have been working at Holt CAT full-time for more than 5 years Cons: Field Service management shows favoritism to certain employees and craps all over others."
Former Employee - Outside Sales Representative says"I worked at Holt CAT full-time Cons: Sales and Operations Management is only interested in their numbers, people not appreciated nor valued. Bottom line only with no regard to employee well being . As their name states...Its All about them first. Employees last"
Former Employee - Warehouse says"I worked at Holt CAT full-time for less than a year Cons: You will get screwed out of a position by the higher up because of your race by the higher ups in San Antonio. They will not hire Hispanic Salesmen and they Will expect you to work over your pay and reqiurements if you are capable. If you want to move up quickly this isn't the company it'll take 10 years before you can even be considered in a management position"
concerned emloyee says"Caterpillar have a long way to go in being diverse."
Frank says"Caterpillar Inc is in active collusion with the State of Israel in illegally bulldozing Palestinian housing as part of Israel's Apartheid and ethnic cleansing of the Arab people from their own lands. Caterpillar Inc has been identified by the BDS for its complicity in aiding Israeli Apartheid. Boycott Caterpillar and all Caterpillar products. By not giving Caterpillar your money you are helping send a message to the corporation to grow a conscience and divest in illegal activity which breaches UN Human Rights."
Cat_Zyndrom says"Ah life sucks. Why do I have to watse my time and energy for a stupid mistake of one company? ?"
papipankek says"RT @LunaRemastered: sorry for not posting any renders, ive been gaming alot lately and haven’t been working on anything (so technically a b…"
LunaRemastered says"sorry for not posting any renders, ive been gaming alot lately and haven’t been working on anything (so technically… https://t.co/WhSrStmXRD"
michaelfreeman says"@MissFlyByNight U.S. men team sucks, Sign Cat up. You start tomorrow. Eat a steak and get some sleep."
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