Feds Closing in on Caterpillar Amidst Allegations of Tax Fraud
The Internal Revenue Service (IRS) appears to be making headway in its attempts to bring down Caterpillar. The industrial equipment supplier is facing allegations of tax fraud. Essentially, the IRS believes the Peoria, Illinois based company has attempted to avoid its tax obligations by putting profits for sales into a subsidiary based in Switzerland.
A recent piece in Fortune notes that Caterpillar CEO promises to cooperate with the authorities and has “rejected any suggestion of avoiding taxes.”
Why are these allegations serious?
These allegations are serious for two reasons:
- Penalties. If the allegations are supported, various penalties could apply. Depending on the details, criminal charges could follow. This can come with steep monetary fines and potential imprisonment.
- Reputation. Regardless of the fate of the allegations, the accusation has an impact on the reputation of the business. Business leaders within Caterpillar are likely attempting to negate some of the damage by publically highlighting their efforts to cooperate with the ongoing investigation.
Although the findings of the investigation are not yet final, the Wall Street Journal reported that the government used a professor at Dartmouth’s Tuck School of Business to dig into the issue. The professor produced a report that supported the agency’s allegations of fraudulent tax practices by the company.
What options are available for companies facing allegations of tax fraud?
Any level of federal tax law controversy should be taken seriously. The negative effects that Caterpillar is currently navigating can apply to any business in the same situation. Resolutions are available. Seeking experienced legal counsel can help you mitigate the negative consequences of the allegations and help to better ensure your business interests are preserved.
