IRS, DOJ conduct probe of Caterpillar Inc.

By Greg Grisolano, Land Line associate editor | Thursday, March 02, 2017

Federal law enforcement agencies conducted a search of three offices owned by Caterpillar Inc., including the company’s corporate headquarters in Peoria, Ill., on Thursday.

The reason for the investigation was not immediately clear Thursday. A spokesperson with the U.S. Attorney’s Office of Central Illinois declined to comment beyond confirming the presence of several federal agencies conducting “law enforcement activity” at three locations in Peoria, East Peoria, and Morton. Agencies involved in the probe include the criminal investigation division of the Internal Revenue Service; the Federal Deposit Insurance Corporation – Office of Inspector General; and the U.S. Department of Commerce – Office of Export Enforcement.

A spokesperson for Caterpillar issued a brief statement Thursday stating that law enforcement were at various Peoria-area Caterpillar locations executing a search warrant, and that Caterpillar is cooperating with the investigation.

According to reports, Caterpillar has been in a dispute with the IRS over a demand that the company pay as much as $2 billion in taxes and penalties for profits assigned to a subsidiary parts distribution operation, headquartered in Switzerland. According to Forbes, the company’s tax rate and treatment of replacement parts sales have come under federal scrutiny amid accusations of using sham transactions to reduce its tax burden by shifting profits overseas.

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