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Cat Tax Scam

Discussion in 'Financing' started by John C., Sep 12, 2022.

  1. John C.

    John C. Senior Member

    Jun 11, 2007
    Machinery & Equipment Appraiser
    I got this in a news feed today and thought many of you might think it interesting. It is very vague as to what Caterpillar was being charged with and why the IRS went after the corporation.


    I was an employee of a Cat dealer at the time and the gist of what we were told about the situation goes something like this. Parts were obtained through manufacture or purchase and stored in the United States. This incurs some sort of inventory tax normally, but Caterpillar listed the parts as being part of one of their subsidiaries based in another country, Sweden or Switzerland as I recall, so incurred no tax liability in their eyes. Apparently the scheme was exposed by a whistleblower in a different court case which brought in the IRS. William Bar was the attorney for Caterpillar at the time and then became the Attorney General where the case faded into the background and I thought went away politically. Apparently it had not completely disappeared as shown by the article. The case was settled with no determination of guilt, no fines and no repercussions to any individual that was part of the scheme.
    Truck Shop and skyking1 like this.
  2. Truck Shop

    Truck Shop Senior Member

    Dec 7, 2015
    star gazer
    SE Washington St
    Garden variety white collar crime, enough pull and you can get out of anything.
    mitch504 likes this.
  3. Tarhe Driver

    Tarhe Driver Well-Known Member

    Nov 16, 2015
    Comm. Real Est Appraiser-Retired cargo/helo pilot
    Savannah, GA
    Don't know if this is applicable here, but Foreign-Trade Zones (FTZs) are secure areas under U.S. Customs and Border Protection (CBP) supervision that are generally considered outside CBP territory upon activation. Located in or near CBP ports of entry, they are the United States' version of what are known internationally as free-trade zones.

    This means that items can be transported into the U.S., stored at and/or worked on (enhanced, rebuilt, whatever, or just stored) and then at some time transported out of the U.S., without ever being inside the U.S. for import tax treatment. About every sea port has FTZs, as do many of the larger airports.
    Truck Shop likes this.