Thursday, March 09, 2017

 Dartmouth Prof Accuses Caterpillar Of Tax Fraud In Report Commissioned By Federal Investigators

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.”

NYFollowing up on my previous posts (links below):  Wall Street Journal, A New Tax-Free Way to Store Art:
New York could become the latest tax haven for art collectors.
A pair of art shippers who for years watched collectors buy works in the city—only to store them tax-free in warehouses in Delaware or Switzerland—have won the right to turn a former parking lot in Harlem into a foreign-trade zone.
The shippers, Tom Sapienza and Kevin Lay, plan to open a 110,000-square-foot facility, called Arcis, that can store as much as $2.5 billion worth of art duty-free. Collectors will be able to buy art in New York, or anywhere in the world, and store it in Arcis’s four-story warehouse indefinitely without having to pay local or state taxes—although taxes will be due once the art leaves the site. Moving new purchases into storage can give collectors and dealers time to save up to pay the taxes later rather than right away—or time to resell the work while it’s in storage and thereby pass on the sales tax to someone else. Collectors can also choose to ship their work internationally and avoid paying local taxes altogether.
A spokeswoman for U.S. Customs and Border Protection confirmed that Arcis had received “tentative approval” for tax-free designation. She said the site will have to follow strict rules set by customs officials to avoid potential abuses such as money-laundering or fraud. ...
Free ports, as such sites are called in Europe, have come under scrutiny in recent months. Investigators in Switzerland and elsewhere have pressed facilities such as the Geneva Free Port for more information about their clients and the contents of the crates they are storing. Free ports say they comply with local tax laws. 
Prior TaxProf Blog coverage: