In a surprising turn of events, Caterpillar Inc. managed to settle with the IRS for significantly less than the initially claimed amount following the closure of a major investigation by Donald Trump’s Justice Department. The investigation, which began with allegations of tax evasion through profit shifting to a Swiss subsidiary, could have potentially cost Caterpillar billions in back taxes. However, the case took an unexpected twist when the Justice Department abruptly halted a key witness interview in Amsterdam in December 2018, just as Trump was about to nominate William P. Barr as attorney general.
Barr, a former attorney general under George H.W. Bush, played a crucial role in Caterpillar’s defense, along with other well-connected lawyers who met with senior federal officials to criticize the investigation’s basis and conduct. Despite concerns raised by federal officials about potential political interference, the investigation ended with the IRS settling for less than a quarter of the initially claimed amount without imposing any penalties.
The case highlights the challenges of prosecuting corporate tax evasion, especially when powerful legal figures are involved. The resolution of this investigation has sparked questions about the influence of high-profile legal representation and its impact on the justice system. Caterpillar, on its part, stated that it cooperated with the government in the review of the issues and expressed satisfaction with reaching a resolution with the IRS.
This outcome underscores the intricacies of navigating federal investigations, particularly when powerful legal connections come into play. The sequence of events, from the investigation’s halt to the eventual settlement, has raised eyebrows among federal officials, prompting calls for an internal investigation into potential political interference. The case serves as a reminder of the opaque mechanisms of legal and political influence that can alter the course of such investigations.
