US Senate Committee request records related to tax schemes involving Caterpillar and Renaissance Technologies

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In a letter dated 28. April 2021 the US Senate Committee on Finance has request records related to tax schemes involving Caterpillar and Renaissance Technologies.

“In 2015, Caterpillar disclosed that a federal grand jury in Illinois had begun investigating an alleged tax scheme involving the company’s Swiss subsidiary. This investigation led to raids by federal agents on three different Caterpillar offices in March 2017. 4 Days after the raids, Caterpillar announced it retained Mr. Barr “to take a fresh look at Caterpillar’s disputes with the government, get all the facts, and then help us bring these matters to proper resolution based on the merits.” Since January 2018, the IRS has sought to recover $2.3 billion in unpaid taxes and penalties from Caterpillar in connection with the alleged tax practices. Alarmingly, just six days after Mr. Barr was nominated to serve as Attorney General, an inspector general agent at the U.S. Federal Deposit Insurance Corporation was reportedly instructed by the DOJ tax division and the Office of the Deputy Attorney General “that no further action was to be taken on the [Caterpillar] matter until further notice.”

“Additionally, we seek to understand how the agencies addressed the potential for political interference with regard to a multi-billion dollar tax enforcement action involving Renaissance Technologies LLC (Renaissance), a prominent hedge fund whose owners are among the nation’s biggest political donors. According to public reports, since 2017 the IRS has reportedly sought to collect approximately $7 billion in back taxes from Renaissance for its use of basket options contracts, a type of transaction the IRS has long considered an abusive tax avoidance technique. Renaissance has contested the tax bill and is reportedly exploring the possibility of a settlement to reduce its tax liability. These efforts by the IRS follow the findings of a bipartisan report from the Senate Permanent Subcommittee on Investigations describing how Renaissance used these transactions over ten years to avoid taxes on $34 billion in profits.

4.28.21 Caterpillar NARA