WSJ Reports on Caterpillar’s Hefty Tax Bill

Caterpillar Inc. (NYSE: CAT) has long used a subsidiary in Geneva, Switzerland, called Caterpillar SARL, to process sales and profits for international orders, and the U.S. Internal Revenue Service wants the heavy-machinery maker to pay a $2-billion tax bill on that business, according to The Wall Street Journal.

The Journal story goes onto say that, although the company maintains that its Swiss strategy, which results in an effective tax rate there of as low as 4%, is legal, some Caterpillar employees have questioned the practice, which began in 1999.

No civil or criminal charges have been filed, and a Caterpillar spokeswoman told the Journal that the company is "in the process of responding to the government's concerns."

Federal officials raided Caterpillar's offices in March, and the outcome of the investigation could influence other U.S. companies' tax strategies. Sweeping new tax law took effect Monday, partially aimed at persuading American companies to bring back their overseas cash holdings.

Other noteworthy news items concerning the Dow stock; in mid-December, Caterpillar’s board decided to maintain the quarterly cash dividend of $0.78 per share of common stock, payable February 20, to shareholders of record at the close of business on January 22.

Caterpillar has paid higher dividends to its shareholders for 24 consecutive years and, since 2007, the company's cash dividend has more than doubled.

Caterpillar has paid a cash dividend every year since the company was formed and has paid a quarterly dividend since 1933.

CAT’s stock price traded up 84 cents Tuesday from Friday’s close to $158.42.