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Scott Michel Comments on U.S. Caterpillar Criminal Tax Inquiry

May 8, 2015, Worldwide Tax Daily

Worldwide Tax Daily spoke with Scott D. Michel on the likelihood that the IRS is conducting parallel investigations for Caterpillar Inc. and its alleged profit-shifting arrangement. For the complete article, please visit Worldwide Tax Daily's website (subscription required). 

Excerpt taken from the article " Observers Split on Odds of U.S. Caterpillar Criminal Tax Inquiry" by Amy S. Elliott for Worldwide Tax Daily. 

Scott D. Michel of Caplin & Drysdale Chtd. said that over the last decade or so, the IRS has relaxed what had historically been a strict prohibition against parallel criminal and civil investigations. Internal Revenue Manual 9.5.1 now permits parallel proceedings when they can be done in a way "to maximize civil enforcement without imperiling the criminal prosecution," and in particular to ensure that civil statutes of limitations aren't allowed to expire during a criminal investigation.

"Priority tends to go to the criminal side," Michel said, adding that IRS revenue agents "are not going to do anything that messes up the criminal case."


Michel said that a so-called Klein conspiracy charge -- conspiracy to defraud the IRS, named after the case United States v. Klein, 247 F.2d 908, 916 (2d Cir. 1957) -- is "a common type of charge in a criminal tax investigation."


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