Resources

Thomson Reuters Tax & Accounting News

Featuring content from Checkpoint

Back to Thomson Reuters Tax & Accounting News

Subscribe below to the Checkpoint Daily Newsstand Email Newsletter

Democrats urge probe into Ingersoll-Rand’s U.S. contracts

WASHINGTON (Reuters) – A group of U.S. Democratic lawmakers on Friday urged a probe of federal contracts being awarded to manufacturer Ingersoll-Rand Plc, saying this violates U.S. law banning federal contract awards to “inverted” companies that have reincorporated abroad to avoid U.S. taxes.

The Democrats wrote to the Army inspector general to query a contract they said Ingersoll Rand received from the Army Corps of Engineers, as well as to the Department of Homeland Security’s inspector general to demand an investigation into reports that the company had been cleared for federal contracts.

“We were dismayed to learn that Ingersoll-Rand has been cleared to win contracts from the Department of Homeland Security despite multiple federal prohibitions on contracting with inverted corporations,” the Democratic lawmakers said in their letter.

They cited a ban on Homeland Security contracts to inverted corporations since 2002, and a U.S. government-wide ban since 2008. But “Ingersoll-Rand applied for and received a contract from the Army Corps of Engineers” after renouncing U.S. citizenship, they noted.

The letters were addressed to Department of Homeland Security Inspector General John Roth, and Army Inspector General Lieutenant General David Quantock. They were signed by Representatives Rosa DeLauro, Sander Levin and Lloyd Doggett, as well as the number two Senate Democrat, Dick Durbin, and Senators Jack Reed and Sheldon Whitehouse.

Ingersoll Rand spokeswoman Misty Zelent responded that the company was in compliance with the law.

“The conclusion that the federal procurement definition of an inverted domestic corporation does not apply to Ingersoll Rand was determined following legal review,” she said in a statement emailed to Reuters.

“Ingersoll Rand shared the analysis with the Federal Government and works with each procuring agency at the time any submission is made to ensure they are comfortable the company is in compliance with all applicable laws.”

Ingersoll, which makes Trane air conditioners and Schlage locks, moved its headquarters in 2001 to Bermuda from the United States, and again in 2009 to Ireland, another low-tax country.

Concern has been growing about inversions, a popular strategy to avoid corporate taxes. President Barack Obama has criticized them, and Democrats have urged legislative action.

House Ways and Means Chairman Paul Ryan said on Friday he intends to pursue an international tax reform package that deters corporate inversions and produces enough revenue to fund a six-year highway bill.

Ryan said the revenue would come from repatriation of some $2 trillion in foreign profits held overseas to be taxed at a lower rate.

Companies have done more than 50 such deals since the 1980s; about half of them since 2008.