In what appears to be a bit of a celebratory boast Caterpillar (CAT), a heavy equipment manufacturer, revealed in its latest quarterly filing that it had reached a settlement with the IRS that resolved all issues for tax years 2007-2016 “without any penalties”. In case it wasn’t clear, the company immediately reminded readers of the absence of penalties three sentences after the initial claim.

Eventually, Caterpillar revealed the settlement included $490 million in back taxes and $250 million in interest. The company says the back taxes were paid in the quarter ended September 30, 2022 and expects to pay the interest by year’s end.

The dispute centered around the tax treatment of profits earned by Caterpillar’s parts division. The company’s uncertain tax position reserve is more than enough to cover the payout and Caterpillar says settling allows it to avoid additional costs and burdens of fighting the IRS.

Notably though, Caterpillar inserted new language in the filing hinting at more tax trouble on the horizon. While the settlement resolves all issues through 2016, Caterpillar’s language suggests it expects scrutiny for subsequent tax periods:

“We are subject to the continuous examination of our income tax returns by the IRS, and tax years subsequent to 2016 are not yet under examination.”