The company later changed addresses again, to tax-friendly Ireland in 2009, after increased U.S. scrutiny of tax havens. The top executives never left the U.S., and Chief Executive Michael Lamach now runs the company from a suburb of Charlotte, North Carolina. The company makes Club Car golf carts, Trane air conditioners, and Thermo King refrigerated trucks.

Legal Arguments

Ingersoll-Rand provided the memo to Bloomberg News this week on the condition that it not publish the document and that the news organization drop an effort to obtain it through a public-records request filed with Homeland Security last September. Homeland Security had previously disclosed the letter from Principal Deputy General Counsel Joseph Maher endorsing the memo, but fought the release of the memo itself, saying that it contained confidential information that could damage Ingersoll- Rand.

The memo demonstrates the “care and transparency with which Ingersoll Rand interacts with its federal customers,” spokeswoman Misty Zelent said in a statement.

It’s unclear whether Homeland Security endorses all three of Ingersoll-Rand’s arguments or just one or two of them. In addition to arguing the entire law is invalid, the memo puts forth two other arguments that would cripple the contracting prohibition.

Ingersoll-Rand argued that companies like itself that inverted to one foreign country and then switched to a third shouldn’t be considered inverted anymore. Under the law, it said, companies have to start out as U.S. firms to be inverted, and during its 2009 address change Ingersoll-Rand wasn’t American anymore.

That logic would also apply to many other inverted companies that fled Bermuda and the Cayman Islands to Switzerland or Ireland, such as oil-services providers Weatherford International Plc and Transocean Ltd. It would also mean that inverted companies could qualify for contracts simply by switching their legal address a second time.

Ingersoll-Rand also argued that firms that have business operations in their new corporate homes -- even modest ones -- should be allowed to bid on contracts under an exception in the law for companies with “substantial business” in their new domicile.

Trade Agreement

The company said that it had more than 700 employees and a Thermo King factory in Ireland when it adopted the address there in 2009. It didn’t mention that these represented less than 2 percent of both its global employees and of its major factories at the time. Ingersoll-Rand also argued that the Internal Revenue Service’s much stricter interpretation of “substantial business,” which now stands at 25 percent of employees, assets, and sales, should not apply.