The U.S. Department of Justice filed a lawsuit against founder and former Cajun Industries Chairman Lane Grigsby and his wife to recover tax refunds stemming from research and development tax credits claimed by the business several years ago.
The federal government claims that the Grigsbys owe $779,000 to the Internal Revenue Service, which includes interest, according to the lawsuit filed in the U.S. District Court for the Middle District of Louisiana.
"It's an issue where I know we will prevail, they made a mistake," said Grigsby, who in 2016 sold his majority stake in Cajun Industries to his son and son-in-law. "By the time this is all said and done I will have spent more money on it than I care to."
The Baton Rouge-based company provides engineering, civil, structural and mechanical work for construction and maintenance of chemical plants, refineries and the oil and gas industry.
Cajun Industries claimed that it qualified for $1.3 million in research and development tax credits from 2013, based on findings of a tax consulting firm Cajun hired in 2015 to study the issue.
In a 2016 amendment of their 2013 tax return, the Grigsbys claimed they were owed $576,756 by the IRS as their share of Cajun Industries' tax credits from 2013 and had overpaid their 2013 taxes.
The federal government issued a tax refund but ultimately decided it was an error and the statistical sampling of projects submitted did not qualify for tax credits.
"Cajun is not entitled to the research credits it claimed on its amended 2013 federal tax return because Cajun failed to comply with the statutory and regulatory requirements," according to the lawsuit. "Cajun did not engage in technological or scientific research to design and/or create new or improved business components of Cajun."
The company didn't keep sufficient records to prove that employees were conducting research, according to the federal government.
When asked about any research and development efforts as examples of work done by the company, Grigsby declined further comment.
Lane Grigsby, the founder of Cajun Industries, has sold his majority stake in the Baton Rouge-based contractor to his son and son-in-law.