U.S. firms are holding increasingly larger amount of cash than they used to, which evokes a great attention on the determinants of corporate cash holdings. However, existing literatures seldom explain cash holdings based on tax incentive faced by firms to hold cash. For U.S. multinationals, they are easier to shift income to their foreign affiliates located in low tax jurisdiction and hold them into cash abroad. Triggered by this, my paper focuses on the listed firms generally and starts to put on linkage between increasingly larger magnitude of cash holdings and recently aggressive of tax avoidance activities and develops hypothesis that cash holdings is positively associated with tax avoidance. Nevertheless, two hypotheses are further developed in regarding to the influence of industry competition and quality of corporate governance on the issue. Using a sample of U.S. listed firms from the period 1993–2011, I first provide evidence that cash holdings of a firm is positively associated with tax avoidance. Second, I find that tight competition of a certain industry will lead to large amount of firm cash holdings. Third, the positive relation between tax avoidance and firm cash holdings is more pronounced in firms with positive book-tax difference, which implies potential issues in such firms with poor governed managerial mechanism.