Title: Microsoft to Contest IRS Request for $28.9 Billion in Back Taxes
Subtitle: Tech giant plans to appeal an IRS demand for additional taxes from 2004 to 2013
New York | CNN — Microsoft announced on Wednesday that it intends to challenge the US Internal Revenue Service’s (IRS) request for an extra $28.9 billion in back taxes for the years 2004 to 2013. The company revealed its decision in a securities filing, stating that it disagrees with the IRS’s findings.
The demand for additional taxes stems from a lengthy audit conducted by the IRS into Microsoft’s past accounting practices. The agency specifically took issue with how the tech giant “allocated profits … among countries and jurisdictions” during the mentioned years, according to the filing.
Microsoft clarified that the IRS’s determination is not final and does not include approximately $10 billion in taxes already paid by the company under the 2017 Tax Cuts and Jobs Act, which could potentially reduce the final bill. The tech company insisted that it has adhered to the IRS’s rules and has consistently paid the taxes it owes in the United States and globally.
In response to the IRS’s request, Microsoft plans to launch an appeal, a process that is expected to take several years. The company is prepared to engage in the IRS Appeals Process and, if necessary, escalate the matter to the courts.
“We believe we have always followed the IRS’s rules and paid the taxes we owe in the U.S. and around the world,” Microsoft stated in the filing. The tech giant further pointed out that it has paid over $67 billion in taxes to the US since 2004.
As they await the outcome of the appeal, Microsoft expressed confidence in its current “allowances for income tax contingencies.” The company believes that its preparations for potential legal proceedings are adequate.
The dispute between Microsoft and the IRS exemplifies the ongoing scrutiny that technology companies face over their tax practices. With billions of dollars at stake, this case highlights the growing tension between corporations and tax authorities regarding the allocation of profits across different jurisdictions.