Image: © JeanLuc Ichard/Stock.adobe.com
Microsoft said it plans to ‘vigorously contest’ the fee that the IRS has presented, which is for taxes allegedly owed between 2004 and 2013.
Microsoft says it is facing a demand of $28.9bn – plus penalties and interest – by the US Internal Revenue Service (IRS).
The US agency claims this payment is owed in taxes from 2004 to 2013. Microsoft said it recently received a Notices of Proposed Adjustment from the IRS about these tax years.
“This marks the end of the audit covering 2004 to 2013, and the beginning of a new process to resolve these decades-old issues,” said Daniel Goff, Microsoft corporate VP for worldwide tax and customs.
Microsoft plans to vigorously contest this figure and said it is willing to enter judicial proceedings if necessary, according to a filing with the US Securities and Exchange Commission. The tech giant says it disagrees with these proposed adjustments and is pursuing an appeal with the IRS, which is expected to take several years to resolve.
Microsoft also said that the figure presented by the IRS does not take into account taxes paid by the company under the US Tax Cuts and Jobs Act. Microsoft claims this could decrease the final tax owed under the audit by up to $10bn.
The disagreement – according to Microsoft – is around the way the company allocated profits during this time period among various countries and jurisdictions. The company also said that it changed its corporate structure since those years, so the issues raised by the IRS “are relevant to the past but not to our current practices”.
“We will continue to work with the IRS and hope to reach a mutual resolution to this issue over the coming years,” Goff said. “We will also continue to share updates on significant developments through our public quarterly and annual reports and financial statements, as we have through this entire process.”
Meanwhile, Microsoft is facing various probes for some of its practices. Last week, UK comms regulator Ofcom has called for further investigation into the UK’s cloud market, due to concerns that both Microsoft and AWS engage in anticompetitive practices.
The tech giant has also been dealing with probes into its planned acquisition of Activision, though amendments to this deal appear to be appeasing regulators.
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