The United States Internal Revenue Service (IRS) has notified Microsoft that it may owe a staggering $28.9 billion in back taxes, plus penalties and interest, for the period from 2004 through 2013. This comes after the IRS announced last month that it would be using new AI tools to crack down on tax evasion, particularly focusing on wealthy taxpayers and companies.
Microsoft has disputed the IRS’ claims, stating that the adjustments do not take into account the Tax Cuts and Jobs Act, which could potentially reduce its financial obligations by up to $10 billion. The company also stated that it has changed its practices and corporate structure since 2013.
Daniel Goff, Microsoft’s VP for worldwide tax and customs, stated that the company will work with the IRS to reach a mutual resolution but denies owing the taxes claimed by the IRS. He added, “We believe we have always followed the IRS’ rules and paid the taxes we owe in the U.S. and around the world. Microsoft historically has been one of the top U.S. corporate income taxpayers. Since 2004, we have paid over $67 billion in taxes to the U.S.”
The IRS’ claim is part of a long investigation into how Microsoft allocated its profits in different countries and jurisdictions between 2004 and 2013. The company has stated that it will “vigorously contest” the IRS request in court if necessary.
This news comes amidst Microsoft’s recent acquisition of Activision Blizzard for $68.7 billion, which was targeted by the Federal Trade Commission (FTC) but ultimately approved by the U.S. Appeals Court for the 9th Circuit.
