The Inland Revenue Service (IRS) has told Microsoft it owes an additional $28.9 billion in tax for 2004 to 2013.

Microsoft said it disagrees with the figure, which follows work it has undertaken with the IRS to address questions about how it allocated its income and expenses for tax years beginning as far back as 2004.

The IRS recently sent Microsoft a series of Notices of Proposed Adjustment, sharing with the company detailed information and explanations of their views about the issues in question and how it arrived at the tax owed figure.

Microsoft said it has changed its corporate structure and practices since the years covered by the audit, and as a result, the issues raised by the IRS are "relevant to the past but not to our current practices."

The tech giant stated it has always followed IRS rules and paid the taxes it owes in the US and around the world, noting that since 2004 it has paid over $67 billion in taxes to the US.

“We strongly believe we have acted in accordance with IRS rules and regulations and that our position is supported by case law,” Microsoft said. “We welcome the IRS’s conclusion of its audit phase which will provide us with the opportunity to work through these issues at IRS Appeals, a separate division of the IRS charged with resolving tax disputes.”

Microsoft also noted the proposed adjustments do not reflect taxes paid by Microsoft under the Tax Cuts and Jobs Act, which it believes could decrease the final tax owed under the audit by up to $10 billion.

In its conclusions on the matter, Microsoft said it will continue to work with the IRS and hopes it will reach a “mutual resolution” to the issue over the coming years.

It added that it would also continue to share updates on significant developments through its public quarterly and annual reports and financial statements and that as of 30 September, it believes its allowances for income tax contingencies are “adequate.”

Share Story: