New York CNN –
Microsoft plans to challenge a request from the Internal Revenue Service for $28.9 billion in additional back taxes for 2004 through 2013, the company said in a securities filing Wednesday.
The claim is the result of a years-long IRS review of Microsoft’s past accounting practices. In particular, the agency took issue with the way the company “allocated profits… between countries and jurisdictions,” Microsoft said in the filing.
“According to the IRS, Microsoft owes $28.9 billion in additional taxes for the years 2004 through 2013, plus penalties and interest,” the company said. It noted that the IRS’s determination is not final and does not include up to $10 billion in taxes Microsoft paid under the Tax Cuts and Jobs Act of 2017, which could lower its final bill.
The company said it plans to appeal the IRS request, a process that will likely take several years.
“We believe we have always complied with IRS rules and paid the taxes we owe in the United States and around the world,” the company said in the filing. “We have paid over $67 billion in taxes to the United States since 2004.”
Microsoft noted that as it prepares for the IRS appeal — and potentially the courts — the company assumes its current “income tax reserve allowances are appropriate.”