Between 2004 and 2013, Microsoft is alleged by the US tax authorities to owe unpaid taxes amounting to $28.9 billion. Central to this dispute is the issue of profit allocation across various countries and jurisdictions for the stated duration.
While the IRS, as cited in an SEC document reported by CNBC, argues that Microsoft did not accurately assign profits to the appropriate countries and jurisdictions, Microsoft counterclaims. The tech giant posits that the IRS's adjustments failed to account for nearly $10 billion in taxes it already disbursed. The said adjustments suggest that Microsoft has a tax obligation close to $29 billion, not inclusive of penalties and interest; the exact figure, however, remains unspecified in the document. In response, Microsoft has embarked on an appeals journey, challenging the IRS's claims and maintaining that their profit distribution was precise. The company has raised objections, highlighting that the already paid $10 billion in taxes weren't correctly integrated into the IRS's adjustments. As the appeal is expected to navigate the IRS's appeals mechanism and potentially the standard courts, a conclusive verdict may not be reached soon. As of September 30, 2023, Microsoft has expressed confidence in its existing provisions for potential income tax contingencies.
