Oct. 11 (UPI) — Microsoft owes an additional $28.9 billion in unpaid taxes, penalties and interest for the years between 2004 and 2013, the Internal Revenue Service said Tuesday.
The multinational technology company plans to appeal the IRS audit, a process that is likely to last years.
“We believe we have always followed the IRS’ rules and paid the taxes we owe in the U.S. and around the world,” Daniel Goff, Microsoft’s corporate vice president for worldwide tax and customs, said in response on the company’s website in response to the IRS’s findings.
“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.,” he said.
The IRS finding is not expected to be reflected in Microsoft’s upcoming quarterly report.
According to its past financial records, Microsoft’s total net income reached $198.7 billion over the period between 2004 and 2013. Microsoft said it disagrees with the IRS’s determination based on transfer pricing, which deals with the way Microsoft allocates profits among different companies.
Goff explained in the Microsoft post that taxes the company paid under the Tax Cuts and Jobs Act could reduce the additional tax it owes by as much as $10 billion, which he said are not reflected in the IRS audit, furthering bolstering his argument that the company is not responsible for the taxes the IRS audit claims it is.
Microsoft said at the end of September that it believes it made proper “allowances for income tax contingencies.”
“We will continue to work with the IRS and hope to reach a mutual resolution to this issue over the coming years,” Goff concluded in his response.
The e-commerce giant Amazon faced a similar challenge from the IRS in 2017, but mounted a successful defense in court and was not required to pay the additional taxes.
