In a recent company filing, Microsoft revealed that the IRS claims they owe $28.9 billion in back taxes. This revelation comes after many years of investigations to determine whether Microsoft underpaid its taxes.
During the investigation, the company focused on the tax years between 2004 and 2013. Companies like Microsoft often use other jurisdictions to report higher taxes where the local government tax rate is lower, and in places where it is higher, they report lower profits to reduce their tax liability, a practice aimed at evading higher taxes.
Microsoft argues that they have followed the rules of the IRS and is disputing the claim. The company attempted to use tax jurisdictions such as Puerto Rico to minimize its tax bill.
In a blog post by the company’s vice president of global tax and customs, it is argued that the tax bill could be reduced by up to $10 billion due to the tax law signed by then-President Donald Trump.
This audit, which began in 2007, is one of the largest probes in the history of the IRS.