IRS says Microsoft owes an additional $29 billion in back taxes

  • Microsoft said the IRS notified the company it owes an additional $28.9 billion in back taxes.
  • The company disagrees with the claims and says it will contest them in court, if necessary.
  • Microsoft will go through the IRS’ administrative appeal, which could take years.
Microsoft CEO Satya Nadella arrives at federal court in Washington, D.C., on Oct. 2, 2023.
Drew Angerer | Getty Images

Microsoft received Notices of Proposed Adjustment from the Internal Revenue Service for an additional tax payment of $28.9 billion, the company said in an 8-K filing Wednesday.

Microsoft said the dispute concerns the company’s allocated profits between countries and jurisdictions between 2004 and 2013. It said up to $10 billion in taxes that the company has already paid are not reflected in the proposed adjustments made by the IRS.

Microsoft plans to contest the notices through the IRS’ administrative appeal and is willing to go to judicial proceedings, if necessary.

“Microsoft disagrees with these proposed adjustments and will pursue an appeal within the IRS, a process expected to take several years,” the company said in its filing. “We believe we have always followed the IRS’s rules and paid the taxes we owe in the U.S. and around the world.”

Microsoft said that as of Sept. 30, 2023, it believes its allowances for income tax contingencies are adequate.

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