Microsoft vs the IRS

The big tech firm is facing an IRS audit demanding $29 billion in unpaid taxes

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Microsoft is facing an IRS audit demanding roughly $29 billion in unpaid taxes for the period from 2004 to 2013.

Here are a few key points:

• The Internal Revenue Service (IRS) is the revenue service for the United States federal government.

• The dispute primarily revolves around how Microsoft allocated profits across international jurisdictions, a practice known as cost-sharing.

• Microsoft vehemently disagrees with the IRS's proposed adjustments and intends to contest the demand through the IRS's administrative appeals office and, if necessary, in court.

• The company asserts it has adhered to IRS rules and regulations and notes that its corporate structure and practices have evolved since the audit period.

• This case underscores ongoing concerns about the tax practices of big tech companies, accused of shifting revenue to lower tax jurisdictions to reduce tax obligations in their primary markets and maximize profits.

• International efforts, including an OECD agreement, aim to regulate tax revenue for such giants. In the EU, Apple faced a similar tax dispute, ordered to pay back taxes, but the outcome is still pending appeal.

• Microsoft's audit process with the IRS is expected to take several years.