The Internal Revenue Service (IRS) has issued Notices of Proposed Adjustment to Microsoft, demanding an additional $28.9 billion in back taxes, as revealed in Microsoft’s 8-K filing on Wednesday. This dispute revolves around how Microsoft allocated its profits across various countries and jurisdictions from 2004 to 2013. Microsoft contends that the proposed adjustments do not consider the $10 billion in taxes the company has already paid during this period.

Microsoft intends to challenge these notices by engaging in the IRS’ administrative appeal process and is prepared to escalate the matter to judicial proceedings if required. Despite the IRS’s claims, Microsoft vehemently disputes the proposed adjustments, asserting that the company has consistently adhered to the IRS’s regulations, paying the due taxes both in the United States and globally.

As of September 30, 2023, Microsoft maintains that its provisions for potential income tax liabilities are sufficient, reflecting the company’s confidence in its standing regarding this tax dispute. The situation underscores a complex financial disagreement between Microsoft and the IRS, likely to unfold over several years as legal processes run their course.