Microsoft said in a securities filing on Wednesday that the Internal Revenue Service estimates it owes the U.S. Treasury $28.9 billion in overdue taxes, penalties, and interest.
That number, which Microsoft disputes, is the result of a protracted IRS investigation into how Microsoft distributed its revenues among several nations and territories between 2004 and 2013. Transfer pricing, as it is commonly known is criticized for being a tactic used by businesses to reduce their tax liability by declaring smaller earnings in nations with high tax rates and bigger profits in nations with lower tax rates.
Microsoft, a Redmond, Washington-based company, asserted that it adhered to IRS regulations and that it will challenge the ruling internally, a procedure that is anticipated to take several years. In after-hours trading, the company’s shares decreased marginally, dropping $1.42 to $331.
