The Internal Revenue Service (IRS) informed Microsoft on Wednesday that it may owe $28.9 billion in overdue taxes, plus penalties and interest, from 2004 to 2013.

The IRS claims that as of September 30, its tax adjustments were correct and that it will take the matter to court if necessary.

Microsoft denied the accusations, claiming in a press release that the IRS’ adjustment is not final and does not account for the Tax Cuts and Jobs Act, which the business claims could reduce its financial commitments by up to $10 billion. According to the IRS in an 8-K filing, Microsoft verified receiving the Notices of Proposed Adjustment on Oct. 11, but it does not expect the problem to be resolved within the next year.

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In a press release, Microsoft’s VP for worldwide tax and customs, Daniel Goff, stated that the company’s methods and organizational structure have changed since 2013, and that “… the issues raised by the IRS are relevant to the past but not to our current practices.” Goff went on to say that Microsoft will engage with the IRS to “hopefully reach a mutual resolution,” but that the business does not owe the taxes sought by the IRS.

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“Microsoft disagrees with these proposed adjustments and will pursue an appeal within the IRS, a process expected to take several years,” Goff said in a statement. “We believe we have always followed IRS rules and paid all taxes owed in the United States and around the world.” Microsoft has consistently been one of the top corporate income taxpayers in the United States. We have paid approximately $67 billion in taxes to the United States since 2004.”

According to a press release, the 8-K filing comes after the IRS stated last month that it was adding AI techniques to identify potential tax evasions. The IRS stated at the time that it would target rich taxpayers, including corporations, who employed “sophisticated schemes to avoid taxes” and would identify individuals with more than $250,000 in recognized tax obligation.

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The corporation was recently challenged by the Federal Trade Commission (FTC), which sought an injunction against Microsoft’s $68.7 billion acquisition of Activision Blizzard. They were able to overcome that obstacle after the United States Court of Appeals for the Ninth Circuit refused the FTC’s attempt to stop the acquisition. Microsoft is anticipated to finalize its agreement with Activision on October 13.

Microsoft did not react promptly to Gizmodo’s request for comment delivered after regular business hours.


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