by Felix Salmon at Axios
How would you calculate penalties and interest on tax arrears of $29 billion dating back as far as 2004? That’s one of the many questions facing the U.S. government as it endeavors to extract a record sum from Microsoft in the largest audit the IRS has ever attempted.
Why it matters: Microsoft seems decidedly sanguine. “We believe we have always followed the IRS’ rules and paid the taxes we owe,” wrote Daniel Goff, a senior tax executive, in a corporate blog post when the ruling was revealed this month.
- “As of September 30, 2023, we believe our allowances for income tax contingencies are adequate.”
Between the lines: Microsoft won’t reveal exactly what its “allowances for income tax contingencies” are. But they’re included in a $19.8 billion balance-sheet charge for “unrecognized tax benefits and other income tax liabilities,” so they have to be lower than that.
- In other words: Once this has gone through the IRS appeals process and then through a court appeal, Microsoft expects to owe less than $20 billion.
The big picture: ProPublica’s Paul Kiel had the full story of what Microsoft got up to in Puerto Rico back in January 2020. (These cases move very slowly.)…Continue Reading