11 October 2023 Microsoft announced that the IRS has claimed that it owes $28.9 billion in back taxes for the years 2004 to 2013, plus penalties and interest.
The claim relates to cost-sharing arrangements used by Microsoft to allocate profits between countries during this period. According to Microsoft, its subsidiaries shared in the costs of developing certain intellectual property and, therefore, the subsidiaries were entitled to the related profits under the IRS cost-sharing regulations.