[lifeisstillgood]

>>> Item 8.01. Other Information On October 11, 2023, Microsoft Corporation announced the receipt of Notices of Proposed Adjustment (“NOPAs”) from the Internal Revenue Service (the “IRS”) for the tax years 2004 to 2013. The NOPAs were received on September 26, 2023. The primary issues in the NOPAs relate to intercompany transfer pricing. In the NOPAs, the IRS is seeking an additional tax payment of $28.9 billion plus penalties and interest. As of September 30, 2023, we believe our allowances for income tax contingencies are adequate. We disagree with the proposed adjustments and will vigorously contest ...

So MS income for 2023 was 211 BN, EBIT on that was 88BN. So being asked to give back 28.9BN is a big hit on anyone's scale, but it's "just" 3BN a year (2004-13) on annual profits of ~88BN - so it's not like it's their whole business model.

Intra-company transfers are a tricky way to move assets and liability around inside a firm - because it's not "really" selling there can be a lot of creativity. For example Starbucks was accused over many years of having foreign subsidiaries "purchase" coffee beans from Seattle at a price that co-incidentally matched the foreign subsidiaries operating profit - essentially meaning only the seattle firm made a profit and so only they had to pay tax.

Something similar is being suggested here. It's not clear what.

However it's worth noting that some years ago Biden announced major new funding for IRS to go after big firms. If this is part of that and if this comes to some agreement in a few years it will pay for that whole initiative several times over.

Interesting