IRS Says Microsoft Owes an Additional $29 Billion in Back Taxes (cnbc.com) 74
Microsoft received Notices of Proposed Adjustment from the Internal Revenue Service for an additional tax payment of $28.9 billion, the company said in an 8-K filing Wednesday. From a report: Microsoft said the dispute concerns the company's allocated profits between countries and jurisdictions between 2004 and 2013. It said up to $10 billion in taxes that the company has already paid are not reflected in the proposed adjustments made by the IRS. Microsoft plans to contest the notices through the IRS' administrative appeal and is willing to go to judicial proceedings, if necessary.
Dang! (Score:5, Funny)
On the bright side, MSFT will dig up the chump change from between the break room couch cushions.
This isn't chump change for Microsoft (Score:5, Informative)
Microsoft has a great balance sheet [yahoo.com] with a lot more cash than debt, but this will have a major impact on the cash:debt ratio.
FWIW, $29B is almost 1/3 of their cash on hand.
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It is chump change, and Microsoft has already won. The issue stems from taxes in 2004. If Microsoft can stall this out sufficiently, the cost of money means that Microsoft got a taxpayer subsidized loan.
In 2004, Microsoft's stock price was about $25. Microsoft stock is currently at $332. So by keeping the money, Microsoft netted a 10x return, against whatever the final reduced settlement with the IRS might eventually be.
What was the opportunity cost of the IRS for this effort? After spending 19+ year
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MS does get any money when their stock price goes up. Their executives that hold the stock can realize gains, their other shareholders can realize gains. If MS were to buy its stock in a buy-back, it would cost them more at the elevated price.
Re:This isn't chump change for Microsoft (Score:4, Informative)
It is "$28.9 billion in taxes, plus penalties and interest" which could be very substantial, in which case it wouldn't be a "subsidized loan".
https://www.washingtonexaminer... [washingtonexaminer.com]
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What was the opportunity cost of the IRS for this effort? After spending 19+ years getting Microsoft for this issue, how many other issues with how many companies were missed???
It has largely been back-burnered. Many large enforcement issues have been put off for years due to lack of IRS funding to pursue them. Now that they are acting on it, this will require a team of IRS attorneys years in court/negotiating with the MS legal team to reach a settlement. The big loss to the US is that, thanks to inflation, the money recovered will be worth a lot less than it was originally.
Expect to see more actions like this now that IRS enforcement funding has been allocated. Unless congres
Re: This isn't chump change for Microsoft (Score:2)
The IRS will charge interest and penalties for late tax payments.
I doubt this would amount to a "free loan" in any sense.
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It was a joke.
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Probably has to something to do with Microsoft's cookie jar reserves (revenues earned in one year, but not recognized until a following year).
Microsoft then recognizes some of these revenues in "bad" quarters to smooth out revenue.
Cookie jar reserves are *NOT* GAAP.
In addition, it means they're recognizing taxable income *years* after it was earned and due.
So now the IRS is upset.
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On the bright side, MSFT will dig up the chump change from between the break room couch cushions.
That's a lot of coin. Lucky thing Bill was "meeting the interns" on that couch.
There's only one word for that (Score:1)
"ouch"
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Frankly... (Score:4, Insightful)
I'm tired of companies using creative accounting to stiff the countries involved of the taxes owed. Taxes are not theft and it is a sign of maturity and responsibility to pay them properly in a timely manner.
Of course, the tax code is so full of holes the Swiss could use it as a template for making cheese. It would be far better if the US tax code was greatly simplified with an almost total elimination of schemes to "incentivize" good behaviour. (Because it doesn't. It simply gives incentives to dodge taxes.)
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If someone gets fired at MSFT for this, then i'll buy that maybe this was a mistake. Don't hold your breath.
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This (Score:2)
And a *lot* of that comes from federal money.
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Counterpoint: taxes are not in fact theft. you have the option to not pay taxes (and not go to prison) you just probably won't like the lifestyle that you will have to live but, you know, something about cakes and eating them too...
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There is one way to not pay taxes and that is to not have income every year. The down side is generally no income means no spending. Ao unless you won the lottery and are living off the millions in you bank account then you dont have taxes to pay. Do not invest that money just sit on it. No savings accounts, no interest, just cash on hand.
You wont pay taxes
Now unless you are a multi millionare that option isnt practical some Alaskans can get away with subsistenace living, but they dont live very we
Re:Frankly... (Score:4, Informative)
Exactly.
Don't want to pay income tax? Don't make income.
Don't want to pay property taxes? Don't own property.
Don't want to pay sales taxes? Don't buy from standard retail and just barter personally for all your goods.
All these these aspects of civilized society hinge on a combined public good and governmental institutions. Businesses exist as a legal concept which requires regulation and enforcement and a judicial system. The concept of private property also hinges on those things (without the state and what it brings your ability to own a block of land hinges on your ability to use violence to defend it)
If you want to partake in society it comes at a cost.
Re:Frankly... (Score:4, Informative)
Taxes have been an aspect of civilization since civilization began. Some of the earliest proto-writing found in Mesopotamia were taxation records. Simply put, you cannot have a civilization based on voluntary payment or good will. You want public works, courts, law making and all the other functions of any kind of state, you need a tax regime.
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Counterpoint: taxes are not in fact theft. you have the option to not pay taxes (and not go to prison) you just probably won't like the lifestyle that you will have to live but, you know, something about cakes and eating them too...
So by your logic, the government is not in fact taking something that's yours because the other option is for the government to take your freedom, something else that is yours?
When a school bully takes your lunch money, that's not stealing. You always have the option of getting beaten up!
FWIW, I'm pro taxes and think tax rates should be higher in the US with fewer loopholes. But your argument is garbage and not helping at all.
Re:Frankly... (Score:5, Insightful)
So by your logic, the government is not in fact taking something that's yours because the other option is for the government to take your freedom, something else that is yours?
No, i specifically called out the fact that you can not pay taxes and also not go to prison if you live by a certain lifestyle. You go to prison for not paying taxes that are owed. The way you get out of paying taxes is not not owe them in the first place. Every tax you pay is based on an action you partake in society.
When a school bully takes your lunch money, that's not stealing. You always have the option of getting beaten up!
You do actually. Let's use a better analogy, you want the school staff to protect you from the bully and punish the bully but you don't want to pay for any of those people.
Re: Frankly... (Score:4, Informative)
No, the other option is for some one else to take what belongs to you because there is no government to stop or hold them accountable.
Everyone who is against taxation is in favor of feudalism and unaware that they would almost certainly be a serf, because there are far fewer non-plebians in such a system. Many of them think they are actually in favor of some other system, but all of their proposed systems lead naturally to feudalism.
Re: Frankly... (Score:4, Insightful)
It's not fucking theft if you are receiving services rendered for tax payments. Your "bully" analogy is fantastically stupid, because the bully doesn't take your lunch money and then build a god damn road with it that you then drive on as many times as you like, or start jailing other bullies for taking others lunch money.
If you like society, pay your fucking taxes. Or go somewhere else if you don't like it, but good luck with that.
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Okay, but we get to pry them before you are cremated.
Companies benefit from the justice system, the regulatory system, the gov. supplied health care, the government supplied defense, etc. Companies owe the U.S. and the U.S. pop. a lot.
You seem to want to live in a dog-eat-dog world.
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And it's worse if they can declare those conflicting statements in the same country. I can understand if there really are two different entities - one making money in a different country, and one losing money in yet another country. However too often I see a company saying it's not making tha
Re: Frankly... (Score:3)
Simple answer, stop taxing corporate profits and tax corporate INCOME. They could still write off actual expenses, but NOT including dividends.
Take 10 slices of swiss cheese (Score:2)
I bet you don't have any holes going all the way through anymore, do you?
That's how public health works. It's why you mask up during an outbreak even if you're vaxxed.
One of the problems is that a lot of people desperately want simple answers to complex problems because they want to believe they can understand every aspect of the world they're forced to interact with.
But as the saying goes, for every suffi
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For once I agree with you - simplicity does not guarantee a tax code is "good" by any reasonable standard, for example proportional to consumption of goods and services. Bankers can invent a lot of crafty ways to multiply wealth and enable consumption without generating taxable income if you define income in any simple (naive) way. I'm sure some of the complexity is to create loopholes, but a lot of it is also to close them.
Simplicity does not mean good. But it means it's easier to assess what's not working. Without worrying about lots of side effects.
It's a lot like computer code. Would you rather try to solve problems with simple code or spaghetti?
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That's how public health works.
Public health in the US is complex and inconsistent and barely works at all when it does work mostly because of decades-long opposition from the American Medical Association. A PAC representing doctors who treat symptoms is not going to lobby to prevent the causes of those symptoms.
One of the problems is that a lot of people desperately want simple answers to complex problems because they want to believe they can understand every aspect of the world they're forced to interact with.
You do realize that you brushed aside the desire for simple answers by providing a simple answer, don't you? Just pointing it out because it made me laugh.
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And it makes it unfair for small companies that can’t take advantage of the big companies that pay almost no tax.
Will. the IRS... (Score:3)
LOL - We're tax cheats, but not THAT big! (Score:2, Troll)
IRS: We have reason to believe you've cheated the United States of America out of $29,000,000,000.
Microsoft: Ha, gotcha dumbasses. We've only actually cheated the good citizens of the United States out of $19,000,000,000.
IRS: Oh no... you sure told us...
I really hope the IRS uses that statement as evidence of knowing intent to defraud the federal government and hits them with an additional $10B fine.
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Once a company reaches a certain level, there are going to be disputes between what the company thinks it owes and what the IRS thinks it owes. The bigger the company, the bigger the discrepancy. There's usually a settlement somewhere in between, but occasionally one side pushes it into court.
The disagreements usually aren't this big, but there probably should be more. It's notable that this is for a 10-year period ending in 2013, meaning that this audit has been open at the IRS for a long time. It can take
There also good news (Score:2)
To pay up, they have time 'til next Monday.
What About My Neighbor, Bob? (Score:1)
Doesn't the IRS have better things to do than shake down our storied corporations, when there are perfectly good citizens to shake down? I thought the job of the IRS was to instill fear into the masses?
Re: What About My Neighbor, Bob? (Score:2)
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One of the stated goals with the funding increase they received was a renewed focus on corporations and the wealthy.
IRS announces sweeping effort to restore fairness to tax system with Inflation Reduction Act funding; new compliance efforts focused on increasing scrutiny on high-income, partnerships, corporations and promoters abusing tax rules on the books [irs.gov]
One of the reasons for this is that those cases take a lot more time and requires much more experienced tax officials to work on for the long haul and th
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[sarcasm] Nuh-uh! According to that paragon of reporting, Fox News, and every true Republican within reach of a microphone [youtu.be], the IRS is readying an brigade of ">well-armed tax enforcement agents [slashdot.org] ready to kick down the doors of God-fearing honest 'Muricans! [/sarcasm]
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Who knew conservatives actually believed in "defunding the police" eh?
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Re: What About My Neighbor, Bob? (Score:3)
Only when it's the guys that police their donors, limiting the amount of surplus cash those donors have to bribe^H^H^H^H^H donate.
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The job of the IRS is to collect taxes and that requires policing the tax code so companies like MS do not weenie out of their fair share.
Want to get rid of the fear? Simplify the tax code so that it is clear what people owe, then an audit wouldn't be so scary.
Your comment is another of those moronic anti-government kvetches masquerading as jab to tickle others like you.
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Aww. Poor baby has to resort to name calling to make his useless fucking point. Sheep up.
Re: What About My Neighbor, Bob? (Score:2)
Yeah, because I'm sure the two are mutually exclusive - pretty sure this is an AND rather than XOR.
Corporate tax code is very different from personal tax code, and thus enforcement would fall to two different departments within the IRS.
Great way to pay off US debt! (Score:2)
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We both need entitlement reform and higher taxes. SS and Medicare are not throwing money away unless you could giving SS to the wealthy....but that latter is a pittance. SS and Medicare are 2/3 of the fed. budget.
One thing they could do is eliminate the cap on SS income taxes. If you work in the U.S., you owe the American society. Making over the cap does not mean your obligation stops there.
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To actually seriously comment... We need to do both. Plug the holes at the bottom of the sieve, and start pouring more into it.
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Unfortunately we are barreling into the same situation Greece found itself in a decade-ish (?) ago: An unsustainable financial situation that had to be solved by years severe austerity measures and high taxes. Eventually we have to figure out that we can't spend our way out of debt.
The only point I would disagree on is the "Left spends more". Both parties are equally as guilty on this aspect, they just like to spend it on different things.
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Clarification is that the right cuts taxes and spends more which drives up the deficit. The 2017 Tax-Cuts-and-Jobs-Act was a tax cut that was almost entirely funded by deficit spending to make up the revenue shortfall. Bush Jr., Bush Sr and Reagan also ran up big deficits when in office as well. The idea that Republicans are these budget hawks that restrain spending is an illusion they have cast by just saying it over and over but never actually doing it.
Re: Great way to pay off US debt! (Score:2)
So we should just let tax cheats not pay billions, because it's not enough billions to take care of an entire nation's debt in one payment?
You didn't think before writing that, did you?
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The best governments are small, local, and accountable; the federal level should be limited to actual defense (over $100B to Ukraine for the war machine?!?). We're spending 10% of our ridiculous national budget on interest alone. Social Security is a giant Ponzi scheme which prevents investment and growth.
The problem i
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By the way, I highly doubt MS were being tax cheats at all. The tax system is extremely complex, and there is a lot of gray area in accounting. The reporting burden, on companies and individuals, is a lot of friction that prevents productive work.
Courageous (Score:2)
[Microsoft said up to $10 billion in taxes ... are not reflected in the proposed adjustments ... and is willing to go to judicial proceedings, if necessary.
Wow, willing to go to judicial proceedings... they must really believe in the rightness of their position!!
Re: Courageous (Score:2)
Nah, they believe in lawyers delaying as long as possible, because they make more money having it in their pockets as long as possible before being forced to pay up by a federal judge.
And the lawyers are likely in-house counsel, so they are paying their salaries regardless.
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Billy boy didn't listen to his dad (Score:1)
Dictionary update (Score:2)
Schadenfreude is being updated by Merriam Webster as we speak.
The number is large enough... (Score:2)
... to ensure they'll litigate it as thoroughly as possible. It's worth chasing every last angle of attack.
I'm surprised it's even possible to go back to 2004... that's pretty amazing. In fact, it might be perfectly legal for MS to have destroyed records from that far back as part of their retention policy.