--- title: "The IRS Says Microsoft Owes More in Back Taxes Than It Invested in OpenAI" description: "The IRS says that Microsoft owes tens of billions of dollars in back taxes — and apparently, the company isn't buying it. " date: "2023-10-12" modified: "2023-10-12" authors: - name: "Noor Al-Sibai" job_title: "Senior Staff Writer" link: "https://futurism.com/authors/nooralsibai" url: "https://futurism.com/the-byte/irs-microsoft-back-taxes" categories: - "Artificial Intelligence" - "Future Society" - "OpenAI" tags: - "irs" - "microsoft" - "taxes" - "the digest" --- # The IRS Says Microsoft Owes More in Back Taxes Than It Invested in OpenAI ![The IRS says that Microsoft owes tens of billions of dollars in back taxes — and apparently, the company isn't buying it. ]() *20 September 2023, North Rhine-Westphalia, Cologne: The Microsoft logo at the Digital X Internet Congress in the Media Park. Photo: Rolf Vennenbernd/dpa (Photo by Rolf Vennenbernd/picture alliance via Getty Images) \Image: Getty Images\* ## Death and Taxes The Internal Revenue Service (IRS) says that Microsoft owes around $30 billion in back taxes — which, for those keeping score, is nearly triple what the [company invested]() in OpenAI earlier this year. In a blog post, [Microsoft executive Daniel Goff said]() that the IRS had sent the company notice that it owes a $28.9 billion tax balance "plus penalties and interest," dating back to a time period between 2004 and 2013. The tax adjustments, the corporate VP for taxes wrote, are the result of a now-closed IRS audit related to Microsoft's former financial dealings. "We have changed our corporate structure and practices since the years covered by the audit," Goff wrote in the update, "and as a result, the issues raised by the IRS are relevant to the past but not to our current practices." Up to $10 billion of that bill, the executive continued, could have been covered under payments Microsoft made following the passage of the [Tax Cuts and Jobs Acts]() in 2017, which reduced corporate income tax rates. As such, it plans to do some wheedling to pay less. "Microsoft disagrees with these proposed adjustments and will pursue an appeal within the IRS, a process expected to take several years,” the company argued in a [Securities and Exchange Commission filing](). “We believe we have always followed the IRS’s rules and paid the taxes we owe in the U.S. and around the world.” ## Money Moves In that same SEC filing, the company said that what it's paid already in taxes — $67 billion since 2004, the beginning of the audit period — is "adequate," and the company "will vigorously contest" the adjustments. It's striking that the tax bill is nearly three times the size of [Microsoft's $10 billion OpenAI investment]() from the beginning of 2023, which was officially announced mere days ahead of [massive job cuts](). News of this tax bill also dropped, as [*The Verge* pointed out](), just a few days shy of the expected closure date of Microsoft's deal to [purchase the video game company Activision Blizzard]() for a cool $68.7 billion — a merger the [Federal Trade Commission has tried to block]() because, as the agency alleges, it's being done as an attempt to suppress competition for the company's Xbox console line. For a [company like Microsoft](), a tax bill ranging in the tens of billions of dollars is par for the course — but it's striking, to say the least, to watch the company vow to battle federal agencies over chump change compared to its various business deals. **More on Microsoft:** [*Microsoft Lobotomizes Bing's Image Generating AI*]() ## Author At Futurism, I've often been drawn to unpacking the narratives that underlie technological, scientific and medical progress, with a special interest in areas of conflict and ambiguity that end up setting agendas and steering the fates of both elites and the hoi polloi. I'm a committed generalist, but I often find myself returning to work involving NASA and the private space sector, the effects of AI on media and society, and the mechanics of the pharmaceutical industry, with a specific focus on the spread of GLP-1 drugs like Ozempic and Wegovy. Prior to Futurism, I worked for publications ranging from Media Matters and Truthdig to Raw Story and Bustle. I'm also the author of "Myspace Scene Queens," a 2024 title in Instar Books' acclaimed "Remember the Internet" series. My work at Futurism has been cited by outlets including the New Yorker, Slate, Nieman Lab, the Verge, the MIT Technology Review, the Sunday Times, and the Daily Beast. I grew up in North Carolina, attended the University of North Carolina at Asheville, and now live in Brooklyn, New York. In my free time, I'm an avid reader and music fan; you can probably find me at a local poetry reading, concert, underground rave, or DJ set. I'm the proud parent of an ineffable orange cat named Mee-Mow. ### Author social links [Bluesky]()