MSFT · 10-K · 2025A · Full report
Tax Audit Contingency (IRS NOPAs)
MICROSOFT CORP · 2025-07-30 · Importance 71 · Surprise 60
Microsoft remains under IRS audit for tax years 2014–2017 and received Notices of Proposed Adjustment (NOPAs) on September 26, 2023 for tax years 2004–2013 related to intercompany transfer pricing. In the NOPAs the IRS is seeking an additional tax payment of $28.9 billion plus penalties and interest, an amount the company says it disputes and will contest through administrative appeals and, if necessary, judicial proceedings. As of June 30, 2025, Microsoft believes its allowances for income tax contingencies are adequate and does not expect a final resolution within the next 12 months. Based on current information, management does not anticipate a significant increase or decrease to its income tax contingencies for these issues in the next 12 months.
Key facts
- Microsoft is subject to Notices of Proposed Adjustment from the IRS seeking an additional tax payment of $28.9 billion plus penalties and interest related to tax years 2004 to 2013.
- As of June 30, 2025, Microsoft believes its allowances for income tax contingencies are adequate and does not expect a final resolution of the IRS NOPAs within the next 12 months.
- Microsoft remains under IRS audit for tax years 2014 to 2017.
Impact estimates
| metric | direction | stage | expected | basis |
|---|---|---|---|---|
| liability | negative | contingent | -0.7% | Microsoft is subject to Notices of Proposed Adjustment from the IRS seeking an additional tax payment of $28.9 billion plus penalties and… |
| liability | negative | contingent | — | As of June 30, 2025, Microsoft believes its allowances for income tax contingencies are adequate and does not expect a final resolution of… |