MSFT · 10-K · 2026A · Full report

Tax Audit Contingency

MICROSOFT CORP · 2026-07-29 · Importance 58 · Surprise 42 · Matches filing data

The IRS continues auditing Microsoft for tax years 2014 through 2017, while the audit for tax years 2004 through 2013 has progressed to Notices of Proposed Adjustment. The IRS is seeking an additional $28.9 billion in tax, plus penalties and interest, primarily related to intercompany transfer pricing. As of June 30, 2026, Microsoft believed its income-tax contingency allowances were adequate and disagreed with the proposed adjustments. Microsoft intends to contest the NOPAs through the IRS administrative appeals process and, if necessary, judicial proceedings.

Key facts

• We remain under audit by the IRS for tax years 2014 to 2017 and the IRS issued Notices of Proposed Adjustment for tax years 2004 to 2013 seeking an additional tax payment of $28.9 billion plus penalties and interest. source
• The Company engaged Deloitte & Touche LLP, an independent registered public accounting firm, to audit and render an opinion on the consolidated financial statements and internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). source

Impact estimates