The Internal Revenue Service (IRS) says that Microsoft owes the US government some $28.9 billion in back taxes, along with penalties and interest.
Microsoft disputes the charge, and said that it would “vigorously contest” them.
In an SEC filing, Microsoft revealed that it had received a Notice of Proposed Adjustment for the tax years 2004 through 2013 based on how the company had allocated its profits among different countries and jurisdictions.
The company has since changed its corporate structure and practices, so later years are not covered by the dispute.
"Microsoft disagrees with these proposed adjustments and will pursue an appeal within the IRS, a process expected to take several years," Daniel Goff, Microsoft CVP of worldwide tax and customs, said in a blog post.
"We strongly believe we have acted in accordance with IRS rules and regulations and that our position is supported by case law."
Goff added that the charge also did not take into account taxes paid by Microsoft under the Trump-era Tax Cuts and Jobs Act (TCJA), which could decrease the final tax owed under the audit by up to $10 billion.
