Clark Armitage Comments on Dispute Between IRS and Microsoft Over Back Taxes

The Messenger

Multinational companies have long used offshore havens to reduce their U.S. tax bills, but the sheer size of Microsoft Corp.’s disclosure that it may owe nearly $29 billion in back taxes has jolted industry experts.

The technology giant said Wednesday in a securities filing that the Internal Revenue Service has asserted that the company owes $28.9 billion in taxes on its global operations for 2004-2013, plus more for penalties and interest.

. . .

Said J. Clark Armitage, an international tax lawyer at Caplin & Drysdale in Washington, D.C.: “It’s a huge number.”

. . .

It’s not clear what type of penalties Redmond, Washington-based Microsoft might face, but interest could add more than $2 billion to the final bill, Armitage said.

. . .

The agreements are particularly lucrative for companies whose core asset is intellectual property with lucrative royalties, like Microsoft. “All the value in Microsoft is in the IP — that’s what gives rise to their profitability,” Armitage said

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