October 18, 2023

Senator Warren Questions Microsoft over “Deeply Disturbing” Reports Company Owes IRS $28.9 Billion Due to Egregious Tax Evasion Scheme

“The new disclosures also raise new and troubling questions about Microsoft’s behavior after the audit began, and its efforts to derail the IRS and its ability to identify corporate tax evaders.” Inflation Reduction Act Contains New Corporate Minimum Tax, Billions of Dollars in New IRS Funding to Fight Corporate Tax Cheats

Text of Letter (PDF)

Washington, D.C. – U.S. Senator Elizabeth Warren (D-Mass.) sent a letter to Microsoft CEO, Satya Nadella, raising concern over reports that the company may owe nearly $29 billion in taxes. Last week, Microsoft’s SEC filings disclosed that “the IRS is seeking an additional tax payment of $28.9 billion plus penalties and interest” to make up for the company’s failure to fully pay its taxes from 2004 to 2013. 

“These are deeply disturbing disclosures, identifying what appears to be an egregious example of corporate tax evasion and misbehavior,” wrote Senator Warren. “They reveal that, for nearly a decade, Microsoft may have systematically underpaid its taxes by billions of dollars – rewarding shareholders and executives, while depriving the federal government of revenue needed to pay for health care, environmental protection, national defense, and more – and leaving middle class taxpayers to foot the bill.”

In the letter, Senator Warren also highlighted earlier reports indicating that Microsoft officials were aware of the company’s questionable behavior and “fought back with every tool it could muster” to derail the IRS’s audit activity, which came after Microsoft allocated billions in profits to a tiny subsidiary in Puerto Rico, where the company faced a near-zero tax rate from 2004 to 2013.

“You owe Congress and the public an explanation for your actions, particularly given reports that Microsoft intends to appeal and continue fighting the results of the audit, a process that is ‘likely to take years … (and) easily stretch into the late 2020s,’” concluded Senator Warren.  

Last year, Congress passed the Inflation Reduction Act, which allocated new funding to better equip the IRS to prevent these kinds of tax evasion schemes. The legislation also established a 15 percent corporate minimum tax to target giant multinationals – like Microsoft – who offshore jobs and profits to cut their effective tax rates to the bone. 

  • In October 2023, Senators Warren, Angus King (I-Maine), Richard Blumenthal (D-Conn.), Bernie Sanders (I-Vt.), Sheldon Whitehouse (D-R.I.), Brian Schatz (D-Hawaii), and Gary Peters (D-Mich.), sent a letter to Secretary of the Treasury Janet Yellen and Internal Revenue Service (IRS) Commissioner Daniel Werfel, urging their agencies to swiftly implement their recently proposed tax reporting requirements for crypto brokers after the agencies’ two-year delay in proposing the rule.
  • In August 2023, Senators Warren, Bob Casey (D-Pa.), Richard Blumenthal (D-Conn.), and Bernie Sanders (I-Vt.) sent a letter to the Department of the Treasury and the Internal Revenue Service (IRS), urging them to quickly propose and implement strong rules that close loopholes exploited by crypto tax evaders.
  • In February 2023, at a hearing of the Senate Finance Committee, Senator Warren questioned Daniel Werfel, President Biden’s nominee to be Commissioner of the IRS about Republicans’ decades-long plan to rig our tax system and make it easier for billionaires and giant corporations to cheat their taxes, including by slashing IRS funding so it lacks the resources to take on wealthy tax cheats.
  • In September 2021, Senator Warren published a report revealing how massive corporations and America’s wealthiest households are using extraordinary loopholes and increasingly complex schemes to avoid paying their fair share in taxes.
  • In August 2021, Senators Warren, Sheldon Whitehouse (D-R.I.), and Sanders sent a letter to then-IRS Commissioner Charles P. Rettig regarding the importance of providing the resources the IRS needs to go after wealthy tax cheats and provide faster and better service to the majority of Americans who are paying their fair share
  • In July 2021, Senators Warren, Whitehouse, members of the Senate Committee on Finance, sent a letter to Finance Committee Chair Ron Wyden (D-Ore.) calling for an investigation into last month’s deeply troubling ProPublica report describing how the nation’s wealthiest individuals are using a series of legal tax loopholes to avoid paying their fair share of income taxes.
  • In May 2021, Senator Warren introduced Restoring the IRS Act of 2021, which would provide the IRS with the resources it needs to go after wealthy tax cheats and close the tax gap.
  • In March 2021, Senator Warren and Representatives Pramila Jayapal (D-Wash.) and Brendan Boyle (D-Pa.) introduced the Ultra-Millionaire Tax Act, legislation that includes robust anti-evasion and avoidance measures and would level the playing field and narrow the racial wealth gap by asking the wealthiest 100,000 households in America, or the top 0.05%, to pay their fair share.