Microsoft said the US Internal Revenue Service (IRS) in September notified the company that it is seeking an additional tax payment of US$28.9 billion (S$39.36 billion), plus penalties and interest for tax years from 2004 to 2013.
Microsoft said the IRS notices relate to an ongoing dispute between the company and the US tax authority, which is auditing how Microsoft allocated its profit among different countries and jurisdictions.
The Redmond, Washington-based company said it has since changed its practices so that "issues raised by the IRS are relevant to the past but not to our current practices," according to a Microsoft blog.
Microsoft said it believes that any taxes owed after the audit would be reduced by up to US$10 billion based on tax laws passed by former President Donald Trump.
The company said it disagrees with the IRS's findings and plans to dispute them, first in an internal IRS proceeding and then later, if necessary, in courts.
The IRS told Reuters it is prevented by US law from confirming or denying whether it is auditing any taxpayer.
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