Many big names in the US tech sector get accused of not paying taxes. In Microsoft’s case, there is an on-going investigation on how they have moved money around between different subsidiaries. However the IRS does not conduct these investigations themselves, instead they hire other firms to do the work. Microsoft is currently suing the IRS because they haven’t completely responded to a request for more information.
In the United States, there is a law called the Freedom of Information Act or FOIA, which requires government agencies to provide information upon request. Microsoft issued a FOIA request to the IRS concerning the details of the contract they had with a company who is conducting an investigation into Microsoft’s tax behavior.
The investigation centers around how Microsoft moved money around within the business between 2004 and 2009. The IRS may suspect that Microsoft has moved this money in an attempt to avoid paying taxes on it. Quinn Emmanuel Urqhart and Sullivan is a business litigation firm who was hired by the IRS to investigate Microsoft in this matter and Microsoft wants the know the details of the contract between them and the IRS.
Microsoft has already sent one FOIA request to the IRS but was not satisfied with the response. This current lawsuit is an attempt to require the IRS to fully respond to the FOIA request and not omit any details. It is unclear what Microsoft plans to do with the information they receive about the contract, and it is possible they will never disclose how they plan to use that information.Further reading: IRS, Microsoft