IRS’s $28.9 Billion Tax Claim Against Microsoft, Explained

Microsoft Corp. became the latest tech giant to join a club of companies to do battle with the IRS over transfer pricing tax claims this week after the agency said the company owed the government $28.9 billion in unpaid taxes.

The company announced the IRS’s claims Wednesday and said it will appeal them.

It’s the latest tech company the IRS has gone after for additional tax dollars it believes were left unpaid due to improper transfer pricing—the pricing of goods and services exchanged within a multinational group. Governments seek to have these transactions priced as if they were ...