Microsoft CEO Satya Nadella Microsoft Microsoft's stash of cash stored overseas, not subject to U.S. taxes, is growing.

In its latest regulatory filing, the software giant said it has now stockpiled $92.9 billion offshore and that this money could have cost the company $29.6 billion in taxes, but didn't.

That compares to $76.4 billion from the previous year, worth an estimated tax bill of $24.4 billion, according to a report released in May from Washington think tank Citizens for Tax Justice.

Here's the exact language Microsoft used in the filing to discuss its offshore cash:

As of June 30, 2014, we have not provided deferred U.S. income taxes or foreign withholding taxes on temporary differences of approximately $92.9 billion resulting from earnings for certain non-U.S. subsidiaries which are permanently reinvested outside the U.S. The unrecognized deferred tax liability associated with these temporary differences was approximately $29.6 billion at June 30, 2014. Income taxes paid were $5.5 billion, $3.9 billion, and $3.5 billion in fiscal years 2014, 2013, and 2012, respectively.

Just to give you an idea of how much money $30 billion is, that's how much Microsoft's home state of Washington will spend in two years, reports International Business Times' David Sirota, who first noticed Microsoft's increase in offshore cash.

Foreign Sales Mean No U.S. Taxes

U.S. corporations don't have to pay taxes on income they earn overseas as long as they also spend that money overseas. If they try to "repatriate" the money — bring it back to spend in the U.S. to, say, pay shareholder dividends or hire new employees or make an acquisition — they are taxed at a high 35% rate, less any taxes they already paid on the money in the country where it was earned, according to the CTJ.

However, like all things taxes, it's not that simple.

There's been growing debate over how some companies assign income to overseas subsidiaries. For instance, a company can license patents to foreign offices that have lower tax rates. When the company sells a product that relies on those patents, it gets to assign at least some of that money to the foreign office and not pay U.S. taxes on it. That's true even if the tech was originally invented in the U.S.

In 2012, Microsoft top tax person, Bill Sample, explained during testimony to a Senate subcommittee looking into the offshore tax situation. He said:

The legal ownership of intellectual property developed as a result of our research and development activities generally resides with Microsoft Corporation in the U.S. In accordance with Internal Revenue Code Section 482 and applicable Treasury Regulations, our three foreign ROC [regional operating centers] groups, Ireland, Singapore and Puerto Rico, license the rights to use the relevant intellectual property to produce and sell Microsoft software products in their respective regions.

Lots Of Companies Do It

Apple Inc. CEO Tim Cook. REUTERS/Stringer Microsoft certainly isn't alone in stockpiling cash overseas, out of the reach of the IRS.

Fortune 500 corporations have stashed nearly $2 trillion in offshore accounts, saving about $550 billion in taxes, the CTJ says.

Microsoft isn't even the biggest cash hoarder. That would be Apple. In September, Apple reported it had $137.7 billion in offshore accounts. The CTJ report also found that Cisco had $48 billion, HP had $38 billion, Google nearly $39 billion, and Oracle $26 billion offshore, based on each company's latest annual report as of May.

And plenty of non-tech companies do the same: GE with $110 billion, Pfizer with $69 billion, and so on, says CTJ.

However the tech industry, led by Microsoft and Apple, are the poster children. The CTJ raised this red flag in its report:

A large number of the biggest corporations appear to be increasing their offshore cash significantly. 105 of the companies surveyed in this report increased their declared offshore cash by at least $500 million each in the last year alone. Eight particularly aggressive companies each increased their permanently reinvested foreign earnings by more than $5 billion in the past year. These include Apple, Microsoft, IBM, Google, and Cisco.

Looking For A Tax Overhaul

Cisco CEO John Chambers Fortune Brainstorm TECH 2014 None of this is illegal. Far from it. A corporation owes it to its shareholders to keep its tax bill as small as possible.

What these companies want is an overhaul of regulations that will permanently reduce the tax rate on repatriated cash.

They would also welcome something called a "tax holiday" which would give them a one-time pass to use the cash in the U.S., paying little to no taxes on the money.

Cisco CEO John Chambers has been advocating for a tax code overhaul on offshore cash for years.

Early last year, he even went so far as to say that Cisco would stop hiring U.S. employees or acquiring U.S. companies if the tax law wasn't changed. That turned out to be an empty threat. Cisco has since acquired U.S. companies including its $2.7 billion acquisition of Sourcefire last year.

A Catch-22

Using the offshore loophole to avoid paying U.S. taxes is also a Catch-22. Unless corporations can convince the U.S. to let them use that money without the high tax rate, or they give up and pay it, they can't touch the money at home.

When asked for comment on this story, Microsoft PR pointed us to a portion of Bill Sample's 2012 Congressional testimony:

Microsoft’s tax results follow from its business, which is fundamentally a global business that requires us to operate in foreign markets in order to compete and grow. In conducting our business at home and abroad, we abide by U.S. and foreign tax laws as written. That is not to say that the rules cannot be improved--to the contrary, we believe they can and should be.

In our view, the U.S. international tax rules are outdated and are not competitive with the tax systems of our major trading partners. These rules all too often provide a disincentive for U.S. investment.