The European Commission is expected to levy a judgment against Apple in the next few months that could total in the billions of euros.
JPMorgan has estimated that Apple could be on the hook for as much as $19 billion--or about 17 billion euros--the Financial Times reports.
The commission is accusing Apple of striking a sweetheart tax deal with Ireland, in which the iPhone maker would move its profits to wholly owned Irish subsidiaries to reduce its corporate taxes.
Apple has one major defender in its corner, though: the US Treasury Department and, by extension, the Obama administration.
The Treasury released a white paper on Wednesday, commissioned by Treasury Secretary Jack Lew, that did not mince words while defending American companies, including Apple, Starbucks, and Amazon.
It says that the Brussels-based investigation of Apple is "supranational" and essentially accused the European Commission of executing a power grab and unfairly targeting American companies.
Here's the money quote from the paper (emphasis added):
"The U.S. Treasury Department continues to consider potential responses should the Commission continue its present course. A strongly preferred and mutually beneficial outcome would be a return to the system and practice of international tax cooperation that has long fostered cross-border investment between the United States and EU Member States."
Tax is one of the biggest and most touchy policy issues for Apple. Congress investigated Apple's tax arrangements in 2013, which led to CEO Tim Cook testifying before a US Senate subcommittee.
Apple has billions of dollars held offshore that it would love to bring back to the US, but Cook has said that he thinks the system is unfair.
"The money that's in Ireland that he's probably referring to is money that is subject to U.S. taxes. The tax law right now says we can keep that in Ireland or we can bring it back," Cook told The Washington Post. "We've said at 40 percent, we're not going to bring it back until there's a fair rate. There's no debate about it. Is that legal to do or not legal to do? It is legal to do. It is the current tax law."
"It's important for everyone to understand that the allegation made in the E.U. is that Ireland gave us a special deal. Ireland denies that," Cook said.
Based on the release of Wednesday's paper, it sounds as if Apple can continue to rely on the Treasury's support while navigating this multibillion transatlantic spat.