Revenue Procedure 2000-26: The Guidance for Taxpayers and IRC 6621(d)

On May 24, 2000, the IRS issued a procedure providing guidance to taxpayers seeking to obtain the benefits of IRC 6621(d) net rate zero interest rateIRC Sec. 6621(d), which was enacted in 1998, is a direct legislative response to the IRS’s sluggishness in remedying the interest rate differential’s inequity. IRC 6621(d) eliminates the interest rate differential in overlapping periods of equivalent underpayments and overpayments by equalizing the interest rates for underpayments and overpayments— netting it to zero.

Included in the initial paragraph was the following statement: “The Service will take reasonable steps to identify overlapping periods of tax overpayments and underpayments and apply the zero net interest rate. To ensure that taxpayers receive the benefit of the zero net interest rate, they should request the rate or request the Service recompute the rate on or before the date on which the last applicable period of limitation closes”.  Further on page 2 of the procedure, another statement concerning the IRS’ complications with implementing Section 6621(d):  “The Service does not currently have the ability to automatically apply the net rate of zero in §6621(d).  Congress recognized this current limitation and intended that until such time as procedures are implemented that allow for the automatic application of §6621(d) by the Service, the Service will promptly and carefully consider any taxpayer’s request to have interest charges recalculated in accordance with §6621(d)”.

Revenue procedure 2000-26 is still in effect and provides the guidance for taxpayers seeking to obtain the benefits of IRC 6621(d).  After 19+ years, the IRS does not automatically apply the net rate of zero in IRC 6621(d).  It remains the taxpayer’s responsibility to initiate actions to recover any overpaid or underpaid interest as a result of applying IRC 6621(d) to federal interest calculations.

Ashland has the experience and know-how to assist its clients in obtaining the benefits of interest netting.  Ashland employs individuals with a working knowledge of IRC 6621(d) and Revenue Procedure 2000-26.