State Insights

State Insights

State Insights

Interest Netting May Be Worth More Than You Think

It may be worth your while to reexamine the benefit of IRC Sec. 6621(d)’s interest netting to the amount of interest paid to and received from the IRS. Recent court decisions have expanded the meaning of “same taxpayer” by allowing interest netting between parents and their subsidiaries with different taxpayer identification numbers (TIN).   Ultimately, you may find interest netting applies to underpayment-overpayment scenarios the IRS would have previously barred, and Interest Netting may be worth more than you think. Background on Interest Netting Corporate taxpayers pay interest on tax underpayments and receive interest from overpayments. Interest on underpayments is charged

Statute of Limitations for Interest May be Much Longer Than You Think

The statute of limitations (SOL) for an interest claim runs two, three, or six years depending on whether the interest you’re claiming arose out of an underpayment or overpayment. Understanding which limitations period applies is an essential step in protecting your rights to file an interest claim. Congress has clearly distinguished between interest charged on a tax deficiency and interest paid by the government for an overpayment. The IRC (Title 26) and Title 28 of the U.S. Code clearly set forth these varying statutes of limitations for each type of interest claim. SOL for Underpayment Interest Claims If you anticipate

The Court of Appeals for the Federal Circuit denies refund of additional interest requested by the Ford Motor Company (Nov. 13, 2018)

The Court of Appeals for the Federal Circuit has affirmed a decision by the U.S. Court of Federal Claims (Fed Cl, 2017-1 USTC ¶550,239) which denied the Ford Motor Company’s (Ford) claim that the Parent and its wholly owned Foreign Sales Corporation (FSC) were the “same taxpayer” for purposes of global interest netting.  This decision regarding the definition of “same taxpayer” for purposes of interest netting allowed by IRC section 6621(d) helps taxpayers understand under which situations the courts will allow Parents and subsidiaries to perform interest netting. Ford tried to argue that the form of the FSC should be

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 rate.  IRC 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

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