CCA 200908040: Interest netting depended on same-taxpayer status

Plain-English summary

Chief Counsel answered several questions about netting overpayment and underpayment interest involving two corporate groups. The advice said § 6402 could permit an overpayment, including interest, to be offset against an underpayment in the stated circumstances. Section 6621(d) netting could remain available after either amount had been paid, but only when the overpayment and underpayment belonged to the same taxpayer. The email agreed that all members of the first group had to be liable for the second group's tax to satisfy that standard, while also agreeing that the first group's agent could request an offset in the final scenario presented.

Ruling snapshot

• Question: When could related corporate groups net overpayment and underpayment interest?
• Outcome: Advice given: netting under § 6621(d) required the same taxpayer, while an offset could be available under § 6402 in the stated circumstances.
• Key authorities: IRC §§ 6402 and 6621(d).

Full text (IRS public release)

ID: CCA_2008111815573118 Number: 200908040
Release Date: 2/20/2009
Office: -------------
UILC: 6621.00-00

From: --------------------
Sent: Tuesday, November 18, 2008 3:57:32 PM
To: ----------------------
Cc: ------------------------------------------
Subject: RE: Question(s) re Interest Netting ---------

My thoughts follow your questions. (I've numbered them.)

1. "Would interest netting be allowed under 6402?"

In the circumstances described, yes, I think the overpayment could be offset against the underpayment, including interest.

2. "if the overpayment including the interest has already been paid by the IRS and
   Group B acquires group A for the sole purpose of netting overpayment interest with underpayment interest is this allowable assuming they are the same taxpayer under Section 6621(d)? YES"

Agree. Section 6621(d) netting may be available even if either the underpayment or overpayment (or both), including interest thereon, has been paid.

3. "Would interest netting be allowed under 6621(d) even if their not the "same taxpayer" (ie some
   the former members of the A group are not part of B group)? No because there not the same taxpayer."

Agree.

4. "Conclusion all the members of Group A must be liable for the Tax of Group B to be considered
   the "Same Taxpayer" . True?"

Agree.

5. "If only half the members of Group A are liable for the tax of Group B Interest netting would not
   be allowed under 6621(d) because there not considered the same taxpayer. Even though these former members of Group A are both liable for B Group Tax and entitled Group A overpayment? However, if the Agent of Group A requests the overpayment (paid or unpaid) to be netted with Group B underpayment interest offset would be allowed. True?"

Agree.