CCA 201016061: Merger structure may affect post-merger interest netting under section 6621(d)

Plain-English summary

Chief Counsel Advice discusses whether interest on overpayments from pre-merger years may be netted against interest on underpayments from post-merger years under section 6621(d). The email raises an Energy East Corporation decision that appeared to reach a different conclusion and notes that the corporate structures differed because the corporations in that case survived the merger. It asks whether that distinction affects the IRS position on using pre-merger overpayments for post-merger interest netting. The released text does not state a final answer.

Ruling snapshot

• Question: Can pre-merger overpayments be used for post-merger interest netting under section 6621(d) when a court decision involves a different merger structure?
• Outcome: Advice given
• Key authorities: IRC § 6621(d); Energy East Corporation v. United States

Full text (IRS public release)

ID: CCA_2010031517403148 Number: 201016061
Release Date: 4/23/2010
Office: ------------------
UILC: 6621(d)

From: -------------------
Sent: Monday, March 15, 2010 5:40:39 PM
To: ----------------------
Cc: ---------------------------------------------------------------- Subject: FW: Netting case - memebers of consolidated group not same TP

Attachment: Energy EastCorp V. United States

Hi ---------

---------------------------forwarded your memo in the ------------, ------------, --------------- case on 6621(d) concluding that the interest for overpayments from --------------- in pre-merger years could be netted with the interest payment for underpayments of ----------- in post-merger years.

This case below, Energy East Corporation, from the Federal Claims court seems to come to a different conclusion. In the case below, the corporations survived the merger unlike the --------------- case that merged into ------------ with ------------ surviving. I don't know if that makes a difference. Could we talk to see if we still think ------------ can use the overpayments by --------------- prior to the merger for interest netting after the Energy East decision? I suppose we don't want to take a position that is inconsistent with the court decision. But I would like to hear from you whether there is an IRS position on this.

Thank you.

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