Taxpayer cannot repay prior interest-netting benefit to choose better periods

Plain-English summary

Chief Counsel considered whether a taxpayer could voluntarily repay a valid interest-netting benefit and then apply netting to different periods with a larger interest-rate difference. The advice concluded that the taxpayer could not do so. Neither section 6621 nor its legislative history permits a taxpayer to undo non-erroneous interest netting after properly using it. The memorandum instructed that any such taxpayer request should be forwarded to Chief Counsel for evaluation.

Ruling snapshot

• Question: May a taxpayer repay a valid interest-netting benefit to use netting for more favorable periods?
• Outcome: Advice given
• Key authorities: IRC § 6621

Full text (IRS public release)

ID: CCA_2015072712521946
UILC: 6601.10-00

Number: 201534012
Release Date: 8/21/2015
From:
Sent: Monday, July 27, 2015 12:52:19 PM
To:
Cc:
Bcc:
Subject: RE: POSTN-117436-15

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You have asked whether a taxpayer can voluntarily repay the benefit of non-erroneous
interest netting, in order to realize a greater benefit by netting periods with a greater
interest differential than the periods for which netting was previously applied.

A taxpayer cannot do this. There is no provision in section 6621 or its legislative history
for a taxpayer to voluntarily repay the benefit of non-erroneous interest netting, in order
to realize a greater benefit after the taxpayer has properly “used” it for interest netting. If
you receive such a request from a taxpayer, please forward it to us for evaluation.

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