Interest Netting Rules Don't Provide Full Measure of Taxpayer Relief.

The IRS's recently issued procedures concerning the netting of interest when a company has overlapping tax underpayments and overpayments do not fully address Congress's mandate for taxpayer equitable relief as set forth in the IRS Restructuring and Reform Act of 1998, according to TEI. The 1998 Act, through the establishment of Internal Revenue Code section 6621(d), provides for a net interest rate of zero for under-and overpayments of tax, and the IRS's proposed "transition rule" is intended to address netting for periods prior to the Act's July 22, 1998, general effective date.

The proposed transition rule, TEI said in May 12 comments to the IRS, continues the inequity of the current law. "The enactment of section 6621(d) signaled Congress's desire to return fairness and equity to the Code's rules on charging for the use of funds," said TEI President Lester D. Ezrati. "TEI is disappointed, however, that the Treasury Department and IRS have not embraced the spirit of the legislative rule and provided a full measure of relief. Hence, although it is possible to interpret the transition rule to permit netting when the statute of limitations is open for either the year of the overpayment or underpayment, the proposed regulations require that the statutes of limitations for both the underpayments and overpayments be open in...