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TAX CLINIC

certifies the allowance of an overassess- After acknowledging that a literal to Sec. 6407 and 28 U.S.C. §§2401 and
ment in respect of any internal revenue reading of Rev. Rul. 56-506 may appear 2501; see also IRM §20.2.14.6.2(5)).
tax shall be considered as the date of contrary to the conclusion of the CCA, Note, however, that while a taxpayer
allowance of refund or credit in respect Chief Counsel explained that that ruling may file an administrative claim or
of such tax (see also Internal Revenue did not contemplate the filing of admin- request for additional overpayment
Manual (IRM) §§25.6.1.10.2.12.1(4) istrative claims for additional overpay- interest, this is not a requirement to
and 20.2.1.4.2.2.3(1)). ment interest and instead addressed only file suit. Although filing a claim for
A time frame within which a “civil whether the IRS could allow and pay refund with the IRS is a jurisdictional
action” — that is, a suit in district court overpayment interest when the taxpayer prerequisite for filing a suit for refund,
or the Court of Federal Claims — may filed its suit after the expiration of the no such statutory prerequisite exists for
be filed is provided in 28 U.S.C. Sec- six-year period. filing a suit for additional overpayment
tions 2401 and 2501. However, the IRS Chief Counsel instead looked to interest (see Sec. 7422 and 28 U.S.C.
has addressed the filing of administra- Rev. Rul. 57-242 to resolve the issue §§2401 and 2501; but also see IRM
tive claims for additional overpayment and interpreted the statement in that §25.6.1.10.2.12.1(2)).
interest in both formal and infor- ruling that overpayment interest “may Observation: If a taxpayer wishes
mal guidance. be allowed and paid upon request at any to file suit against the government for
Rev. Rul. 56-506 states that “no al- time within six years” as meaning only additional overpayment interest, the
lowance of interest on a refund or credit that the taxpayer’s administrative request question arises as to the appropriate
of an overpayment of tax may be made must be made within the six-year period. court. In The E.W. Scripps Co., 420 F.3d
after the expiration of six years from the Accordingly, Chief Counsel concluded 589 (6th Cir. 2005), the Sixth Circuit
date of the allowance of the refund or that no time limit applies to the IRS’s held that federal district courts have
credit unless a taxpayer has filed a civil allowance and payment of additional subject-matter jurisdiction (concurrent
action against the United States within overpayment interest, as long as the tax- with the Court of Federal Claims)
such period.” payer’s administrative request was timely. over taxpayer suits for interest on tax
Rev. Rul. 57-242 provides that the However, Chief Counsel reiterated that overpayments (see also Ford Motor
IRS will entertain administrative claims a taxpayer must file a timely suit to “fully Co., 768 F.3d 580 (6th Cir. 2014), cert.
for additional overpayment interest and protect” its rights to additional overpay- denied, 576 U.S. 1035 (2015)). However,
that such claims may be allowed and ment interest. the Second, Eleventh, and Federal
paid by the IRS upon the taxpayer’s The relevant provisions of the Circuits have all held that the Court of
request at any time within six years from IRM do not appear to be completely Federal Claims has exclusive jurisdiction
the date on which the schedule listing consistent. For example, IRM Section over suits against the government for
the overpayment is signed. However, the 25.6.1.10.2.12.1(2) provides that additional overpayment interest (Pfizer,
ruling makes clear that: “[a]n administrative claim [for ad- 939 F.3d 173 (2d Cir. 2019); Paresky,
■ The filing of such an administrative ditional overpayment interest] may be 995 F.3d 1281 (11th Cir. 2021); Bank
claim does not suspend the running allowed and paid upon request at any of America, 964 F.3d 1099 (Fed. Cir.
of the six-year limitation period for time before the [six-year] period for fil- 2020)).
filing suit; and ing suit [under 28 U.S.C. Sections 2401 Another key point is that, while the
■ A taxpayer must file a timely suit to and 2501] expires,” citing to Rev. Rul. two-year period to bring suit under Sec.
“fully protect” its rights to additional 57-242 (emphasis added). 6532 may be extended by agreement
overpayment interest. However, IRM Section 20.2.14.6.6.2, by the IRS and the taxpayer with Form
In Chief Counsel Advice (CCA) which provides guidance to assist IRS 907, the six-year period of limitation to
200532001 (released Aug. 12, 2005), the employees in determining the netting file suit against the government for ad-
IRS Office of Chief Counsel directly status for the credit or refund of over- ditional overpayment interest cannot be
addressed the issue of whether the IRS payment interest, instructs the employee extended by agreement.
has the authority to allow an administra- to determine whether the claim was
tive claim for additional overpayment received within six years from the date of Net rate interest netting claims
interest that was filed within the six-year scheduling of the overpayment and pro- As stated above, Sec. 6621(d) provides
limitation period, even though the tax- vides that, if the answer to that question that a net interest rate of zero applies to
payer fails to file suit within the six-year is yes, then the overpayment netting sta- interest on equivalent overlapping tax
period, and concluded that it does have tus is “open,” and additional interest may underpayments and tax overpayments.
such authority. be allowed on the overpayment (citing Rev. Proc. 2000-26 provides guidance

18 July 2022 The Tax Adviser