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with respect to the application of the In Section 4.02, the revenue proce- From Mark A. Bond, J.D., LL.M.,
interest-netting procedures to interest dure further provides that “[a] claim for Washington, D.C.; Michael Urban, J.D.,
accruing on or after Oct. 1, 1998, includ- payment of additional interest allowable MLT, Washington, D.C.; and Julie Lov-
ing the requirements and time limits for on an overpayment pursuant to section eridge, IRS Enrolled Agent, Ogden, Utah
filing interest-netting claims. 6611 must be filed within the 6-year
Although, as noted above, a taxpayer period in which a suit must be filed
can file a suit for additional overpayment pursuant to 28 U.S.C. sections 2401 and Tax Accounting
interest without first having filed an 2501.”
administrative claim with the IRS, the Sec. 451 regulations offer
Service has requested that taxpayers file Key takeaways ways to reduce revenue
administrative claims for the application Interest claims can implicate the peri- acceleration
of the net interest rate of zero because ods of limitation under Sec. 6511 (and Sec. 451 governs the timing of includ-
it is not able to automatically determine related provisions) and/or the six-year ing an item in income.
when the net interest rate of zero applies periods of limitation under 28 U.S.C. The 2017 law known as the Tax
(Rev. Proc. 2000-26, §4.01). Sections 2401 and 2501. To evaluate the Cuts and Jobs Act (TCJA), P.L.
Section 4.03 of that revenue proce- timeliness of a claim, the taxpayer needs 115-97, made significant changes to
dure provides that the IRS achieves the to determine whether it is a refund claim Sec. 451. The TCJA added new Sec.
“net rate of interest” of zero: or a claim for additional overpayment 451(b), which accelerates the recogni-
■ If the Sec. 6511 period of limitation interest. With net rate interest netting tion of income for certain accrual-
for refunding underpayment interest claims, both statutory frameworks may method taxpayers, and Sec. 451(c),
is open at the time a claim is filed, by be implicated. which codified the existing one-year
decreasing underpayment interest In the context of the six-year period deferral for certain advance payments
owed by the taxpayer (to match of limitation, identifying when the cause but eliminated the longer deferral al-
the overpayment interest for the of action accrues is fundamental, as this lowed under former Regs. Sec. 1.451-5.
equivalent period); or starts the running of the period. The The IRS and Treasury issued final
■ If the Sec. 6511 period of limitation six-year period cannot be extended by regulations under those provisions in
for refunding underpayment interest agreement (unlike the two-year period December 2020 (T.D. 9941), providing
is closed at the time a claim is filed, to bring suit under Sec. 6532). The only clarity on matters of application and
but the period for paying additional way to “fully protect” the rights of the some relief for taxpayers required to
overpayment interest is open, by taxpayer under the six-year period is to accelerate income under the new rules.
increasing overpayment interest owed file suit. Should a taxpayer wish to file The final regulations apply for tax
to the taxpayer (to match the under- suit, care should be taken in evaluating years beginning on or after Jan. 1, 2021.
payment interest for the equivalent relevant case law, as jurisdictional haz- Taxpayers generally may apply the
period). ards abound. regulations for tax years beginning after

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