SECTION 1. PURPOSE

.01 In general. This revenue procedure provides guidance regarding the application of § 6621(d) of the Internal Revenue Code with respect to interest accruing before October 1, 1998, and modifies and supersedes Rev. Proc. 99–19, 1999–13 I.R.B. 10. Section 6621(d) was enacted by § 3301 of the Internal Revenue Service Restructuring and Reform Act of 1998 (RRA), Pub. L. No. 105-206, 112 Stat. 741, and was amended by § 4002(d) of the Tax and Trade Relief Extension Act of 1998, Pub. L. No. 105-277, 112 Stat. 2681. Section 6621(d) provides for a net interest rate of zero to the extent of overlapping tax underpayments and tax overpayments, and generally applies to interest for periods beginning after July 22, 1998 ( i.e., interest accruing on or after October 1, 1998). However, the net inter

est rate of zero in § 6621(d) also applies to interest for periods beginning before July 22, 1998 ( i.e., interest accruing before October 1, 1998), provided certain conditions (described in section 4.01 of this revenue procedure) are met. Among these conditions is a requirement that a taxpayer request the application of § 6621(d) by December 31, 1999. This revenue procedure provides guidance on, and discusses how to comply with, those conditions.

.02 Comments received in response to Rev. Proc. 99–19. In Rev. Proc. 99–19, the Service asked for comments regarding what taxpayers should be required to submit to the Service by December 31, 1999, when taxpayers cannot provide a final computation on the application of the net rate of zero by that date. Commentators made recommendations regarding the amount of information that would be sufficient to make a request by December 31, 1999, that would reasonably identify and establish overlapping periods. Commentators also suggested that taxpayers should not be required to take any action by December 31, 1999, if taxpayers could not reasonably identify and establish overlapping periods by that date. In response to these comments, this revenue procedure provides that:

(1) taxpayers must file a claim requesting application of the net rate of zero by December 31, 1999, only if both applicable periods of limitation (as described in sections 4.02(1) and 4.02(2) of this revenue procedure) will be closed on or before December 31, 1999 (section 4.03(1)); and

1999–47 I.R.B. 579 November 22, 1999

the overpayment to the due date of the amount against which the credit is taken. Section 6611(b)(2) provides that, in the case of a refund, interest must be allowed and paid from the date of the overpayment to a date preceding the date of the refund check by not more than 30 days.

.02 Interest rates in general. (1) For interest accruing before January 1, 1999, § 6621(a)(1) provides that the overpayment rate is the federal short-term rate (determined under § 6621(b)) plus 2 percentage points. To the extent that an overpayment of tax by a corporation exceeds $10,000, the overpayment rate is the federal short-term rate plus 0.5 percent.

(2) Section 6621(a)(2) provides that the underpayment rate is the federal shortterm rate (determined under § 6621(b)) plus 3 percentage points. Special rules in § 6621(c) increase the underpayment rate on large corporate underpayments by an additional 2 percentage points.

.03 Interest for overlapping periods. (1) Section 6621(d), as enacted by the RRA on July 22, 1998, provides that, to the extent that for any period interest is payable under subchapter A (§§ 6601 and 6602) and allowable under subchapter B (§ 6611) on equivalent underpayments and overpayments by the same taxpayer of tax imposed by the Code, the net rate of interest under § 6621 on such amounts is zero for such period.

(2) The Conference Report, H. R. Conf. Rep. No. 599, 105th Cong., 2d Sess. 257 (1998), accompanying the RRA provides that the net interest rate of zero is applied without regard to whether the overpayment or underpayment is currently outstanding. Further, each overpayment or underpayment is considered only once in determining whether equivalent amounts of overpayment and underpayment overlap for a particular period. That report also provides that the net interest rate of zero applies even when special rules increase the rate of interest for large corporate underpayments under § 6621(c), or decrease the rate of interest for large corporate overpayments under § 6621(a).