SECTION 4. SPECIAL EFFECTIVE

DATE RULE

.01 Special Rule. Section 6621(d) generally applies to interest for periods (calendar quarters) beginning after July 22, 1998 ( i.e., interest accruing on or after October 1, 1998). See H. R. Rep. No. 364 (Part 1), 105th Cong., 1st Sess. 64 (1998); S. Rep. No. 174, 105th Cong., 2d Sess. 62 (1998); H. R. Conf. Rep. No. 599, 105th Cong., 2d Sess. 257 (1998). However, § 3301(c)(2) of the RRA provides that § 6621(d) applies to interest for periods beginning before July 22, 1998 ( i.e., interest accruing before October 1, 1998), provided certain conditions are met. First, both periods of limitation applicable to the tax underpayment and to the tax overpayment (as described in section 4.02 of this revenue procedure) must have been open on July 22, 1998. Second, the taxpayer must:

(a) reasonably identify and establish periods of tax overpayments and underpayments for which the net interest rate of zero applies, and

(b) not later than December 31, 1999, request the Secretary of the Treasury to apply § 6621(d) to such periods.

.02 Applicable periods of limitation. The applicable periods of limitation are as follows:

(1) Underpayment interest. A claim for credit or refund of interest paid on an underpayment pursuant to § 6601 or 6602 generally must be filed within 3 years from the time the tax return was filed or 2 years from the time the interest was paid, whichever period expires later, pursuant to § 6511.

(2) Overpayment interest. A claim for payment of additional interest allowable on an overpayment pursuant to § 6611 must be filed within the 6-year period in which a suit must be filed pursuant to 28 U.S.C. §§ 2401 and 2501. See Rev. Rul. 56–506, 1956–2 C.B. 959. (3) Claims filed on or before December 31, 1999. If both applicable periods of limitation described in sections 4.02(1) and 4.02(2) of this revenue procedure were open on July 22, 1998, and both close on or before December 31, 1999, a claim requesting the application of the net interest rate of zero (as described in sections 5.01 through 5.04 of this revenue procedure) will be considered timely if filed on or before December 31, 1999.

.03 Requirement to make a request by December 31, 1999. A taxpayer will satisfy the requirement in the special rule to make a request for the application of the net rate of zero not later than December 31, 1999, as follows: (1) If both applicable periods of limitation described in sections 4.02(1) and 4.02(2) of this revenue procedure were open on July 22, 1998, but both will be closed on or before December 31, 1999, the taxpayer must file a claim requesting the application of the net rate of zero (as described in sections 5.01 through 5.04 of this revenue procedure) on or before December 31, 1999.

(2) If both applicable periods of limitation described in sections 4.02(1) and 4.02(2) of this revenue procedure were open on July 22, 1998, and at least one of the applicable periods of limitation will be open after December 31, 1999, the tax

November 22, 1999 580 1999–47 I.R.B.

payer need not take any action on or before December 31, 1999. In order to obtain the net rate of zero, the taxpayer must file a claim requesting application of the net rate of zero (as described in sections 5.01 through 5.04 of this revenue procedure) or make a written request (as described in section 5.06 of this revenue procedure) on or before the date on which the last applicable period of limitation closes.

.04 Net Rate of Zero. In general, the Service will apply the net rate of zero as follows:

(1) If the period of limitation for refunding underpayment interest (as described in section 4.02(1) of this revenue procedure) is open at the time a claim (as described in sections 5.01 through 5.04 of this revenue procedure) is filed or a written request (as described in section 5.06 of this revenue procedure) is made, the Service will apply the net rate of zero by decreasing underpayment interest owed by the taxpayer.

(2) Except as provided in 4.04(3) of this revenue procedure, if the period of limitation for refunding underpayment interest (as described in section 4.02(1) of this revenue procedure) is closed at the time a claim (as described in sections 5.01 through 5.04 of this revenue procedure) is filed or a written request (as described in section 5.06 of this revenue procedure) is made, but the period for paying additional overpayment interest (as described in section 4.02(2) of this revenue procedure) is open, the Service will apply the net rate of zero by increasing overpayment interest owed to the taxpayer.

(3) If both applicable periods of limitation (as described in sections 4.02(1) and 4.02(2) of this revenue procedure) are open on July 22, 1998, and a claim requesting the application of the net interest rate of zero (as described in sections 5.01 through 5.04 of this revenue procedure) is filed on or before December 31, 1999, the Service will apply the net rate of zero by decreasing underpayment interest owed by the taxpayer.