Government Dismisses Appeal in Magma Power

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January 3, 2013

We previously reported on the Court of Federal Claims’ decision in Magma Power that allowed an interest netting claim when the taxpayer was a member of a consolidated group for one leg of the overlap period but not during the other leg.  The government had argued that such a claim did not fall within the statutory language requiring that the overlapping interest payments involve the “same taxpayer.”  The government filed a protective notice of appeal from the decision, but it has now voluntarily dismissed the appeal in the Federal Circuit.  The Court of Federal Claims’ decision therefore will stand, and … Read More

Court of Federal Claims Construes “Same Taxpayer” Requirement for Interest Netting

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December 9, 2011

In Magma Power v. United States, Case No. 09-419T, the Court of Federal Claims tackled the arcane topic of interest netting.  The issue in Magma Power was a narrow question of statutory interpretation, but the broader topic of interest netting warrants a word of explanation. 

The government charges interest on tax underpayments at a higher rate (under section 6601) than it pays on tax overpayments.  Because it often takes several years or more to determine whether a taxpayer has an overpayment or underpayment for a particular tax year and the amount of that overpayment or underpayment, there are sometimes … Read More