ExxonMobil Victory in Interest Netting Case Is Final

June 18, 2013 by  
Filed under Exxon Mobil, Interest

[Note:  Miller and Chevalier represented the taxpayer Exxon Mobil Corp. in this case.]

We previously reported on the Second Circuit’s consideration of the interest netting issue that had been resolved against the taxpayer by the Federal Circuit in FNMA v. United States, 379 F.3d 1303 (2004).  Although we did not follow up with a timely report on the Second Circuit’s decision in that case in favor of the taxpayer, the decision is now final, with the government having allowed the time to seek certiorari to expire.  To close the loop, we provide here a summary of the decision and … Read More

Government Dismisses Appeal in Magma Power

January 3, 2013 by  
Filed under Interest, Magma Power

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

Second Circuit to Resolve Disagreement Between Tax Court and Federal Circuit Over Availability of Interest Netting for Pre-1998 Tax Periods

April 24, 2012 by  
Filed under Exxon Mobil, Interest

[Note:  Miller & Chevalier represents the taxpayer Exxon Mobil Corp. in this case.]

The government has appealed the Tax Court’s decision on interest netting in Exxon Mobil Corp. v. Commissioner, 136 T.C. No. 5 (Feb. 3, 2011).  The briefing is now complete, and the Second Circuit (Judges Cabranes, Walker, and Winter) is scheduled to hear oral argument on April 25.

Congress expressly required global interest netting by enacting Code section 6621(d) in 1998.  Before then, the IRS had sometimes taken advantage of the differential interest rates established in 1986 to collect net interest when no net tax was due.  … Read More

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

December 9, 2011 by  
Filed under Interest, Magma Power, Statutory Interpretation

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