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Section 6601(a)17 provides the general rule that interest on
an underpayment shall accrue during the period from the last date
prescribed for payment until the date paid at the underpayment
rate established under section 6621. As we stated in Intel Corp.
& Consol. Subs. v. Commissioner, 111 T.C. 90, 92 (1998):
Section 6601 reflects the “use of money” principle: “That
is, the party who has the use of the money pays interest up
until the event which causes the party no longer to have use
of that money.” [BankAmerica Corp. v. Commissioner, 109
T.C. 1, 14 (1997).][18] * * *
Under section 6601(a), interest on an underpayment begins to
accrue when the tax becomes both due and unpaid. Avon Products
17 SEC. 6601. INTEREST ON UNDERPAYMENT, NONPAYMENT, OR
EXTENSIONS OF TIME FOR PAYMENT, OF TAX.
(a) General Rule.--If any amount of tax imposed by this
title [title 26, the Internal Revenue Code] (whether
required to be shown on a return, or to be paid by stamp or
by some other method) is not paid on or before the last date
prescribed for payment, interest on such amount at an annual
rate established under section 6621 shall be paid for the
period from such last date to the date paid.
The later amendment of this provision, by sec. 1511(c)(11)
of TRA 1986, 100 Stat. at 2745, applies to interest for periods
after Dec. 31, 1986, TRA 1986 sec. 1511(d), 100 Stat. 2746, and
so it does not affect our search for the starting date for
interest on the 1979 and 1982 underpayments.
18 One may fairly contend that this principle has been
eroded by various provisions, including sec. 6621(c) (discussed
infra at C.) and the interest abatement provision that is the
subject of the instant proceeding. However, the “use of money”
principle remains an appropriate basis for decision where it has
not been modified by statute, as in the instant issue. See,
e.g., Dang v. Commissioner, 259 F.3d 204, 208 n.4 (4th Cir.
2001), affg. an unreported order and decision of this Court
entered July 21, 2000; BankAmerica Corp. v. Commissioner, 109
T.C. 1, 14-16 (1997).
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