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Respondent acknowledges that excess underpayment interest which
has been assessed and paid by petitioner ‘becomes part of the
overpayment, i.e., a payment in excess of that which is properly
due.’”).12
12The Chief Counsel’s National Office addressed the meaning
of the term “overpayment” and our overpayment jurisdiction to
determine underpayment interest in field service advice:
The [Tax] Court does have jurisdiction to consider
alleged overpayments of underpayment interest as part
of its overpayment jurisdiction. Such excessive
interest, once assessed and paid, becomes part of an
overpayment, i.e., a payment in excess of that which is
properly due. Jones v. Liberty Glass Co., 332 U.S.
524, 531 (1947); Baumgardner v. Commissioner, 85 T.C.
445 (1985). At the time of the overpayment, previous
payments of tax and previous payments of interest merge
to become the refundable amount of the overpayment,
regardless of their previous designation as tax or
interest. Baumgardner, at 457-58; see also section
6601(e)(1); Alexander Proudfoot Co. v. United States,
454 F.2d 1379, 1383 (1972) (“deficiency interest . . .
has been deemed an integral part of the tax”); Barton
v. Commissioner, 97 T.C. 548 (1991) (Tax Court has
jurisdiction to consider overpayment of interest under
former section 6621(c) even though it does not have
jurisdiction over a proposed determination of yet-to-be
assessed and paid underpayment interest).
* * * * * * *
Thus, in Winn-Dixie Stores, Inc. v. Commissioner,
110 T.C. 291 (1998), the court held that it had
jurisdiction to consider the effect of the Service’s
failure to honor the taxpayer’s request that the
Service credit overpayments of tax from other tax years
against the proposed liabilities before the court
because such crediting would have reduced the amount of
underpayment interest due from the taxpayer on the
deficiencies. Critical to the Court’s exercise of
jurisdiction was the taxpayer’s payment of the tax plus
the underpayment interest determined by the Service
(continued...)
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