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section 6601 on an interim underpayment in petitioner’s
account. Overpayment interest is the interest computed
under section 6611 on an interim overpayment in
petitioner’s account. Thus, the underpayment interest
charged to, and the overpayment interest allowed on,
petitioner’s account are both computed on the basis of the
balance of petitioner’s account as of a particular date.
Petitioner’s account balance, on any given date,
is composed not only of the positive and negative
transactions booked to petitioner’s account for the year,
such as assessments (positive) and payments (negative), but
also of the underpayment and overpayment interest that was
previously computed and combined with the account balance.
See section 6622(a), which provides that, for purposes of
the Internal Revenue Code, interest is “compounded daily.”
If the account balance on a particular date were to
change, by reason of a change in the amount or the date of
a transaction booked to the account, for example, then the
amount, and possibly the kind, of interest computed as of
that date would also change. Any such change would ripple
through the account causing later interim balances, and the
interest computed thereon, to change, and further causing a
change in the aggregate amount of each type of interest;
viz underpayment or overpayment. Compare app. 1 with app.
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