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The Commissioner cannot be compelled to credit an
overpayment against a liability of the taxpayer. See,
e.g., N. States Power Co. v. United States, 73 F.3d 764,
768 (8th Cir. 1996). If the Commissioner chooses to do
so, however, then section 6402(a) provides that the
Commissioner may credit the amount of the overpayment
“including any interest allowed thereon” against a
liability of the taxpayer, and with certain exceptions,
shall “refund any balance” to the taxpayer. If the
Commissioner fails to include all or a part of the interest
that is allowable on the overpayment, then the aggregate
amount of the overpayment, plus the allowable interest,
will exceed the amount of the tax liability satisfied by
the credit. In effect, the taxpayer will have overpaid the
liability by the amount of allowable interest that is not
credited.
For example, assume that, pursuant to section 6402(a),
the Commissioner credits an overpayment of $1,000 against a
liability of the same taxpayer for a different taxable year
in the amount of $1,000 but fails to include interest of
$20 computed under section 6611 that is allowable on the
overpayment. Under these facts, the taxpayer would have
used $1,020 to satisfy a liability of $1,000. In effect,
the taxpayer would have overpaid the liability against
which the overpayment is credited by $20. That amount
would be “legally due”, to use respondent’s words,
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