Sunoco, Inc. and Subsidiaries - Page 25

                                        - 25 -                                        

                  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                
                  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,                       

Page:  Previous  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  30  31  32  33  34  Next

Last modified: May 25, 2011