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As indicated, however, petitioners contend that respondent
undercalculates, and has not paid petitioners, the full amount of
the additional interest that accrued after December 31, 1994, on
petitioners’ cumulative accrued overpayment interest balance of
approximately $1.6 billion that was outstanding on December 31,
1994, and that was not paid to petitioners until 2004 and 2005.
As petitioners read the above GATT amendment to section
6621(a), the GATT overpayment interest rate reduction does not
apply to petitioners’ December 31, 1994, overpayment interest
balance. Petitioners read section 6621(a)(1) either as expressly
supporting their interpretation or as vague and lacking a
specific mandate that the reduced GATT interest rate is to apply
to their December 31, 1994, overpayment interest balance.
Petitioners argue that “In the absence of some specific
instruction to the contrary, the interest continues to compound
at the same rate at which interest first began to accrue on the
tax overpayment”; i.e., at the regular rate. Petitioners argue
further that the GATT amendment “directs that the change in
interest rate * * * should be limited to a portion of the amounts
owed to the taxpayer-–with the remaining portion continuing to
accrue interest at the regular rate.”
Petitioners’ arguments focus on, or are dependent primarily
on, the interpretation of the flush language in section
6621(a)(1) that refers to an “overpayment of tax”. Petitioners
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