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The General Electric Case
In Gen. Elec. Co. v. United States, supra, the entire amount
of the taxpayer’s (General Electric’s) 1978 overpayment of $15.5
million had been refunded or credited in 1988, but $810,000 of
accrued interest on the 1978 overpayment was not credited and
remained unpaid until 2002. The taxpayer’s position was that the
unpaid interest should continue to be compounded at the regular
rate until paid. The United States argued that as of January 1,
1995, the GATT rate replaced the regular rate for purposes of
compounding interest. The Court of Federal Claims held that the
full amount of General Electric’s pre-1995 accrued interest was
subject to the GATT rate as of January 1, 1995. Gen. Elec. Co.
v. United States, 56 Fed. Ct. 488 (2003). The Court of Appeals
for the Federal Circuit affirmed the primary holding, but
remanded the case for a determination whether the taxpayer was
entitled to any additional interest at the regular rate after
January 1, 1995, on the interest that had accrued prior to
January 1, 1995, on the first $10,000 of its overpayment. Gen.
Elec. Co. v. United States, 384 F.3d at 1313.
The Court of Appeals for the Federal Circuit initially
addressed the meaning of the term “overpayment” as follows:
We agree with GE and the trial court that the term
“overpayment,” as used in the Internal Revenue Code,
does not ordinarily include interest that is earned on
the overpayment. We do not agree with GE, however, that
the statutory provision that preserves the regular
interest rate for small corporate overpayments of
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