1998 U.S. Tax Ct. LEXIS 22">*22 An appropriate order will be issued denying petitioner's motion for partial summary judgment.
Docket Nos. 27027-96, 5382-97
R determined deficiencies in P's taxable years 1988 through 1993. P agreed in part with R's determinations for 1988 through 1991 and entered into an agreement with R regarding the uncontested amounts. R also determined overpayments of tax for 1984 and 1987, which are not before the Court. R refunded the 1984 and 1987 overpayments plus interest. P claims that R should have honored P's request to credit the overpayments for 1984 and 1987 against the agreed underpayments for 1988 through 1991 pursuant to R's authority to offset under
In its motion1998 U.S. Tax Ct. LEXIS 22">*23 for partial summary judgment, P argues that R abused his discretion when he failed to offset the overpayments for 1984 and 1987 against the agreed underpayments for 1988 through 1991. P claims an "overpayment" for 1988 through 1991 in the amount of additional interest paid as a result of the failure to offset. R maintains that
HELD:
HELD, FURTHER: Our "overpayment" jurisdiction under
HELD, FURTHER: Although we have jurisdiction, genuine issues as to material facts exist which preclude us from deciding the issue presented by P's motion. P's motion for partial summary judgment is denied.
110 T.C. 291">*292 OPINION
RUWE, JUDGE: This matter is before the Court on petitioner's motion for partial summary judgment filed January 9, 1998, pursuant to
As a preliminary matter, we must decide whether this Court has jurisdiction to determine whether petitioner has made overpayments for 1988 through 1991 based on petitioner's alleged overpayment of interest. If we have jurisdiction, we must decide whether to grant petitioner's motion for partial summary judgment.
BACKGROUND
Petitioner alleges that by May 1995, the parties had reached a tentative settlement regarding part of the underpayments that respondent had determined for the years 1988 through 1991 and had also reached a tentative agreement that petitioner had made overpayments of tax for 1984 and 1987. Petitioner alleges it notified respondent that its overpayments for 1984 and 1987 should be used to offset the agreed underpayments for 1988 through 1991. The overpayments for 1984 and 1987 exceeded the agreed underpayments. Nevertheless, respondent did not credit the overpayments against the underpayments.
By checks dated July 20, 1995, and August 4, 1995, in the respective amounts1998 U.S. Tax Ct. LEXIS 22">*27 of $ 11,203,987 and $ 1,767,273, respondent 110 T.C. 291">*293 refunded the overpayment for 1984. Included in the refund was interest calculated at the overpayment rate specified in section 6621(a)(1). By check dated September 5, 1995, in the amount of $ 62,798, respondent refunded the overpayment for 1987 with interest calculated in the same manner.
On or about July 26, 1995, petitioner executed a Form 870- AD reflecting the partial settlement of its tax liabilities for the years 1988 through 1991. The Form 870-AD showed agreed underpayments of $ 909,763 for 1988, $ 911,371 for 1989, $ 9,513 for 1990, and $ 613,513 for 1991, or an aggregate of $ 2,444,160 of agreed underpayments. The Form 870-AD also contained the following statement: "The taxpayer reserves the right to challenge the interest calculations made by the Internal Revenue Service with respect to all years/periods covered by this agreement." Respondent accepted the Form 870-AD on August 17, 1995, and on or about August 30, 1995, assessed the agreed tax and mailed two Notices of Tax Due relating to the agreed underpayments. Included in the amount of tax due was interest in the amount of $ 2,003,589.91 calculated1998 U.S. Tax Ct. LEXIS 22">*28 at the underpayment rate specified in section 6621(a)(2) and (c).
The rate for calculating interest on overpayments is less than the rate for calculating interest on underpayments. See sec. 6621(a)(1) and (2). However, when respondent exercises his authority to offset under
On September 25, 1995, petitioner paid the agreed underpayments relating to 1988 through 1991, together with interest at the underpayment rate. Petitioner claims that respondent's failure to offset caused it to overpay interest in the amount of $ 626,794.
DISCUSSION
110 T.C. 291">*294 (a) General Rule. -- In the case of any overpayment, the Secretary, within the applicable period of limitations, may credit the amount of such overpayment, including any interest allowed1998 U.S. Tax Ct. LEXIS 22">*29 thereon, against any liability in respect of an internal revenue tax on the part of the person who made the overpayment and shall, subject to subsections (c) and (d), refund any balance to such person.
Petitioner had overpaid tax for its 1984 and 1987 tax years. Petitioner had underpaid tax for 1988 through 1991. Respondent did not offset the overpayments for 1984 and 1987 against the underpayments for 1988 through 1991. Respondent argues that such offsets are discretionary under
1998 U.S. Tax Ct. LEXIS 22">*31 Petitioner's alleged overpayment of interest is a matter that falls within this Court's overpayment jurisdiction under
if the Tax Court finds that there is no deficiency and further finds that the taxpayer has made an overpayment of income tax for the same taxable year, * * * or finds that there is a deficiency but that the taxpayer has made an overpayment of such tax, the Tax Court shall have jurisdiction to determine the amount of such overpayment * * *
Overpayment jurisdiction depends on whether we have jurisdiction to find that "there is no deficiency" or "that there is a deficiency."
An "overpayment" of tax can include interest.
110 T.C. 291">*296 The next issue is whether petitioner is entitled to partial summary judgment on its claim that it overpaid interest because respondent abused his discretion under
Petitioner argues that its allegations show that respondent abused his discretion by either failing, or refusing, to offset overpayments from 1984 and 1987 against agreed underpayments for 1988 through 1991. Our review of the factual allegations made by the parties, including their respective supporting affidavits, leads us to conclude that there are genuine issues as to the material facts alleged by petitioner. Accordingly, we deny petitioner's motion for partial summary judgment.
An appropriate order will be issued denying petitioner's motion for partial summary judgment.
1. Unless otherwise indicated, all Rule references are to the Tax Court Rules of Practice and Procedure, and all section references are to the Internal Revenue Code in effect for the years in issue.↩
2. For Federal income tax purposes, petitioner reported on a fiscal year basis for the years ending: June 29, 1988; June 28, 1989; June 27, 1990; June 26, 1991; June 24, 1992; and June 30, 1993.↩
3. The legislative history of
4. Historically, the Tax Court generally did not have jurisdiction to redetermine the amount of interest on a deficiency.
5. The term "overpayment" has been interpreted to mean "any payment in excess of that which is properly due."