[Federal Register Volume 59, Number 108 (Tuesday, June 7, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-13742]


[[Page Unknown]]

[Federal Register: June 7, 1994]


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DEPARTMENT OF THE TREASURY
Bureau of Alcohol, Tobacco and Firearms

27 CFR Part 70

[T.D. ATF-358]
RIN 1512-AB27

 

Clarification of Periods of Interest With Respect to Certain 
Overpayments (T92-122)

AGENCY: Bureau of Alcohol, Tobacco and Firearms (ATF), Treasury.

ACTION: Treasury decision, final rule.

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SUMMARY: This Treasury decision amends 27 CFR 70.92, in Part 70, 
Procedure and Administration. The amendments clarify the period during 
which interest is allowed on taxpayer overpayments which are credited 
against other liabilities of the same taxpayer for interest and certain 
additions to the tax. The amendments are necessary as a result of 
changes to the law made by the Tax Equity and Fiscal Responsibility Act 
of 1982 and the Deficit Reduction Act of 1984. The regulations affect 
all taxpayers who have overpayments credited against underpayments.

EFFECTIVE DATE: These regulations are effective on June 7, 1994.

FOR FURTHER INFORMATION CONTACT:
Jackie White of the Tax Compliance Branch, (202) 927-8220, Bureau of 
Alcohol, Tobacco and Firearms, P.O. Box 50221, Washington, DC 20091-
0221 ((202) 927-8220).

SUPPLEMENTARY INFORMATION:

Background

    This document contains amendments to the regulations on Procedure 
and Administration (27 CFR part 70) under Sec. 6611 of the Internal 
Revenue Code of 1986 (IRC) to clarify the period during which interest 
is allowed on overpayments that are credited against a taxpayer's 
liability for interest and certain additions to the tax. The amendments 
will conform the regulations to Sec. 344 of the Tax Equity and Fiscal 
Responsibility Act of 1982 (TEFRA) (Pub. L. 97-248, 96 Stat. 635), and 
Sec. 158 of the Deficit Reduction Act of 1984 (DEFRA) (Pub. L. 98-369, 
98 Stat. 696).
    The Internal Revenue Service (IRS) applies Sec. 6611 to the taxes 
it administers and enforces. The IRS published a notice of proposed 
rulemaking in the Federal Register on August 25, 1992 (57 FR 38457), 
and Treasury Decision 8524 (59 FR 10075) was published in the Federal 
Register on March 3, 1994, adopting final rules implementing the TEFRA 
and DEFRA amendments. ATF believes these regulations are equally 
applicable to its tax collection activities and is adopting such 
regulations.

Interest on Overpayments That Are Credited Against Interest on 
Underpayments

    Section 6611(a) of the IRC provides that interest shall be allowed 
and paid on any overpayment in respect of any internal revenue tax at 
the overpayment rate established under Sec. 6621.
    Under Sec. 6402(a), the Secretary may credit any overpayment 
(including any interest allowed thereon) against any liability imposed 
on the taxpayer under the IRC. Under Sec. 6611(b)(1), interest is 
allowed on an overpayment that is so credited from the date of the 
overpayment to the due date of the taxpayer's liability against which 
the overpayment is credited. For purposes of this interest computation, 
a definition of the term ``due date'' is provided in Sec. 70.92(d) of 
the regulations.
    Generally, Sec. 6601(f) provides that once an overpayment is 
credited to satisfy a taxpayer's liability, interest no longer accrues 
on that liability. Section 344 of TEFRA added Sec. 6622 of the IRC, 
which requires interest imposed by the IRC to be compounded daily. The 
effect of Sec. 6601(f) on the compounding requirement of Sec. 6622 is 
that once an overpayment is credited to satisfy the taxpayer's 
liability for interest, that credit cuts off any further compounding of 
the interest (i.e., interest no longer accrues on the taxpayer's 
interest liability against which the credit has been made).
    Similarly, it is appropriate that no interest liability to the 
taxpayer accrues on the overpayment once the overpayment is credited to 
satisfy the taxpayer's liability for interest. Thus, the regulations 
amend Sec. 70.92(d)(2)(iii) to clarify that interest ceases to accrue 
on any portion of an overpayment that is credited against the 
taxpayer's liability for interest.

Interest on Overpayments That Are Credited Against Certain Additions to 
the Tax

    Prior to DEFRA, interest only accrued on additions to the tax from 
the date of notice and demand, and then only if not paid within 10 days 
from the date of notice and demand. In Sec. 158 of DEFRA, Congress 
added Sec. 6601(e)(2)(B) to the IRC, requiring taxpayers to pay 
interest on certain additions to tax from the due date of the relevant 
return (including any extensions) until the addition to the tax is 
paid. The number of additions to the tax that bear interest from the 
due date of the return was increased by Congress in 1988 and again in 
1989. This regulation amends Sec. 70.92(d)(2)(iv) to clarify that 
interest ceases to accrue on any portion of an overpayment that is 
credited against certain additions to the tax for any period after the 
due date of the return (including extensions) to which the addition to 
the tax relates.

Prior Regulations Obsolete

    When ATF assumed responsibility for the collection and enforcement 
of taxes imposed under Subtitle E of the IRC, it patterned many of its 
procedural regulations upon those already promulgated by the IRS. See, 
e.g., T.D. ATF-301, 55 Fed. Reg. 47608 (November 14, 1990); T.D. ATF-
251, 52 Fed. Reg. 19314 (May 22, 1987). However, since enactment of 
Sec. 6622 of the IRC in TEFRA and Sec. 6601(e)(2)(B) in DEFRA, the 
prior regulations regarding interest and certain additions to tax have 
been obsolete. Accordingly, ATF has been computing interest consistent 
with the statutory changes and these regulatory amendments acknowledge 
existing agency practice.

Regulatory Flexibility Act

    The provisions of the Regulatory Flexibility Act relating to a 
final regulatory flexibility analysis (5 U.S.C. 604) are not applicable 
to this final rule because the agency was not required to publish a 
general notice of proposed rulemaking under 5 U.S.C. 553 or any other 
law. A copy of this final rule has been submitted to the Administrator 
of the Small Business Administration for comment on the impact of such 
regulation on small business, pursuant to 26 U.S.C. 7805(f).

Executive Order 12866

    It has been determined that this rule is not a significant 
regulatory action because (1) it will not have an annual effect on the 
economy of $100 million or more or adversely affect in a material way 
the economy, a sector of the economy productivity, competition, jobs, 
the environment, public health or safety, or State, local or tribal 
governments or communities; (2) create a serious inconsistency or 
otherwise interfere with an action taken or planned by another agency; 
(3) materially alter the budgetary impact of entitlements, grants, user 
fees, or loan programs or the rights and obligations of recipients 
thereof; or (4) raise novel legal or policy issues arising out of legal 
mandates, the Presidents priorities, or the principles set forth in 
Executive Order 12866.

Administrative Procedures Act

    Because this final rule merely adopts existing IRS procedural 
regulations regarding overpayment interest, it is found to be 
unnecessary to issue this Treasury decision for notice and public 
procedure pursuant to 5 U.S.C. 553(b) or subject to the effective date 
limitation in 5 U.S.C. 553(d).

Paperwork Reduction Act

    The provisions of the Paperwork Reduction Act of 1980, Pub. L. No. 
96-511, 44 U.S.C. Chapter 35, and its implementing regulations, 5 CFR 
Part 1320, do not apply to this final rule because it does not impose 
any new recordkeeping or reporting requirements.

Drafting Information

    The principal author of this document is Jackie White of the Tax 
Compliance Branch, Bureau of Alcohol, Tobacco and Firearms.

List of Subjects in 27 CFR Part 70

    Administrative practice and procedure, Alcohol and alcoholic 
beverages, Authority delegations, Bankruptcy, Claims, Excise taxes, 
Firearms and ammunition, Government employees, Law enforcement, Law 
enforcement officers, Penalties, Reporting and recordkeeping 
requirements, Seizures and forfeitures, Surety bonds, Tobacco.

Authority and Issuance

    Title 27 CFR is amended as follows:

PART 70--[AMENDED]

    Paragraph 1. The authority citation for part 70 continues to read 
as follows:

    Authority: 5 U.S.C. 301 and 552; 26 U.S.C. 4181, 4182, 5146, 
5203, 5207, 5275, 5367, 5415, 5504, 5555, 5684(a), 5741, 5761(b), 
6020, 6021, 6064, 6102, 6155, 6159, 6201, 6203, 6204, 6301, 6303, 
6311, 6313, 6314, 6321, 6323, 6325, 6326, 6331-6343, 6401-6404, 
6407, 6416, 6423, 6501-6503, 6511, 6513, 6514, 6532, 6601, 6602, 
6611, 6621, 6622, 6651, 6653, 6656, 6657, 6658, 6665, 6671, 6672, 
6701, 6723, 6801, 6862, 6863, 6901, 7011, 7101, 7102, 7121, 7122, 
7207, 7209, 7214, 7304, 7401, 7403, 7406, 7423, 7424, 7425, 7426, 
7429, 7430, 7432, 7502, 7503, 7505, 7506, 7513, 7601-7606, 7608-
7610, 7622, 7623, 7653, 7805.

    Para. 2. Section 70.92 is amended by revising paragraphs 
(d)(2)(iii) and (d)(2)(iv) to read as follows:


Sec. 70.92  Interest on overpayments.

* * * * *
    (d) * * *
    (2) * * *
    (iii) Interest. In the case of a credit against interest that 
accrues for any period ending prior to January 1, 1983, the due date is 
the earlier of the date of assessment of such interest or December 31, 
1982. In the case of a credit against interest that accrues from any 
period beginning on or after December 31, 1982, such interest is due as 
it economically accrues on a daily basis, rather than when it is 
assessed.
    (iv) Additional amount, addition to the tax, or assessable penalty. 
In the case of a credit against an additional amount, addition to the 
tax, or assessable penalty, the due date is the earlier of the date of 
assessment or the date from which such amount would bear interest if 
not satisfied by payment or credit.
* * * * *
    Signed: May 11, 1994.
Daniel R. Black,
Acting Director.

    Approved: May 19, 1994.
John P. Simpson,
Deputy Assistant Secretary (Regulatory, Tariff and Trade Enforcement).
[FR Doc. 94-13742 Filed 6-6-94; 8:45 am]
BILLING CODE 4810-31-M