§6621 — Determination of rate of interest

] Additionally, even if all of section 6621 is considered because of the cross-reference in section 6601, as petitioner argues, section 6621(d) does not apply a zero interest rate bu t rather provides that the net rate of interest shall be zero on equivalent underpayments and overpayments .

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.

We disagree with petitioners' contentions.

- 19 - [*19] efficient, and consistent disposition ofpartnership litigation pursuant to section 6621, et seq." R at 1127.

- 19 - [*19] efficient, and consistent disposition ofpartnership litigation pursuant to section 6621, et seq." R at 1127.

- 19 - [*19] efficient, and consistent disposition ofpartnership litigation pursuant to section 6621, et seq." R at 1127.

- 19 - [*19] efficient, and consistent disposition ofpartnership litigation pursuant to section 6621, et seq." R at 1127.

The underpayment additipn rate is determined pursuant to section 6621 and is applied to the amount ofthe estimatedtax underpayment for the period ofunderpayment.

Consistent with this approach, the court expressly rejects "that the interest rate on deferred taxes för purposes of [11 U.S.C.] § 1129(a)(9)(C) is fixed as § 6621 provides." Id.

The Court of Appeals rejected the taxpayers' "interesting but ultimately unavailing" argument, finding that the Commissioner was applying section 6621(c), and that the effective date of section 1092 was not determinative of the issue before the court as to the taxpayers' liability for increased interest .

.The parties-further stipulated that-the deficiency was a substantial underpayment -attributable*to tax-motivated transactions (TMT), and thus the related interest was to be calculated by an increased rate pursuant to section 6621(c)-' (before amendment by the Omnibus Budget Reconciliation Act of .

Petitioner's offer in effect was that he'would pay the underlying liability and the statutory interest on the deficiency but would not have to pay the negligence additions to tax under section 6653 and tax-motivated interest pursuant to section 6621 .

In Weiner , the taxpayers challenged the interest charged against them for "tax-motivated transactions" pursuant to section 6621 (c) (now repealed) .

Accordingly, we hold that petitioner did not have re sonable cause for failing to pay her 2002 tax liability when due .

We hold only that the Commissioner's burden of production under section 7491(c) with - 21 - respect to the section 6654 addition to tax requires the Commissioner, at a minimum, to produce evidence that a taxpayer had a required annual payment .under section 6654(d) .

Held: We hold that the GATT rate applies to the accrued interest owed P as of Dec.

Accordingly, we hold that petitioner is liable for the additions to tax under section 6651(a)(1) and (2) for the years at issue.

We hold that the State tax deficiencies and interest on Federal and State tax deficiencies in issue in the instant case constitute specified liability losses within the meaning of section 172(f).

579, to implement procedures for a taxpayer to request interest -19- netting under section 6621(d) and the special rule. On December 17, 1999, petitioners requested administrative interest-netting relief by filing a timely claim with respondent on Form 843, Claim for Refund and Request for Abatement, in accordance with the revenue proceduke. RRA 1998 sec. 3301(b) also added section 6601(f) to clarify the offset provision of section 6402. Section 6601(f) provides: SEC. 6601(f). Satisfaction by C

Interest Netting Before 1987, section 6621 applied the same annual interest rate to overpayments and underpayments.

ent provided the requisite notices of the administrative and judicial proceedings with respect to petitioners ' income tax liability for 1984 ; (2) whether petitioners are liable for the increased rate of interest on tax-motivated transactions under section 6621 (c) ;2 (3) whether respondent abused his discretion in failing to abate interest under section 6404 ( e) ; and (4) whether petitioners are liable for the addition to tax under section 6651 (a)(3) .

6621 was designated subsec. (d). The additional interest applies only after Dec. 31, 1984. Sec. 6621(c) was repealed as of Dec. 31, 1989, by the Omnibus Budget Reconciliation Act of 1989, Pub. L. 101-239, sec. 7721(b), 103 Stat. 2399. 3 Respondent reserved relevancy objections to many of the exhibits attached to the stipulations of fact. Fed.

- 3 - Because the new statutory language [in section 6621] was enacted as part of the statute that gave effect to the agreements reached at the Uruguay Round of Multilateral Trade Negotiations conducted under the auspices of the General Agreement on Tariffs and Trade (“GATT”), the lower corporate overpayment interest rate of 0.5 percent set forth in the 1994 amendment is referred to as the “G

2004), explained: Because the new statutory language [in section 6621] was enacted as part of the statute that gave effect to the agreements reached at the Uruguay Round of Multilateral Trade Negotiations conducted under the auspices of the General Agreement on Tariffs and Trade (“GATT”), the lower corporate overpayment interest rate of 0.5 percent set forth in the 1994 amendment is referred to as the “G

ches #1 Ltd. v. Commissioner, 401 F.3d 1136 (9th Cir. 2005), affg. in part, revg. in part, and remanding T.C. Memo. 2003-150, this is not a case where our findings with respect to this matter are alleged to have any bearing on penalty-interest under sec. 6621 or on any other penalties. For instance, respondent has not alleged that an adjustment to SMP’s reported basis in SMHC stock would give rise to any underpayment for purposes of sec. 6662 accuracy-related penalties. -264- have on taxable yea

* * * * * * * IRC § 6601(a) provides, that if any amount of the tax imposed by this title is not paid on or before the last date prescribed for payment, interest on the underpay- ment rate established under section 6621 shall be paid for the period from such last date to the date paid.

Copies of those returns are not (continued...) - 26 - section 6621 regarding additional interest would apply to that taxable year.

Copies of those returns are not (continued...) - 26 - section 6621 regarding additional interest would apply to that taxable year.

Petitioners further assert that a plain reading of the applicable provisions leads to the conclusion that the amounts that they owe pursuant to section 6621(c), an item that is tied directly to the rate of interest under section 6621, will be substantially reduced when computed pursuant to the interest-netting rule.

ng nontest case petitioners that the Commissioner would settle their cases on a basis "consistent with the original project settlement offer that was extended to Kersting investors before the trial of the test cases": A 7-percent reduction of the deficiency, elimination of all additions to tax, and interest imposed at the normal rate prescribed in section 6621; the burnout feature was not provided for.

ng nontest case petitioners that the Commissioner would settle their cases on a basis "consistent with the original project settlement offer that was extended to Kersting investors before the trial of the test cases": A 7-percent reduction of the deficiency, elimination of all additions to tax, and interest imposed at the normal rate prescribed in section 6621; the burnout feature was not provided for.

ng nontest case petitioners that the Commissioner would settle their cases on a basis "consistent with the original project settlement offer that was extended to Kersting investors before the trial of the test cases": A 7-percent reduction of the deficiency, elimination of all additions to tax, and interest imposed at the normal rate prescribed in section 6621; the burnout feature was not provided for.

ng nontest case petitioners that the Commissioner would settle their cases on a basis "consistent with the original project settlement offer that was extended to Kersting investors before the trial of the test cases": A 7-percent reduction of the deficiency, elimination of all additions to tax, and interest imposed at the normal rate prescribed in section 6621; the burnout feature was not provided for.

ng nontest case petitioners that the Commissioner would settle their cases on a basis "consistent with the original project settlement offer that was extended to Kersting investors before the trial of the test cases": A 7-percent reduction of the deficiency, elimination of all additions to tax, and interest imposed at the normal rate prescribed in section 6621; the burnout feature was not provided for.

All of the positions in the Merit T-bill and T-bond options, as well as the stock forwards, constitute "straddles" within the meaning of section 6621 (c) (3) (A) (iii) .

id. (5) Whether, in 1989, petitioner Murphy owned a 9.53- percent interest or a 50-percent interest in Lone Star. We hold that Murphy owned a 9.53-percent interest in Lone Star in 1989. (6) Whether petitioners are liable for increased interest under section 6621. We hold that they are not. (7) Whether petitioner Sands is liable for additions to tax for negligence under section 6653(a)(1) and (2) for the taxable 2(...continued) refer to this section as sec. 6621(c). The annual rate of interest un

id. (5) Whether, in 1989, petitioner Murphy owned a 9.53- percent interest or a 50-percent interest in Lone Star. We hold that Murphy owned a 9.53-percent interest in Lone Star in 1989. (6) Whether petitioners are liable for increased interest under section 6621. We hold that they are not. (7) Whether petitioner Sands is liable for additions to tax for negligence under section 6653(a)(1) and (2) for the taxable 2(...continued) refer to this section as sec. 6621(c). The annual rate of interest un

Section 6601(a) provides the general rule that interest will be imposed at the rate established under section 6621 on any tax that is not paid on or before the last date prescribed for payment.

Section 6621 applied to interest accruing after December 31, 1984, even though the transaction giving rise to the underpayment of tax on which interest accrued was entered into before that date, while section 1092 applied to property acquired and positions established by the taxpayers after June 23, 1981. The taxpayers contended that because their

om the law construing the word “tax” on Form 872-A to include - 12 - interest and penalties. Further, in Estate of Raney v. Commissioner, T.C. Memo. 1992-684, a Form 872-A was deemed to extend the period of limitations for increased interest under section 6621. Petitioners cite Tolve v. Commissioner, 31 Fed. Appx. 73 (3d Cir. 2002), as authority that the word “tax” does not include interest or penalties. In addition to the fact that Tolve is an unpublished opinion that is not precedential, we fi

SERVED Jg| 1 7 2006 Because the new statutory language [in section 6621] was enacted as part of the statute that gave effect to the agreements reached at the Uruguay Round of Multilateral Trade Negotiations condúcted under the auspices of the General Agreement on Tariffs and Trade ("GATT"), the lower corporate ·overpayment interest rate of 0.5 percent set forth in the 1994 amendment is referred to as the "

The parties differ not only over the amount owed, that is, the amount of the deficiencies, but also the time the deficiencies should be deemed to have been outstanding (there does appear to be a consensus, with which the Court agrees, that the applicable rates of interest are those prescribed pursuant to section 6621 and set forth most recently in Rev.

The parties differ not only over the amount owed, that is, the amount of the deficiencies, but also the time the deficiencies should be deemed to have been outstanding (there does appear to be a consensus, with which the Court agrees, that the applicable rates of interest are those prescribed pursuant to section 6621 and set forth most recently in Rev.

The parties differ not only over the amount owed, that is, the amount of the deficiencies, but also the time the deficiencies should be deemed to have been outstanding (there does appear to be a consensus, with which the Court agrees, that the applicable rates of interest are those prescribed pursuant to section 6621 and set forth most recently in Rev.

The parties differ not only over the amount owed, that is, the amount of the deficiencies, but also the time the deficiencies should be deemed to have been outstanding (there does appear to be a consensus, with which the Court agrees, that the applicable rates of interest are those prescribed pursuant to section 6621 and set forth most recently in Rev.

The parties differ not only over the amount owed, that is, the amount of the deficiencies, but also the time the deficiencies should be deemed to have been outstanding (there does appear to be a consensus, with which the Court agrees, that the applicable rates of interest are those prescribed pursuant to section 6621 and set forth most recently in Rev.

The parties differ not only over the amount owed, that is, the amount of the deficiencies, but also the time the deficiencies should be deemed to have been outstanding (there does appear to be a consensus, with which the Court agrees, that the applicable rates of interest are those prescribed pursuant to section 6621 and set forth most recently in Rev.

The parties differ not only over the amount owed, that is, the amount of the deficiencies, but also the time the deficiencies should be deemed to have been outstanding (there does appear to be a consensus, with which the Court agrees, that the applicable rates of interest are those prescribed pursuant to section 6621 and set forth most recently in Rev.

The parties differ not only over the amount owed, that is, the amount of the deficiencies, but also the time the deficiencies should be deemed to have been outstanding (there does appear to be a consensus, with which the Court agrees, that the applicable rates of interest are those prescribed pursuant to section 6621 and set forth most recently in Rev.

The parties differ not only over the amount owed, that is, the amount of the deficiencies, but also the time the deficiencies should be deemed to have been outstanding (there does appear to be a consensus, with which the Court agrees, that the applicable rates of interest are those prescribed pursuant to section 6621 and set forth most recently in Rev.

The parties differ not only over the amount owed, that is, the amount of the deficiencies, but also the time the deficiencies should be deemed to have been outstanding (there does appear to be a consensus, with which the Court agrees, that the applicable rates of interest are those prescribed pursuant to section 6621 and set forth most recently in Rev.

The parties differ not only over the amount owed, that is, the amount of the deficiencies, but also the time the deficiencies should be deemed to have been outstanding (there does appear to be a consensus, with which the Court agrees, that the applicable rates of interest are those prescribed pursuant to section 6621 and set forth most recently in Rev.

Court agrees, that the applicable rates of interest are those prescribed pursuant to section 6621.and set forth most recently in Rev.

The parties differ not only over the amount owed, that is, the amount of the deficiencies, but also the time the deficiencies should be deemed to have been outstanding (there does appear to be a consensus, with which the Court agrees, that the applicable rates of interest are those prescribed pursuant to section 6621 and set forth most recently in Rev.

original overpayment on the due date of petitioner’s return relieves the need for any further application of the $10,000 threshold in section 6621(a)(1). Discussion Interest on overpayments is authorized by section 6611(a) at the rate established in section 6621. Section 6622(a) requires that the overpayment interest be compounded daily. The issue before us concerns whether the GATT rate change in corporate overpayment interest applies in computing interest on the interest accrued before the eff

6654(e), and it imposes an addition to tax on an individual who underpays his estimated tax that is calculated with reference to the underpayment rate under section 6621, the underpayment amount, and the underpayment period, see sec.

6,861 1986 4-6-1998 9,697 1987 3-30-1998 319 Respondent prepared an Interest and Penalty Detail Report for each tax year from 1982 through 1987 based on the total amount of income tax assessed and the applicable interest rates determined pursuant to section 6621. Each report shows in detail the computations used to determine the amount of interest on petitioner’s income tax deficiencies. The tax year of each deficiency, the dates during which the interest accrued, and the total amount of interes

ts, not on deficiencies. See, e.g., secs. 6601, 6611, 6621. There can be an income tax deficiency without an underpayment. There can be an underpayment without an income tax deficiency. In describing the amendments made by tra 1986 sections 1511 (to sec. 6621, I.R.C. 1986) and 1512 (to sec. 6601, I.R.C. 1986), the Joint Statement of Managers portion of the conference committee report consistently refers to interest on underpayments or overpayments of tax, and it does not refer to interest on tax

he claimed deduction must be a liability that arises out of Federal or state law. Both of Plaintiffs losses meet this requirement. The liability for federal income tax deficiency interest arises out of 26 U.S.C. § 6601(a) under a rate established by § 6621. The liability for workers’ compensation payments arises out of various state laws. Second, the claims must arise out of acts or failures to act more than three years earlier. In the case of the workers’ compensation claims, the liability aros

With respect to increased interest under section 6621, petitioners present no argument as to why the provision should not apply, other than contending that petitioner is at risk and, therefore, not liable for increased interest pursuant to section 6621.

(6) Whether petitioner is liable for increased interest on substantial underpayments attributable to tax-motivated transactions under section 6621 for 1984.

36,601 10,980 --- $1,830 50% of the interest due on $36,601 1 1982 4,602 1,381 230 50% of the interest due on $4,602 Respondent also determined that, pursuant to section 6621, interest on substantial underpayments attributable to tax- motivated t ansactions for the taxable years 1980, 1981, and 1982 would be 120 percent of the adjusted rate.

* We have also reconsidered whether petitioner is liable for the additions to tax determined by respondent under secs. 6651(a)(1), 6653(a)(1) and (2), 6653(a)(1)(A) and (B), and 6661, and whether he is liable for the increased rate of interest under sec. 6621. In light of the Court of Appeals for the Second Circuit’s opinion, we conclude that petitioner’s reporting position with respect to his store was not unreasonable. Accordingly, we hold that he is not liable for the additions to tax for neg

In Tricarichi II we held that the IRS was entitled to recover pre- notice interest from the transferee, at the rate specified in section 6621, because the transferee “received assets with a value in excess of [the transferor’s] total Federal tax liability (including pre-notice interest).” Id.

In Tricarichi II we held that the IRS was entitled to recover pre- notice interest from the transferee, at the rate specified in section 6621, because the transferee “received assets with a value in excess of [the transferor’s] total Federal tax liability (including pre-notice interest).” Id.

In Tricarichi II we held that the IRS was entitled to recover pre- notice interest from the transferee, at the rate specified in section 6621, because the transferee “received assets with a value in excess of [the transferor’s] total Federal tax liability (including pre-notice interest).” Id.

The section 6654(a) addition to tax is determined by applying the underpayment rate established under section 6621 to the amount ofthe underpayment" for the period ofthe underpayment.¹² Ifthe taxpayer challenges the section 6654(a) addition to tax, the Commissioner must introduce evidence to prove that the taxpayerhad an obligation to make estimated tax payments for the year at issue, by showing whether the taxpayer filed a return for the prior yea

The undersigned [petitioners] spent 20 years fighting section 6621 penalties and valuation penalties associated with the infamous FoodSource cases.

omitted.] Section 6611(a) provides that "[i]nterest shall be allowed and paid upon any overpayment in respect ofany internal revenue tax at the overpayment rate established under section 6621." The term 'overpayment' has been interpreted to mean "any payment in excess ofthat which is properly due." Jones v.

The undersigned [petitioners] spent 20 years fighting section 6621 penalties and valuation penalties associated with the infamous FoodSource cases.

The section 6654(a) addition to tax is determined by applying the underpayment rate 18 established under section 6621 to the amount ofthe underpayment¹³ for the period ofthe underpayment.¹4 This addition to tax under section 6654 is mandatory unless the taxpayer can place herselfunder one ofthe computational exceptions provided in that section.

6621 establishes the rate ofinterest for postnotice interest for the postnotice interest period. See Shockley v. Commissioner, at *7. -238- [*238] amount ofassets that the transferor-taxpayers transferred to the transferee- taxpayer. See id. It is respondent's position that respondent is entitled to prenotice interest from each ofMr. Fankhaus

OPINION Interest on a Federal income tax deficiency generally accrues at the rate specified by section 6621 from the last date prescribed for payment until the date on which the tax is paid.

Interest accrues on a Federal gift tax liability at the rate specified by section 6621 from the last date prescribed for payment until the date on which the tax is actually paid.

6621 establishes the rate ofinterest for postnotice interest for the postnotice interest period. See Shockley v. Commissioner, at *7. -238- [*238] amount ofassets that the transferor-taxpayers transferred to the transferee- taxpayer. See id. It is respondent's position that respondent is entitled to prenotice interest from each ofMr. Fankhaus

6621 establishes the rate ofinterest for postnotice interest for the postnotice interest period. See Shockley v. Commissioner, at *7. -238- [*238] amount ofassets that the transferor-taxpayers transferred to the transferee- taxpayer. See id. It is respondent's position that respondent is entitled to prenotice interest from each ofMr. Fankhaus

The section 6654(a) addition to tax is determined by applying the underpayment interest rate established under section 6621 to the amount ofthe underpayment for the period ofthe underpayment.

at 959 (referencing the same section in the Internal Revenue Code of 1954); see also section 6621 (establishing the interest rate).

The section-6654(a) addition to tax is determined by applying the underpaymentrate established under section 6621 to the amount ofthe underpayment for the period ofthe underpayment.

The addition to tax is calculated by applying the section 6621 underpayment interest rate to the amount ofeach underpayment from the due date ofeach installment until April 15 following the close ofthe taxable year (for calendar-yeartaxpayers).

Section 6651(a)(2) provides that ifa taxpayer fails to pay taxes, unless the failure is due to reasonable cause and not due to willful neglect, there shall be added to the amount required to be shown as tax on the return an,amount equal to 0.5% for each month during which the taxpayercontinues to fail to pay such taxes, not exceed

The section 6654(a) addition to tax is calculated by applying the section 6621 underpayment interest rate to the amount ofeach underpayment from the due date ofeach installment until April 15 following the close ofthe taxable year (for calendar yeartaxpayers).

al revenue tax (or any interest, assessable penalty, additional amount, or addition to tax) which has been erroneously refunded, and which is recoverable by suit pursuant to section 7405, shall bear interest at the underpaymentrate established under section 6621 from the date ofthe payment ofthe refund." Section 7405 concerns actions for recovery oferroneous refunds, and section 7405(b) provides: "Any portion ofa tax imposed by this title which has been erroneously refunded (ifsuch refund - 12 -

The section 6654(a) addition to tax is calculated by applying the section 6621 underpayment interest rate to the amount ofeach underpayment from the due date ofeach installment until April 15 following the close ofthe taxable year (for calendar year taxpayers).

- 10 - stipulation offacts and the accompanying exhibits as to materiality for paragraphs 33 through 48 and the corresponding Exhibits 18-P through 32-P.6 Discussion Interest on a Federal incometax deficiency generally accrues at the rate specified by section 6621 from the last date prescribed for payment.until the date on which the tax is paid.

l revenue tax (or any interest, assessable penalty, additional amount, or addition to tax) which has been erroneously refunded, and which is recoverable by suit pursuant to section 7405, shall bear interest at the underpayment rate established under section 6621 from the date of the payment of the refund.” Section 7405 concerns actions for recovery of erroneous refunds, and section 7405(b) provides: “Any portion of a tax imposed by this title which has been erroneously refunded (if such refund w

The section 6654(a) addition to tax is calculated by applying the section 6621 underpayment interest rate to the amount of each underpayment from the due date of each installment until April 15 following the close of the taxable year (for calendar year taxpayers).

The section 6654(a) addition to tax is determined by applying the underpayment rate established under section 6621 to the amount of the underpayment' for the period of '"[A]mount of the underpayment" means the excess of the required installment over the amount, if any, of the installment paid on or before the due date for the installment.

Section 6601(a) provides that if-a taxpayer fails'to pay the tàx imposed by the/Code, eihterest shall, accrue from the- date that ther tax payment is due- until the date it sis*paid. eThe rate of interest is "the underpayment rate established under section 6621" . 22 .llustrat he alâulation of undeFþayment 2This statutory language is in effect for interest? accruing after December 31, 1986e -For interest accruing befores then, the statute istworded differently but is substantively the same for

The section 6654(a) addition to tax is determined by applying the underpayment rate established under -12- section 6621 to the amount of the underpayments for the period of the underpayment.' The addition.to tax is.also calculated with reference to four required installment payments of the taxpayer's estimated income tax.

The section 6654(a) addition to tax is determined by applying the underpayment rate established under section 6621 to the amount of the underpayments for the period of the underpayment.

The section 6654(a) addition to tax is determined by applying the underpayment rate established under -12- section 6621 to the amount of the underpayments for the period of the underpayment.' The addition.to tax is.also calculated with reference to four required installment payments of the taxpayer's estimated income tax.

The section 6654(a) addition to tax is determined by applying:the underpayment rate established under section 6621 to the amount of the underpayments for the period of s"[A]mount of the underpayment" means the excess of the required installment over the amount, if any, of the installment ,paid on or before the due date for the installment.

tax is calculated by applying the section 6621 underpayment interest rate to the amount of the underpayment from the due date of each installment until April 15 following the close of the taxable year .

The addition to .tax is', calculated-by applying the section 6621 underpayment .' interest_ rate- to .,the amount of each- underpayment from the „ due,,.date.

In his notice of objection respondent argues that petitioner is liable for two types of interest: (1) Pursuant to section 6601, interest at the section 6621 underpayment rate for the period October 17, 2005 (the date respondent issued the notice of transferee liability), until petitioner's transferee liability is finally paid; and (2) pursuant to Florida law, interest at rates determined under Fla.

6601(a)-provides : If any amount of tax imposed by this title (whether required to be shown on a return, or to be paid by stamp or by some other method) is not paid on or befor e the last date prescribed for payment, interest on such amount at the underpayment rate established under section 6621 shall be paid for the period from such last date to the date paid.

6601(a)-provides : If any amount of tax imposed by this title (whether required to be shown on a return, or to be paid by stamp or by some other method) is not paid on or befor e the last date prescribed for payment, interest on such amount at the underpayment rate established under section 6621 shall be paid for the period from such last date to the date paid.

ability was in error insofar as it asserted petitioner’s transferee liability to exceed $41,000 plus “statutory interest”. Respondent has not explained whether by “statutory interest” he means anything other than interest at the underpayment rate of sec. 6621, accumulating on the principal of $41,000 from the date of transferee liability. See infra note 18. In some situations Federal law determines the existence and extent of transferee liability. See, e.g., sec. 6324(a)(2), (b). Fla. Stat. Ann.

, that if any amount o f tax imposed by the Code is not paid on or before the last dat e ,[ prescribed-for payment, interest on such amount must be. paid for theperiod from such last date to the; date paid at the ,underpayment rate established under section 6621 . Section I6611;(a) similarly provides that interest must be allowed and paid on,aiy overpayment in respect of any internal revenue tax at the overpayment rate established under section 6621 . Section 6621(d) :provides for the eliminatio

The addition to tax is calculated by applying the section 6621 underpayment rate to the amount of the underpayment from the due date of the particular installment until the 15th day of the 4th month following the close of the taxable year .

provided for interest to be calculated "based on the rate established from time to time by the Secretary of the Treasury" as provided in section 6621 .10 On January 3, 2007, petitioner timely filed a petition with the Court .

OPINION Interest on a Federal income tax deficiency generally accrues at the rate specified by section 6621 from the last date prescribed for payment until the date on which the tax is paid .

Discussion Under section 6601(a), interest on a Federal income tax liability generally accrues at the rate specified by section 6621 from the last date prescribed for payment until the date on which the tax is paid .

816, 823-824 (1988) (as a sanction for the Commissioner's failure to timely file an answer, the Court deemed established that the Commissioner erred in determining that additional interest was due under section 6621(.c)); Vermouth v.

ekulsia v. Commissioner, 389 F .3d 601 ( 6th Cir . 2004), that the taxpayer was not entitled to an abatement of interest . Second, the notice states that petitioners never established that their facts did not support the imposition of interest under section 6621 (c) . Third, the notice indicates that petitioners never discussed at the hearing their claim that they were not given an opportunity to be heard during the examination and, hence, that Driver considered that issue to be abandoned . OPIN

The increased rate of interest under section 6621(c) is 120 percent of the statutory rate imposed on underpayments under section 6601 if the underpayment exceeds $1,000 and is attributable to a tax-motivated transaction (as defined in section 6621 (c)(3)) .

Section 6654(a) provides that in the case of an underpayment of estimated tax by an individual, there shall be added to the tax an amount determined by applying the underpayment rate established under section 6621 to the amount of the underpayment for the period of the underpayment.

Petitioner makes this argument in order to incorporate not simply the provisions of subsection (c)(3)(B) of section 6621 into the operation of section 6621(a)(1), but also subsection (c) (3) (A).

Summers to pay responden $647,749 .86 for unpaid Federal income taxes for years 1985, 1 86, 1988, and 1989 plus interest accruing thereon at the rate p ovided by section 6621 from April 27, 2003, unti l paid.

Petitioner makes this argument in order to incorporate not simply the provisions of subsection (c)(3)(B) of section 6621 into the operation of section 6621(a)(1), but also subsection (c)(3)(A).

Section 6654(-a) provides that in the case of an underpayment of estimated tax by an individual, there shall be added to the tax an amount determined by applyi g the underpayment rate established under section 6621.to the amount of the underpayment I for the period of the underpayment.

Section 6654(a) provides that in the case of an underpayment of estimated tax by an individual, there shall be added to the tax an amount determined by applying the underpayment rate established under section 6621 to the amount of the underpayment for the period of the underpayment.

Section 6654(a) provides that in the case of an underpayment of estimated tax by an individual, there shall be added to the tax an amount determined by multiplying the underpayment rate established under section 6621 to the amount of the underpayment for the period of the underpayment.

Section 6654(a) provides that in the case of an underpayment of estimated tax by an individual, there shall be added to the tax an amount determined by applying the underpayment rate established under section 6621 to the amount of the underpayment - 12 - for the period of the underpayment.

Adjustments On October 6, 2003, respondent issued a notice of deficiency (notice) for 1982 to petitioner. Respondent determined that petitioner was liable for additions to tax under sections 6653(a)(1) and (2) and 6659, and increased interest under section 6621. In the Form 886-A, Explanation of Items, accompanying the notice, respondent explained that he had adjusted petitioner’s reported basis in the recyclers to zero and disallowed the loss and the investment and business energy credits petit

Petitioner's only arguments concerning this issue were made in the context of her objections to the application of the section 6621 tax motivated interest, an issue that is discussed below.

for negligence. Petitioner is concerned because she was unaware of the litigation that was going on in this Court. Petitioner argues that respondent's failure to notify her about the deficiency resulted in her incurring extraordinary interest under section 6621. Under the TEFRA procedures, however, the TMP is responsible for giving various notices to the limited partners. See sec. 6223(g). Section 6230(f) expressly states: SEC. 6230(f). Failure of Tax Matters Partner, Etc., To Fulfill Responsib

not on deficiencies. See, e.g., secs. 6601, 6611, 6621. There can be an income tax deficiency without an underpayment.12 There can be an underpayment without an income tax deficiency.13 In describing the amendments made by TRA 1986 sections 1511 (to sec. 6621, I.R.C. 1986) and 1512 (to sec. 6601, I.R.C. 1986), the Joint Statement of Managers portion of the conference committee report consistently refers to interest on underpayments or overpayments of tax, and it does not refer to interest on tax

se the amount assessed by respondent under - 17 - the authority of section 6621(c) is a penalty, not interest. Tax-motivated interest is clearly interest, prescribed in the same manner as all interest--under section 6601(a) at the rate set forth in section 6621. Even if the interest could be considered a “penalty”, it is nonetheless prescribed by section 6601(a) and therefore subject to the same jurisdictional restrictions as regular interest prescribed by section 6601(a). See Pen Coal Corp. v.

r because the amount assessed by respondent under the authority of section 6621(c) is a penalty, not interest. Tax-motivated interest is clearly interest, prescribed in the same manner as all interest--under section 6601(a), at the rate set forth in section 6621. Even if the interest could be considered a “penalty”, it is nonetheless prescribed by section - 17 - 6601(a) and therefore subject to the same jurisdictional restrictions as regular interest prescribed by section 6601(a). See Pen Coal C

In pertinent part, section 6654(a) provides: in the case of any underpayment of estimated tax by an individual, there shall be added to the tax * * * an amount determined by applying-- (1) the underpayment rate established under section 6621, (2) to the amount of the underpayment, (3) for the period of the underpayment.

In the case of Lakewood, respondent also determined that it was liable for a 15- percent addition to tax under section 6651(a) for failure to file timely its 1992 Federal income tax return and a section 6621 increased rate of interest on its 1991 deficiency as to interest accruing after July 20, 1995.

2(...continued) underpayment of tax for each taxable year referred to in subparagraph (A) which would result solely from the application of subparagraph (A), and (C) then using the overpayment rate established by section 6621, compounded daily, on the overpayment or underpayment determined under subparagraph (B).

Until such partnership-level proceeding is completed, respondent generally may not assess a deficiency attributable to a - 16 - “partnership item” against any partner. Sec. 6225. Moreover, because the tax treatment of an “affected item” depends upon the partnership-level determination, affected items generally cannot be tried as part of

If there is an underpayment of estimated tax for any of the years in issue, section 6654(a) imposes an addition to tax equal to the interest rate established under section 6621 applied to the amount of the underpayment for the period of the underpayment.

Section 6621(c) Increased Interest With regard to increased interest under section 6621(c), among other arguments, petitioners contend that the temporary regulations under section 6621 that extended increased interest to transactions lacking a profit objective are invalid and that - 8 - imposition against them of increased interest would violate due process of law.1 See sec.

In the case of Lakewood, respondent also determined that it was liable for a 15- percent addition to tax under section 6651(a) for failure to file timely its 1992 Federal income tax return and a section 6621 increased rate of interest on its 1991 deficiency as to interest accruing after July 20, 1995.

and costs instead of the estimated contract price and costs, (B) second, determining (solely for purposes of computing such interest) the overpayment or underpayment of tax for each taxable year referred to in subparagraph (A) which would result solely from the application of subparagraph (A), and (C) then using the overpayment rate established by section 6621, compounded daily, on the overpayment or underpayment determined under subparagraph (B).

In the case of Lakewood, respondent also determined that it was liable for a 15-percent addition to tax under section 6651(a) for failure to file timely its 1992 Federal income tax return and a section 6621 increased rate of interest on its 1991 deficiency as to interest accruing after July 20, 1995.

Until such partnership-level proceeding is completed, respondent generally may not assess a deficiency attributable to a “partnership item” against any partner. Sec. 6225. Moreover, because the tax treatment of an “affected item” depends upon the partnership-level determination, affected items generally cannot be tried as part of a partn

"Congress decided that no longer would a - 5 - partner's tax liability be determined uniquely but 'the tax treatment of any partnership item [would] be determined at the partnership level.'" Maxwell v. Commissioner, 87 T.C. 783, 787 (1986) (citing section 6621). Pursuant to section 6226(b)(1), any notice partner may file a petition "within 60 days after the close of the 90-day period set forth in subsection (a)". Subsection (a) of section 6226 states in pertinent part: (a) Petition by Tax Matte

20219-91 1984 $827,955 $41,397.75 $206,988.75 -- 21555-91 1987 195,498 9,774.90 48,874.50 -- 16164-92 1988 109,048 5,452.00 27,262.00 -- 7557-93 1989 109,049 -- .-- $21,810 In the following cases, respondent determin d in the notices of deficiency or asserted in amended answers that the underpayments in tax were subject to increased i terest under section 6621 (c) , formerly section 6621 (d) :4 Investment Research Associatesr Ltd., and Subsidiaries: Docket No.

During the period 1982 through 1993, interest rates under section 6621 ranged as follows from a high of 20 percent in 1982 to a low of 7 percent in 1993: Interest rates under section 6621 were 20 percent in 1982, 10 percent in 1986, 8 percent in 1987, 10 percent in 1990, 9 percent in 1991, 8 percent in 1992, and 7 percent in 1993.

- 6 - Section 6654(a) imposes an addition to tax equal to the amount of the underpayment multiplied by the underpayment rate established under section 6621 for the period of the underpayment.

The amount of this addition to tax is equal to the amount of the underpayment multiplied by the underpayment rate established under section 6621 for the period of the underpayment.

Section 6654(a) imposes an addition to tax equal to the amount of the underpayment multiplied by the underpayment rate established under section 6621 for the period of the underpayment.

understatement of tax penalties under section 6661 and the negligence additions to tax under section 6653(a)(1) and (2); (3) taxpayer concession of the section 6659 addition to tax for valuation overstatement and the increased rate of interest under section 6621; and (4) execution of a closing agreement (Form 906) stating the settlement and resolving the entire matter for all years.10 Petitioners assert that the Plastics Recycling 9 In their motion for decision, petitioners state: "After the lea

nderstatement of tax penalties under section 6661 and the negligence additions to tax under section 6653(a)(1) and (2); (3) taxpayer concession of the section 6659 addition to tax for valuation overstatement and the increased rate of interest under section 6621; and (4) execution of a closing agreement (Form 906) stating the settlement and resolving the entire matter for all years.32 Petitioners assert that the Plastics Recycling project settlement offer was extended to them, but they do not cla

understatement of tax penalties under section 6661 and the negligence additions to tax under section 6653(a)(1) and (2); (3) taxpayer concession of the section 6659 addition to tax for valuation overstatement and the increased rate of interest under section 6621; and (4) execution of a closing agreement 22 In each of their motions for decision, petitioners state: "After the lead counsel for taxpayers and Respondent had agreed upon the designation of the lead cases, Respondent's counsel prepared

understatement of tax penalties under section 6661 and the negligence additions to tax under section 6653(a)(1) and (2); (3) taxpayer concession of the section 6659 addition to tax for valuation overstatement and the increased rate of interest under section 6621; and (4) execution of a closing agreement 22 In each of their motions for decision, petitioners state: "After the lead counsel for taxpayers and Respondent had agreed upon the designation of the lead cases, Respondent's counsel prepared

nderstatement of tax penalties under section 6661 and the negligence additions to tax under section 6653(a)(1) and (2); (3) taxpayer concession of the section 6659 addition to tax for valuation overstatement and the increased rate of interest under section 6621; and (4) execution of a closing agreement (Form 906) stating the settlement and resolving the entire matter for all years.32 Petitioners assert that the Plastics Recycling project settlement offer was extended to them, but they do not cla

nderstatement of tax penalties under section 6661 and the negligence additions to tax under section 6653(a)(1) and (2); (3) taxpayer concession of the section 6659 addition to tax for valuation overstatement and the increased rate of interest under section 6621; and (4) execution of a closing agreement (Form 906) stating the settlement and resolving the entire matter for all years.32 Petitioners assert that the Plastics Recycling project settlement offer was extended to them, but they do not cla

understatement of tax penalties under section 6661 and the negligence additions to tax under section 6653(a)(1) and (2); (3) taxpayer concession of the section 6659 addition to tax for valuation overstatement and the increased rate of interest under section 6621; and (4) execution of a closing agreement 22 In each of their motions for decision, petitioners state: "After the lead counsel for taxpayers and Respondent had agreed upon the designation of the lead cases, Respondent's counsel prepared

nderstatement of tax penalties under section 6661 and the negligence additions to tax under section 6653(a)(1) and (2); (3) taxpayer concession of the section 6659 addition to tax for valuation overstatement and the increased rate of interest under section 6621; and (4) execution of a closing agreement (Form 906) stating the settlement and resolving the entire matter for all years.32 Petitioners assert that the Plastics Recycling project settlement offer was extended to them, but they do not cla

understatement of tax penalties under section 6661 and the negligence additions to tax under section 6653(a)(1) and (2); (3) taxpayer concession of the section 6659 addition to tax for valuation overstatement and the increased rate of interest under section 6621; and (4) execution of a closing agreement 22 In each of their motions for decision, petitioners state: "After the lead counsel for taxpayers and Respondent had agreed upon the designation of the lead cases, Respondent's counsel prepared

nderstatement of tax penalties under section 6661 and the negligence additions to tax under section 6653(a)(1) and (2); (3) taxpayer concession of the section 6659 addition to tax for valuation overstatement and the increased rate of interest under section 6621; and (4) execution of a closing agreement (Form 906) stating the settlement and resolving the entire matter for all years.32 Petitioners assert that the Plastics Recycling project settlement offer was extended to them, but they do not cla

- 24 - (1) the underpayment rate established under section 6621, (2) to the amount of the underpayment, (3) for the period of the underpayment.

6621 $384.30 50% of the interest $768.60 120% of the due on $7,686 adjusted rate This matter is before us on the Commissioner's Motion for Summary Judgment and/or Entry of Decision and Petitioners' Motion for Leave to File Amendment to Petition. Petitioners, Mayer and Ninette Stiskin, are husband and wife. They resided in New York, New York, a

e year(s) of investment to the extent of loss claimed; (2) Government concession of the substantial understatement of tax penalties under section 6661 and the negligence additions to tax under section 6653(a)(1) and (2); (3) taxpayer concession of the section 6659 addition to tax for valuation overstatement and the increased rate of interest under section 6621; and (4) execution of a closing agreement (Form 906) stating the settlement and resolving the entire matter for all years.

- 11 - under section 6621; and (4) execution of a closing agreement (Form 906) stating the settlement and resolving the entire matter for all years.

- 50 - The addition is imposed at the rate determined by section 6621.21 Imposition of the tax is mandatory where prepayments of the tax, either through withholding or by making estimated quarterly payments, do not satisfy the specified percentages of total liability required under the statute.

e year(s) of investment to the extent of loss claimed; (2) Government concession of the substantial understatement of tax penalties under section 6661 and the negligence additions to tax under section 6653(a)(1) and (2); (3) taxpayer concession of the section 6659 addition to tax for valuation overstatement and the increased rate of interest under section 6621; and (4) execution of a closing agreement (Form 906) stating the settlement and resolving the entire matter for all years.

understatement of tax penalties under section 6661 and the negligence additions to tax under section 6653(a)(1) and (2); (3) taxpayer concession of the section 6659 addition to tax for valuation overstatement and the increased rate of interest under section 6621; and (4) execution of a closing agreement (Form 906) stating the settlement and resolving the entire matter for all years.20 Petitioners assert that the Plastics Recycling project settlement offer was extended to them, but they do not 19

understatement of tax penalties under section 6661 and the negligence additions to tax under section 6653(a)(1) and (2); (3) taxpayer concession of the section 6659 addition to tax for valuation overstatement and the increased rate of interest under section 6621; and (4) execution of a closing agreement (Form 906) stating the settlement and resolving the entire matter for all years.20 Petitioners assert that the Plastics Recycling project settlement offer was extended to them, but they do not 19

understatement of tax penalties under section 6661 and the negligence additions to tax under section 6653(a)(1) and (2); (3) taxpayer concession of the section 6659 addition to tax for valuation overstatement and the increased rate of interest under section 6621; and (4) execution of a closing agreement (Form 906) stating the settlement and resolving the entire matter for all years.20 Petitioners assert that the Plastics Recycling project settlement offer was extended to them, but they do not 19

understatement of tax penalties under section 6661 and the negligence additions to tax under section 6653(a)(1) and (2); (3) taxpayer concession of the section 6659 addition to tax for valuation overstatement and the increased rate of interest under section 6621; and (4) execution of a closing agreement (Form 906) stating the settlement and resolving the entire matter for all years.17 Petitioners assert that the Plastics Recycling project settlement offer was extended to them, but they did not a

nderstatement of tax penalties under section 6661 and the negligence additions to tax under section 6653(a)(1) and (2); (3) taxpayer concession of the section 6659 addition to tax for valuation overstatement and the increased rate of interest under section 6621; and (4) execution of a closing agreement (Form 906) stating the settlement and resolving the entire matter for all years.19 Petitioners assert that the Plastics Recycling project settlement offer was extended to them, but they do not cla

- 50 - The addition is imposed at the rate determined by section 6621.21 Imposition of the tax is mandatory where prepayments of the tax, either through withholding or by making estimated quarterly payments, do not satisfy the specified percentages of total liability required under the statute.

e year(s) of investment to the extent of loss claimed; (2) Government concession of the substantial understatement of tax penalties under section 6661 and the negligence additions to tax under section 6653(a)(1) and (2); (3) taxpayer concession of the section 6659 addition to tax for valuation overstatement and the increased rate of interest under section 6621; and (4) execution of a closing agreement (Form 906) stating the settlement and resolving the entire matter for all years.

e year(s) of investment to the extent of loss claimed; (2) Government concession of the substantial understatement of tax penalties under section 6661 and the negligence additions to tax under section 6653(a)(1) and (2); (3) taxpayer concession of the section 6659 addition to tax for valuation overstatement and the increased rate of interest under section 6621; and (4) execution of a closing agreement (Form 906) stating the settlement and resolving the entire matter for all years.

nderstatement of tax penalties under section 6661 and the negligence additions to tax under section 6653(a)(1) and (2); (3) taxpayer concession of the section 6659 addition to tax for valuation overstatement and the increased rate of interest under section 6621; and (4) execution of a closing agreement (Form 906) stating the settlement and resolving the entire matter for all years.19 Petitioners assert that the Plastics Recycling project settlement offer was extended to them, but they do not cla

e year(s) of investment to the extent of loss claimed; (2) Government concession of the substantial understatement of tax penalties under section 6661 and the negligence additions to tax under section 6653(a)(1) and (2); (3) taxpayer concession of the section 6659 addition to tax for valuation overstatement and the increased rate of interest under section 6621; and (4) execution of a closing agreement (Form 906) stating the settlement and resolving the entire matter for all years.

understatement of tax penalties under section 6661 and the negligence additions to tax under section 6653(a)(1) and (2); (3) taxpayer concession of the section 6659 addition to tax for valuation overstatement and the increased rate of interest under section 6621; and (4) execution of a closing agreement (Form 906) stating the settlement and resolving the entire matter for all years.17 Petitioners assert that the Plastics Recycling project settlement offer was extended to them, but they did not a

The amount of the addition is determined by applying — • (1) the underpayment rate established under section 6621, (2) to the amount of the underpayment, (3) for the period of the underpayment.