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20.2.9.2
(06-30-2009)
Determining the Overpayment Interest Period
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For interest accruing after October 3, 1982 (post-TEFRA) - compute interest from the later of:
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the loss year return due date (determined without regard to extensions),
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the received date of a delinquent loss year return,
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the date the loss year return is filed in processible form,
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the application or claim processible date,
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the date the overpayment arose.
Interest is computed from the later of the above dates TO the refund schedule date (less the applicable back-off date).
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For interest accruing on or before October 3, 1982 (pre-TEFRA):
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compute interest FROM the first day after the end of the loss year or
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the date the overpayment arose, whichever is later,
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TO the refund schedule date (also see additional rules below, applicable to pre-TEFRA and post-TEFRA periods).
Example:
Loss year is 198112 (Form 1120)
Loss year return due date is 03151982
Tentative application or claim is filed 11141982
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If refunded within 45 days, interest is allowed from January 1, 1982 (one day after the end of the loss year) to either the received date of the claim
or October 3, 1982, whichever is earlier. If not refunded within 45 days, interest is allowed from January 1, 1982 to the refund schedule date.
Note:
The interest start date for Transaction Code (TC) 299 is January 1, 1982 (pre-TEFRA).
Example:
Loss year is 198208 (Form 1120)
Loss year return due date is 11151982
Tentative application or claim is filed 10151982
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If refunded within 45 days, interest is allowed from September 1, 1982, to October 3, 1982. If not refunded within 45 days, interest is allowed from September 1, 1982 to October 3, 1982, then from November 15, 1982, to the refund schedule date
(pre-TEFRA and post-TEFRA straddle years).
Note:
The interest start date for Transaction Codes 295 or 299 is September 1, 1982.
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Losses carried forward to years succeeding the loss year do not require restricted interest computations. Follow regular adjustment procedures for allowing normal credit interest.
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Interest is not allowed when the Service refunds an overpayment of income tax attributable to a carryback of a net operating
loss within 45 days of the date on which a taxpayer files a claim for refund of the overpayment in processible form.
The law provides specific rules with respect to how interest is to be computed on overpayments arising from the carryback
of the net operating loss.
IRC section 6611(f)(4)(B)(i)(I) provides that for purposes of IRC section 6611(e), the overpayment attributable to the carryback
of the net operating loss is treated as an overpayment for the loss year. IRC section 6611(f)(4)(B)(i)(II) provides that
IRC section 6611(e) is applied with respect to that overpayment by treating the return for the loss year as not filed before
claim for such overpayment is filed.
When the 45-day period is in jeopardy, prepare a manual refund. See IRM 21.4.4, Refund Inquiries-Manual Refunds.
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Compute interest on carryback applications and claims as follows:
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To determine whether the 45-day period has been met, consider these dates:
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The due date of the loss year return.
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Received date of the delinquent loss year return.
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The date the loss year return is filed in processible form.
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The application or claim received date.
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The application or claim processible date, whichever is later.
20.2.9.2.1
(06-30-2009)
Special Rules
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If a carryback application ( Form 1045 or Form 1139) and a carryback claim ( Form 1120X or Form 1040X) are filed for the
same loss year, determine the start date for the 45-day interest free period as follows:
Reminder:
This rule does not apply if the applications were received prior to the due date of the loss year return or the delinquent
loss year return received date.
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For loss years ending on or before October 3, 1982, interest is paid from the first day after the loss year to October 3,
1982. Additional interest, if any, is computed from October 4, 1982, the loss year return due date or received date of the
delinquent loss year return, whichever is later. See Exhibit 20.2.9-4, Summary Interest Computation Chart for Carryback Claims/Applications.
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If the module is restricted from Master File interest computation, the interest restriction must be addressed. See Exhibit 20.2.9-1,Interest Restrictions.
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