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20.2.9.8
(06-30-2009)
Summary
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When determining the interest period for a tentative allowance or a general adjustment due to a carryback loss and there is
a reduction of an unpaid liability:
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Use TC 295/299 or TC 309 with an interest computation date.
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Compute debit interest from the due date of the carryback year to the due date of the loss year return.
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Compute credit interest on any overpayment from the loss year return due date, received date of delinquent loss year return
or payment date whichever is later, to the refund schedule date. See IRM 20.2.9.2.
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For a partial abatement of an unpaid tax liability:
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Use TC 295/299 or TC 309 with an interest computation date.
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Compute debit interest from the due date of the carryback year to the due date of the loss year return.
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Credit interest is not allowed on the abated unpaid tax liability.
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For a decrease in the liability which results in an overpayment:
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Refund or offset (if applicable) the overpayment.
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For interest accruing before October 3, 1982, compute credit interest from the first day after the end of the loss year or
from the payment date, whichever is later, to the refund schedule date.
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For interest accruing on or after October 3, 1982, compute credit interest from the loss year return due date, received date
of the delinquent loss year return, or the payment date, whichever is later, to the refund schedule date. See IRM 20.2.9.2.
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Credit any overpayment and any corresponding credit interest to any unpaid tax, interest, and penalty for any other year before
refunding any part of the overpayment. Interest is computed on the overpayment from its availability date to the due date
of the liability that is being paid.
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Compute credit interest on any remaining overpayment to be refunded, from the credit availability date to the refund schedule
date, after all liabilities for tax, penalties, additions to tax, and debit interest have been paid.
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If credit interest was allowed, assess interest on an excessive tentative refund or an erroneous refund claim from the date
it was allowed. Then assess interest on the excessive refund and the netted interest amount from the refund date to the earlier
of:
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the 30th day after filing a waiver, or
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the date of assessment, or
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the date of payment, or
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the credit availability date (if paid by credit)
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When determining the debit interest period for an NOL and net capital loss carryback with general adjustments, assess interest
on the deficiency as shown earlier in See IRM 20.2.9.7.
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Allow credit interest on a net overassessment as shown in IRM 20.2.4, Overpayment Interest.
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When debit interest was assessed at any time before the end of a loss year and there is a net overassessment due to a combination
of a general adjustment decrease and a carryback allowance, debit interest must be reduced.
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Determine whether debit interest was initially computed to a date beyond the loss year due date. If so, recompute debit interest
to the loss year due date.
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Abate the excess debit interest with a TC 341.
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Estimated tax penalties and penalties for late filing (Failure to File), negligence in reporting income (Accuracy Related),
and fraud are not reduced by carryback losses. See IRM 20.1.5.2.3, Carrybacks and Carryovers in the Penalty Handbook.
Note:
See IRM 20.2.5.3(4), Interest on Underpayments for penalties that do not begin to accrue until the due date of the loss year return.
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