rp-99-43.pdf

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Part III
Administrative, Procedural, and Miscellaneous
26 CFR 601.105: Examination of returns and claims for refund, credit, or abatement;
determination of correct tax liability. (Also Part I, §§ 6601, 6611, 6621; 301.6601-1,
301.6611-1, 301.6621-1.)
Rev. Proc. 99-43
SECTION 1. PURPOSE
.01 In general
. This revenue procedure provides guidance regarding the application
of § 6621(d) of the Internal Revenue Code with respect to interest accruing before
October 1, 1998, and modifies and supersedes Rev. Proc. 99-19, 1999-13 I.R.B. 10.
Section 6621(d) was enacted by § 3301 of the Internal Revenue Service Restructuring
and Reform Act of 1998 (RRA), Pub. L. No. 105-206, 112 Stat. 741, and was amended
by § 4002(d) of the Tax and Trade Relief Extension Act of 1998, Pub. L. No. 105-277,
112 Stat. 2681. Section 6621(d) provides for a net interest rate of zero to the extent of
overlapping tax underpayments and tax overpayments, and generally applies to interest
for periods beginning after July 22, 1998 (i.e.
, interest accruing on or after October 1,
1998). However, the net interest rate of zero in § 6621(d) also applies to interest for
periods beginning before July 22, 1998 (i.e.
, interest accruing before October 1, 1998),
provided certain conditions (described in section 4.01 of this revenue procedure) are
met. Among these conditions is a requirement that a taxpayer request the application of
§ 6621(d) by December 31, 1999. This revenue procedure provides guidance on, and

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discusses how to comply with, those conditions.
.02 Comments received in response to Rev. Proc. 99-19
. In Rev. Proc. 99-19, the
Service asked for comments regarding what taxpayers should be required to submit to
the Service by December 31, 1999, when taxpayers cannot provide a final computation
on the application of the net rate of zero by that date. Commentators made
recommendations regarding the amount of information that would be sufficient to make a
request by December 31, 1999, that would reasonably identify and establish
overlapping periods. Commentators also suggested that taxpayers should not be
required to take any action by December 31, 1999, if taxpayers could not reasonably
identify and establish overlapping periods by that date. In response to these comments,
this revenue procedure provides that:
(1) taxpayers must file a claim requesting application of the net rate of zero by
December 31, 1999, only if both applicable periods of limitation (as described in
sections 4.02(1) and 4.02(2) of this revenue procedure) will be closed on or before
December 31, 1999 (section 4.03(1)); and
(2) taxpayers need not take any action by December 31, 1999, if at least one of
the applicable periods of limitation (as described in sections 4.02(1) and 4.02(2) of this
revenue procedure) will be open after December 31, 1999; such taxpayers must file a
claim requesting application of the net rate of zero on or before the date on which the
last applicable period of limitation closes (section 4.03(2)).
.03 Modification to Rev. Proc. 99-19 regarding application procedures
. Claims

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requesting the application of the net rate of zero:
(1) should be sent to a specific address (section 5.02);
(2) should be specifically labeled (section 5.03); and
(3) should generally be made using a computation that reduces underpayment
interest, except as otherwise expressly provided (section 5.04(5)(f)).
SECTION 2. BACKGROUND
.01 Interest computations in general
.
(1) Section 6601(a) provides, in general, that if any amount of tax imposed by the
Code is not paid on or before the last date prescribed for payment, interest on such
amount must be paid for the period from such last date to the date paid at the
underpayment rate established under § 6621.
(2) Section 6611(a) provides that interest must be allowed and paid on any
overpayment in respect of any internal revenue tax at the overpayment rate established
under § 6621. Section 6611(b)(1) provides that, in the case of a credit, interest must be
allowed and paid from the date of the overpayment to the due date of the amount
against which the credit is taken. Section 6611(b)(2) provides that, in the case of a
refund, interest must be allowed and paid from the date of the overpayment to a date
preceding the date of the refund check by not more than 30 days.
.02 Interest rates in general
.
(1) For interest accruing before January 1, 1999, § 6621(a)(1) provides that the
overpayment rate is the federal short-term rate (determined under § 6621(b)) plus 2

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percentage points. To the extent that an overpayment of tax by a corporation exceeds
$10,000, the overpayment rate is the federal short-term rate plus 0.5 percent.
(2) Section 6621(a)(2) provides that the underpayment rate is the federal short-
term rate (determined under § 6621(b)) plus 3 percentage points. Special rules in
§ 6621(c) increase the underpayment rate on large corporate underpayments by an
additional 2 percentage points.
.03 Interest for overlapping periods
.
(1) Section 6621(d), as enacted by the RRA on July 22, 1998, provides that, to
the extent that for any period interest is payable under subchapter A (§§ 6601 and
6602) and allowable under subchapter B (§ 6611) on equivalent underpayments and
overpayments by the same taxpayer of tax imposed by the Code, the net rate of interest
under § 6621 on such amounts is zero for such period.
(2) The Conference Report, H. R. Conf. Rep. No. 599, 105 Cong., 2d Sess. 257
th
(1998), accompanying the RRA provides that the net interest rate of zero is applied
without regard to whether the overpayment or underpayment is currently outstanding.
Further, each overpayment or underpayment is considered only once in determining
whether equivalent amounts of overpayment and underpayment overlap for a particular
period. That report also provides that the net interest rate of zero applies even when
special rules increase the rate of interest for large corporate underpayments under
§ 6621(c), or decrease the rate of interest for large corporate overpayments under
§ 6621(a).

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SECTION 3. SCOPE
.01 Applicability
. This revenue procedure applies to the application of the net interest
rate of zero in § 6621(d) to interest for periods beginning before July 22, 1998 (i.e.,
interest accruing before October 1, 1998), provided:
(1) both applicable periods of limitation described in sections 4.02(1) and 4.02(2)
of this revenue procedure were open on July 22, 1998;
(2) the periods of tax overpayments and underpayments for which the net interest
rate of zero applies are reasonably identified and established (as described in section 5
of this revenue procedure); and
(3) the request is made not later than as described in section 4.03 of this revenue
procedure.
.02 Inapplicability
. This revenue procedure does not apply to:
(1) the application of the net interest rate of zero in § 6621(d) to interest for
periods beginning after July 22, 1998 (i.e.
, interest accruing on or after October 1,
1998). The Service intends to provide further guidance for those periods;
(2) an overpayment or underpayment for any period during which interest on the
overpayment or underpayment was not allowable or payable by law (e.g.
, the 45-day
interest disallowance rule under § 6611(e)); or
(3) to the extent of an offset made pursuant to §§ 6402(a) and 6601(f), regarding
the crediting of an outstanding overpayment against an outstanding underpayment.
SECTION 4. SPECIAL EFFECTIVE DATE RULE

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.01 Special Rule
. Section 6621(d) generally applies to interest for periods (calendar
quarters) beginning after July 22, 1998 (i.e.
, interest accruing on or after October 1,
1998). See H. R. Rep. No. 364 (Part 1), 105th Cong., 1st Sess. 64 (1998); S. Rep. No.
174, 105th Cong., 2d Sess. 62 (1998); H. R. Conf. Rep. No. 599, 105th Cong., 2d Sess.
257 (1998). However, § 3301(c)(2) of the RRA provides that § 6621(d) applies to
interest for periods beginning before July 22, 1998 (i.e.
, interest accruing before
October 1, 1998), provided certain conditions are met. First, both periods of limitation
applicable to the tax underpayment and to the tax overpayment (as described in section
4.02 of this revenue procedure) must have been open on July 22, 1998. Second, the
taxpayer must:
(a) reasonably identify and establish periods of tax overpayments and
underpayments for which the net interest rate of zero applies, and
(b) not later than December 31, 1999, request the Secretary of the
Treasury to apply § 6621(d) to such periods.
.02 Applicable periods of limitation. The applicable periods of limitation are as follows:
(1) Underpayment interest
. A claim for credit or refund of interest paid on an
underpayment pursuant to § 6601 or 6602 generally must be filed within 3 years from
the time the tax return was filed or 2 years from the time the interest was paid,
whichever period expires later, pursuant to § 6511.
(2) Overpayment interest. A claim for payment of additional interest allowable on
an overpayment pursuant to § 6611 must be filed within the 6-year period in which a suit

7
must be filed pursuant to 28 U.S.C. §§ 2401 and 2501. See Rev. Rul. 56-506, 1956-2
C.B. 959.
(3) Claims filed on or before December 31, 1999
. If both applicable periods of
limitation described in sections 4.02(1) and 4.02(2) of this revenue procedure were open
on July 22, 1998, and both close on or before December 31, 1999, a claim requesting
the application of the net interest rate of zero (as described in sections 5.01 through
5.04 of this revenue procedure) will be considered timely if filed on or before December
31, 1999.
.03 Requirement to make a request by December 31, 1999
. A taxpayer will satisfy the
requirement in the special rule to make a request for the application of the net rate of
zero not later than December 31, 1999, as follows:
(1) If both applicable periods of limitation described in sections 4.02(1) and
4.02(2) of this revenue procedure were open on July 22, 1998, but both will be closed
on or before December 31, 1999, the taxpayer must file a claim requesting the
application of the net rate of zero (as described in sections 5.01 through 5.04 of this
revenue procedure) on or before December 31, 1999.
(2) If both applicable periods of limitation described in sections 4.02(1) and
4.02(2) of this revenue procedure were open on July 22, 1998, and at least one of the
applicable periods of limitation will be open after December 31, 1999, the taxpayer need
not take any action on or before December 31, 1999. In order to obtain the net rate of
zero, the taxpayer must file a claim requesting application of the net rate of zero (as

8
described in sections 5.01 through 5.04 of this revenue procedure) or make a written
request (as described in section 5.06 of this revenue procedure) on or before the date
on which the last applicable period of limitation closes.
.04 Net Rate of Zero
. In general, the Service will apply the net rate of zero as follows:
(1) If the period of limitation for refunding underpayment interest (as described in
section 4.02(1) of this revenue procedure) is open at the time a claim (as described in
sections 5.01 through 5.04 of this revenue procedure) is filed or a written request (as
described in section 5.06 of this revenue procedure) is made, the Service will apply the
net rate of zero by decreasing underpayment interest owed by the taxpayer.
(2) Except as provided in 4.04(3) of this revenue procedure, if the period of
limitation for refunding underpayment interest (as described in section 4.02(1) of this
revenue procedure) is closed at the time a claim (as described in sections 5.01 through
5.04 of this revenue procedure) is filed or a written request (as described in section 5.06
of this revenue procedure) is made, but the period for paying additional overpayment
interest (as described in section 4.02(2) of this revenue procedure) is open, the Service
will apply the net rate of zero by increasing overpayment interest owed to the taxpayer.
(3) If both applicable periods of limitation (as described in sections 4.02(1) and
4.02(2) of this revenue procedure) are open on July 22, 1998, and a claim requesting
the application of the net interest rate of zero (as described in sections 5.01 through
5.04 of this revenue procedure) is filed on or before December 31, 1999, the Service will
apply the net rate of zero by decreasing underpayment interest owed by the taxpayer.

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SECTION 5. PROCEDURES FOR REQUESTING THE NET RATE OF ZERO
.01 Form to file
. Except as provided in section 5.06 of this revenue procedure,
requests for the application of the net interest rate of zero in § 6621(d) to interest
accruing before October 1, 1998, should be made on Form 843, Claim for Refund and
Request for Abatement.
.02 Where to file
. A Form 843 requesting the net rate of zero should be sent to the
following address:
Internal Revenue Service
Net Rate Interest Netting Claim
P.O. Box 9987
Mail Stop 6800
Ogden, UT 84409
or, if sent by other than U. S. mail, to the following address:
Internal Revenue Service
Net Rate Interest Netting Claim
1160 West 1200 South
Mail Stop 6800
Ogden, UT 84201
.03 Label
. The taxpayer should label the top of the Form 843: “Request for Net
Interest Rate of Zero Under Rev. Proc. 99-43.”
.04 Filing requirements for Form 843
.
(1) Line 1 should be left blank.
(2) The taxpayer may, but is not required to, place a dollar amount on Line 2.
(3) Line 3 should indicate the type of tax and type of return covered by the
request. More than one box may be checked if more than one type of tax or return is

10
covered by the request. In addition, any taxes imposed by the Code (or returns for
those taxes) for which there is no box on Line 3 should be written in on that line.
(4) Line 4 should be left blank.
(5) Line 5 should:
(a) identify the taxable periods for which the taxpayer overpaid and underpaid
its tax liability. A separate Form 843 is not required for each separate taxable period
involved in the request;
(b) state when the taxpayer paid the tax if the underpayment is no longer
outstanding;
(c) state when the taxpayer received a refund of tax if the overpayment is no
longer outstanding;
(d) identify and establish the period(s) for which the taxpayer’s overpayment and
underpayment overlapped and the overlapping amount. For this purpose, the taxpayer
should provide any background material (such as copies of examination reports,
notices, or prior interest computations provided by the Service) relating to the
overpayments and underpayments. The background material is needed to assist the
Service in determining the period(s) for which the overpayment and underpayment
overlap, and the amount of such overlap;
(e) state that, to the extent of equivalent amounts of underpayment and
overpayment for the period(s) identified and established under section 5.04(5)(d) of this
revenue procedure, the period(s) has (have) been used only once in a request to obtain

11
the net interest rate of zero under § 6621(d); however, if the full amount of the
overpayment or underpayment is not used in a netting calculation, the remaining portion
may be used in another netting calculation; and
(f) provide a computation, to the extent possible, of the amount of interest to be
credited, refunded, or abated to provide a net interest rate of zero for the period(s) of
overlap. This computation generally should be made by applying § 6621(d) to reduce
the taxpayer’s underpayment interest payable to the Service. However, if the Form 843
is filed after December 31, 1999, and only the period of limitation for claiming additional
overpayment interest is open on that filing date, the computation should be made by
applying § 6621(d) to increase the taxpayer’s overpayment interest payable by the
Service.
.05 Verification
. The amounts used in a computation provided under section 5.04(5)(f)
of this revenue procedure are subject to verification by the Service and may be subject
to adjustment for purposes of computing the net interest rate of zero pursuant to
§ 6621(d).
.06 Special procedure
. No Form 843 is required when a computation of interest using
the net interest rate of zero under § 6621(d) for interest accruing before October 1,
1998, is requested by a taxpayer in connection with a return (or returns) of the taxpayer
under consideration by any function of the Service (including Examination, Appeals, or a
case before a federal court that requires a computation of interest by any function of the
Service). Rather than filing a Form 843, the taxpayer must furnish a letter or written

12
statement to such function that:
(1) states that the taxpayer is requesting the net interest rate of zero under
§ 6621(d);
(2) indicates the type of tax and type of return that affects the interest
computation for the taxable period under consideration;
(3) states when and for what period(s) the refund or payment (that affects the
interest computation for the taxable period under consideration) was made; and
(4) states that, to the extent of equivalent amounts of overpayment or
underpayment, the period(s) set forth under section 5.06(3) of this revenue procedure
has (have) not previously been applied to obtain a net interest rate of zero under
§ 6621(d).
.07 Special procedure verification
. The refund or payment provided under section
5.06(3) of this revenue procedure is subject to verification by the Service and may be
subject to adjustment for purposes of computing the net interest rate of zero pursuant to
§ 6621(d).
SECTION 6. EXAMPLES
.01 Example 1
. X is a calendar year corporation. The Service examined X’s Form
1120, Corporation Income Tax Return, for the 1992 and 1994 taxable years. For the
1994 taxable year, the Service determined that X
was entitled to a refund of $30,000.
This Service-initiated refund was made on September 21, 1997, with interest computed
from March 15, 1995, to July 29, 1997. For the 1992 taxable year, the Service

13
determined that X
underpaid its income tax by $80,000. The Service sent X a notice
and demand for payment dated May 3, 1998, which X
paid on May 12, 1998, with
interest computed from March 15, 1993, to May 3, 1998. On July 22, 1998, both the 6-
year period of limitation for claiming additional overpayment interest on X
’s 1997 refund
and the 2-year period of limitation for claiming a refund of underpayment interest paid in
1998 were open. On December 27, 1999, X
files a Form 843 requesting the net interest
rate of zero under § 6621(d) for the overlap period from March 15, 1995, to July 29,
1997. The Service will refund underpayment interest to X in an amount equal to the
difference between the underpayment interest paid on $30,000 for the period from
March 15, 1995, to July 29, 1997, and the overpayment interest computed and paid on
$30,000 for that period.
.02 Example 2. The facts are the same as in Example 1, except that the Service sent
X a notice and demand for payment dated May 3, 1996, which X paid on May 12, 1996,
with interest computed from March 15, 1993, to May 3, 1996. On December 27, 1999, X
files a Form 843 requesting the application of § 6621(d) for the overlap period from
March 15, 1995, to May 3, 1996. On July 22, 1998, the 6-year period of limitation for
claiming additional overpayment interest on X
’s 1997 refund was open, but the 2-year
period of limitation for claiming a refund of underpayment interest paid in 1996 was not
open. Therefore, the net interest rate of zero under § 6621(d) does not apply to the
overlap period and no adjustment will be made.
.03 Example 3
. Y is a calendar year corporation. The Service examined Y’s Form

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1120, Corporation Income Tax Return, for the 1990 and 1992 taxable years. For the
1990 taxable year, the Service determined that Y
was entitled to a refund of $40,000.
The Service-initiated refund was made on November 21, 1993, with interest computed
from March 15, 1991, to September 28, 1993. For the 1992 taxable year, the Service
determined that Y
underpaid its income tax by $60,000. The Service sent Y a notice
and demand for payment dated October 3, 1996, which Y
paid on October 12, 1996,
with interest computed from March 15, 1993, to October 3, 1996. On July 22, 1998,
both the 6-year period of limitation for claiming additional overpayment interest on Y’s
1993 refund and the 2-year period of limitation for claiming a refund of underpayment
interest paid in 1996 were open. However, both of these periods of limitation will be
closed before December 31, 1999. Y files a Form 843 after both these periods close
and on or before December 31, 1999, requesting the net interest rate of zero under
§ 6621(d) for the overlap period from March 15, 1993, to September 28, 1993. The
Service will refund underpayment interest to Y
in an amount equal to the difference
between the underpayment interest paid on $40,000 for the period from March 15, 1993,
to September 28, 1993, and the overpayment interest computed and paid on $40,000
for that period.
.04 Example 4
. The facts are the same as in Example 3 except that the Service-
initiated refund was made on November 21, 1994, with interest computed from March
15, 1991, to September 28, 1994. On December 31, 1999, the 6-year period of
limitation for claiming additional overpayment interest will be open, but the 2-year period

15
of limitation for claiming a refund of underpayment interest paid in 1996 will not be open.
After December 31, 1999, but on or before the close of the 6-year period of limitation for
claiming additional overpayment interest on Y
’s 1994 refund, Y files a Form 843
requesting the net interest rate of zero under § 6621(d) for the overlap period from
March 15, 1993, to September 28, 1994. The Service will pay additional overpayment
interest to Y
in an amount equal to the difference between the underpayment interest
paid on $40,000 for the period from March 15, 1993, to September 28, 1994, and the
overpayment interest computed and paid on $40,000 for that period.
SECTION 7. EFFECTIVE DATE
This revenue procedure is effective for taxpayer requests made for the
application of the net interest rate of zero in § 6621(d) to interest accruing before
October 1, 1998.
SECTION 8. EFFECT ON OTHER DOCUMENTS
Revenue Procedure 99-19 is modified and superseded; however, the procedures
in Revenue Procedure 99-19 will remain effective for any taxpayer requests for the
application of the net interest rate of zero in § 6621(d) to interest accruing before
October 1, 1998, made prior to November 22, 1999.
DRAFTING INFORMATION
The principal author of this revenue procedure is John J. McGreevy of the Office
of Assistant Chief Counsel (Income Tax and Accounting). For further information
regarding this revenue procedure, contact Mr. McGreevy on (202) 622-4910 (not a toll-

16
fee call).