Ford Motor Co. v. United States, No. 10-1934 (6th Cir. 2014)
Annotate this CaseWhen a taxpayer is a large corporation such as Ford, it often takes years for the IRS to conduct an audit of the corporation’s tax liability. When the IRS determines that the taxpayer underpaid its taxes, the taxpayer is liable for underpayment interest that accrued while the IRS analyzed its tax liability, 26 U.S.C. 6601(a). If the IRS determines that the taxpayer overpaid its taxes for the year under scrutiny, the government owes overpayment interest, which accrues from “the date of the overpayment.” Ford remitted approximately $875 million to the IRS in the 1990s after the IRS initiated an audit and preliminarily determined that Ford had underpaid its taxes by nearly $2 billion during the preceding decade. Ford sent the money pursuant to Revenue Procedure 84-58, which allows taxpayers to remit funds to stop the accrual of underpayment interest and identifies: “deposits in the nature of a cash bond” and “advance tax payments.” Ford designated each of its payments as a deposit in the nature of a cash bond, which the IRS says is “made merely to stop the running of [underpayment] interest,” “is not a payment of tax,” and “if returned to the taxpayer, does not bear interest.” Later Ford asked the IRS to treat its remittances as advance tax payments, which do bear interest in the event of an overpayment. The IRS complied, but subsequently reversed its position and concluded that the monies Ford remitted to the IRS to cover the alleged deficiencies were actually an overpayment of taxes. The government refunded Ford’s tax remittances plus overpayment interest, calculated from the dates on which Ford requested that its deposits be converted into advance tax payments rather than from the earlier dates on which Ford remitted the deposits.
This opinion or order relates to an opinion or order originally issued on December 17, 2012.
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