Global Interest Netting can save and recover substantial amounts of interest for your company.
When companies pay interest on tax underpayments and receive interest from overpayments at the same time from different tax types or tax periods, interest on underpayments is charged at a higher rate than overpayments. The resulting interest differential means a taxpayer may owe no actual tax because of offsetting payments, yet still owe interest on the underpayment portion. This scenario is not uncommon for separately handled underpayments and overpayments resulting from differing tax types or tax periods.
Global Interest Netting can be used for several different tax types:
- Corporate Income
- Excise Tax
- Employment Tax
Global Interest Netting can help to produce fair results for your corporation.
IRC Sec. 6621(d), which was enacted in 1998, is a direct legislative response to the IRS’s sluggishness in remedying the interest rate differential’s inequity. Sec. 6621(d) eliminates the interest rate differential in overlapping periods of equivalent underpayments and overpayments by equalizing the interest rates for underpayments and overpayments.
CIS has in-depth knowledge of the tax codes, nuances, and requirements to recover every dollar of interest that can be claimed with Global Interest Netting.
Recent court decisions have expanded the meaning of “same taxpayer” by allowing Global Interest Netting between parents and their subsidiaries with different taxpayer identification numbers (TIN).
In 2012 it was decided that taxpayers should benefit from Global Interest Netting if either the underpayment or overpayment indebtedness period is open even if one leg of the overlapping period has an expired statute.
Corporate taxpayers may now look to Global Interest Netting as an applicable, effective remedial strategy.
Did you know since 1998, the IRS has sought to restrict the use of Global Interest Netting by adopting a narrow interpretation of the meaning of ‘same taxpayer’?
CIS CAN HELP
If your company has been involved in a statutory merger in the past 20 years or if you feel it may be worthwhile to have a Global Interest Netting evaluation done to determine if there is interest that can be claimed, contact us.