Welcome!

News Feed Item

Ford Motor Co. v. United States, (No. 10-1934) (United States Court of Appeals for the Sixth Circuit), 2012 TNT 243-16, aff'g Ford Motor Co. v. United States, No. 2:08-cv-12960 (E.D. Mich. 2010), 2010 TNT 108-15.

DALLAS, Jan. 18, 2013 /PRNewswire/ -- Ford submitted remittances to the Internal Revenue Service (IRS), pursuant to Revenue Procedure 84-58, 1984-2 C.B. 501, superseded by Revenue Procedure 2005-18, 2005-1 C.B. 798, to stop the accrual of underpayment interest related to 30-day letters it received from the IRS. Ford designated these remittances as deposits in the nature of a cash bond, but subsequently, Ford requested that the IRS treat the remittances as advance payments.  The IRS complied with the request.  Eventually, the IRS determined that Ford overpaid its taxes.  The resultant refunds included interest under section 6611 computed from the dates when the deposits were converted to advance payments and not from when Ford originally made the deposits.

(Logo: http://photos.prnewswire.com/prnh/20110726/DA41187LOGO)

Ford sued for approximately $445 million in overpayment interest computed from the original deposit dates.  The Sixth Circuit agreed with the government that interest under section 6611 accrued only from the later dates when the deposits were converted to payments. 

Section 6611 does not define "the date of overpayment."  The government argued that there can be no "overpayment" under section 6611, unless there has been a "payment," and there was no payment until Ford requested that its deposits be converted into payments.  Prior to the conversion date, the remittances were treated as deposits, and Ford could have requested that the funds be returned at any time.  Ford argued that section 6611 and section 6601 should be interpreted symmetrically.  Section 6601 stops the accrual of underpayment interest on the date the tax is "paid," and section 6611 starts the accrual of overpayment interest on the "date of the overpayment."  Because its deposits stopped the accrual of interest under section 6601 from the deposit dates, Ford argued that those deposit dates should also be considered the payment dates for purposes of determining the date of overpayment under section 6611.

Ford also argued that section 5.05 of Revenue Procedure 84-58 supported its position.  The first sentence of section 5.05 provides that "[r]emittances treated as payments of tax will be treated as any other assessed amount and compound interest will be paid on any overpayment under section 6611 of the Code...."  Ford argued that this sentence is a general rule, allowing overpayment interest on remittances that are treated as payments of tax, regardless of whether the remittances were originally treated as payments or were later converted to payments.  The government argued that Revenue Procedure 84-58 does not even contemplate requests to convert a deposit to a tax payment.  In the government's view, a conversion of a deposit to a payment is effectively a return of this deposit, which does not accrue overpayment interest, followed by an "immediate resubmission" of the amount as an actual tax payment, which does accrue overpayment interest from the date it is treated as being resubmitted.  The court found the government's "constructive return" interpretation to be "strained" because if it were correct, the taxpayer should also lose the benefit of stopping the accrual of underpayment interest for the period up to the conversion date. However, the government did not argue that Ford should lose the benefit of the deposit, stopping the accrual of underpayment interest.   

The court found Ford's and the government's interpretation of the meaning of the phrase "the date of overpayment" in section 6611 to be "conflicting, plausible readings of section 6611."  The court also found Ford's interpretation of section 5.05 to be "superior" to that of the government.  However, because of the ambiguity, the court held that it could not conclude that Congress has "unequivocally expressed" its waiver of sovereign immunity, allowing Ford to receive overpayment interest.   

Although the Sixth Circuit's opinion in Ford's case was unfavorable, there is language in the opinion that provides support for favorable taxpayer results on other remittance issues.  For example, the court noted that the fact that a taxpayer can initially request that a remittance be treated as a deposit or a tax payment supports the logical inference that a taxpayer may request conversion from a deposit to tax payment.  The IRS, in some recent situations, has refused to allow taxpayers to re-designate remittances.   

The court also noted that the government's "constructive return" theory was a flawed interpretation ofRevenue Procedure 84-58, but that the theory made some sense in connection with section 6603, which allows interest on returned deposits at a reduced rate (section 6603 interest).  Ford made an argument that because section 6603 allows a taxpayer who requests the return of a deposit to obtain section 6603 interest computed from the date of remittance date, it didn't make sense to interpret section 6611 to allow a taxpayer who converts a deposit to recover interest only from the conversion date. The government responded that the conversion of a deposit involves two separate transactions.  First, the deposit is constructively returned, and then it is immediately re-submitted as a payment.  The court noted that under this reasoning, section 6603 would allow interest to be paid at two different rates—the lower section 6603 rate from the date of deposit to the date of conversion and at the normal interest rate from the date of conversion to the date of refund.

About Ryan
Ryan is an award-winning global tax services firm, with the largest indirect tax practice in North America and the sixth largest corporate tax practice in the United States. Headquartered in Dallas, Texas, the Firm provides a comprehensive range of state, local, federal, and international tax advisory and consulting services on a multi-jurisdictional basis, including audit defense, tax recovery, credits and incentives, tax process improvement and automation, tax appeals, tax compliance, and strategic planning. Ryan is a two-time recipient of the International Service Excellence Award from the Customer Service Institute of America (CSIA) for its commitment to world-class client service. Empowered by the dynamic myRyan work environment, which is widely recognized as the most innovative in the tax services industry, Ryan's multi-disciplinary team of more than 1,600 professionals and associates serves over 6,500 clients in 40 countries, including many of the world's most prominent Global 5000 companies. More information about Ryan can be found at www.ryan.com.

TECHNICAL INFORMATION CONTACT:

David L. Veeder 
Principal
Ryan
972.934.0022
[email protected]

SOURCE Ryan

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
Cloud-based disaster recovery is critical to any production environment and is a high priority for many enterprise organizations today. Nearly 40% of organizations have had to execute their BCDR plan due to a service disruption in the past two years. Zerto on IBM Cloud offer VMware and Microsoft customers simple, automated recovery of on-premise VMware and Microsoft workloads to IBM Cloud data centers.
SYS-CON Events announced today that Daiya Industry will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Daiya Industry specializes in orthotic support systems and assistive devices with pneumatic artificial muscles in order to contribute to an extended healthy life expectancy. For more information, please visit https://www.daiyak...
The Internet giants are fully embracing AI. All the services they offer to their customers are aimed at drawing a map of the world with the data they get. The AIs from these companies are used to build disruptive approaches that cannot be used by established enterprises, which are threatened by these disruptions. However, most leaders underestimate the effect this will have on their businesses. In his session at 21st Cloud Expo, Rene Buest, Director Market Research & Technology Evangelism at Ara...
SYS-CON Events announced today that N3N will exhibit at SYS-CON's @ThingsExpo, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. N3N’s solutions increase the effectiveness of operations and control centers, increase the value of IoT investments, and facilitate real-time operational decision making. N3N enables operations teams with a four dimensional digital “big board” that consolidates real-time live video feeds alongside IoT sensor data a...
Internet of @ThingsExpo, taking place October 31 - November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 21st Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devic...
Mobile device usage has increased exponentially during the past several years, as consumers rely on handhelds for everything from news and weather to banking and purchases. What can we expect in the next few years? The way in which we interact with our devices will fundamentally change, as businesses leverage Artificial Intelligence. We already see this taking shape as businesses leverage AI for cost savings and customer responsiveness. This trend will continue, as AI is used for more sophistica...
SYS-CON Events announced today that SourceForge has been named “Media Sponsor” of SYS-CON's 21st International Cloud Expo, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. SourceForge is the largest, most trusted destination for Open Source Software development, collaboration, discovery and download on the web serving over 32 million viewers, 150 million downloads and over 460,000 active development projects each and every month.
SYS-CON Events announced today that DXWorldExpo has been named “Global Sponsor” of SYS-CON's 21st International Cloud Expo, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Digital Transformation is the key issue driving the global enterprise IT business. Digital Transformation is most prominent among Global 2000 enterprises and government institutions.
One of the biggest challenges with adopting a DevOps mentality is: new applications are easily adapted to cloud-native, microservice-based, or containerized architectures - they can be built for them - but old applications need complex refactoring. On the other hand, these new technologies can require relearning or adapting new, oftentimes more complex, methodologies and tools to be ready for production. In his general session at @DevOpsSummit at 20th Cloud Expo, Chris Brown, Solutions Marketi...
In the world of DevOps there are ‘known good practices’ – aka ‘patterns’ – and ‘known bad practices’ – aka ‘anti-patterns.' Many of these patterns and anti-patterns have been developed from real world experience, especially by the early adopters of DevOps theory; but many are more feasible in theory than in practice, especially for more recent entrants to the DevOps scene. In this power panel at @DevOpsSummit at 18th Cloud Expo, moderated by DevOps Conference Chair Andi Mann, panelists discussed...
Elon Musk is among the notable industry figures who worries about the power of AI to destroy rather than help society. Mark Zuckerberg, on the other hand, embraces all that is going on. AI is most powerful when deployed across the vast networks being built for Internets of Things in the manufacturing, transportation and logistics, retail, healthcare, government and other sectors. Is AI transforming IoT for the good or the bad? Do we need to worry about its potential destructive power? Or will we...
Many organizations adopt DevOps to reduce cycle times and deliver software faster; some take on DevOps to drive higher quality and better end-user experience; others look to DevOps for a clearer line-of-sight to customers to drive better business impacts. In truth, these three foundations go together. In this power panel at @DevOpsSummit 21st Cloud Expo, moderated by DevOps Conference Co-Chair Andi Mann, industry experts will discuss how leading organizations build application success from all...
SYS-CON Events announced today that SIGMA Corporation will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. uLaser flow inspection device from the Japanese top share to Global Standard! Then, make the best use of data to flip to next page. For more information, visit http://www.sigma-k.co.jp/en/.
The last two years has seen discussions about cloud computing evolve from the public / private / hybrid split to the reality that most enterprises will be creating a complex, multi-cloud strategy. Companies are wary of committing all of their resources to a single cloud, and instead are choosing to spread the risk – and the benefits – of cloud computing across multiple providers and internal infrastructures, as they follow their business needs. Will this approach be successful? How large is the ...
Your clients expect transactions to never fail, cloud access to be fast and always on, and their data to be protected - no exceptions. Hear about how Secure Service Container (SSC), an IBM-exclusive open technology, enables secure building and hosting of next-generation applications, both cloud and on-premises. SSC protects the full stack from external and insider threats, allows automatic encryption of data in-flight and at-rest, and is tamper-resistant during installation and runtime – with no...