ment we decide. I believe the legislative history cited by the majority supports this view. Majority op. p. 10 note 17; see S. Rept. 100-309, at 17 (1988) (stating that the Tax Court should be able to enforce a determination that a taxpayer is due a refund and that the taxpayer should not have to incur additional time, trouble, and expense of enforcing the refund in another forum).

Conclusion

Section 6330 cases are not merely about whether or not the Commissioner can proceed with the proposed collection action. Whether there is an overpayment has a direct bearing on whether the Commissioner can proceed with the lien or levy at issue. Meadows v. Commissioner, 405 F.3d at 952953; Washington I, 120 T.C. at 120-121. The section 6330 determination includes the issue of an overpayment if it is raised as a relevant issue or if there is a challenge to the underlying liability. Sec. 6330(c)(2)(A) and (B), (3). Accordingly, I believe we have jurisdiction to enter a decision that petitioner had an overpayment in tax for the year at issue. Sec. 6330(d).

It would be illogical that we could conclude that the Commissioner has collected too much money, but we could not enter a decision that the taxpayer has overpaid his/her tax. The majority's interpretation of the statute conflicts with the remedial purpose of section 6330.

If we could enter a decision for an overpayment, as I propose, the issue of whether the Court has jurisdiction and authority to order a refund would not yet be ripe for decision as the overpayment decision would not yet be final. See secs. 6512(b)(2), 7481(a), 7483; Estate of Quick v. Commissioner, supra at 443; O'Connor v. Commissioner, T.C. Memo. 1992410. I note that whether or not the Court is able to enforce our decision in a section 6330 case that the taxpayer overpaid his/her taxes, however, is not relevant to whether we have authority to enter a decision for an overpayment.8

8 From our inception and for more than 60 years, the Tax Court (and our predecessors) had jurisdiction to enter a decision for an overpayment but could not order the Commissioner to credit or refund the overpayment contained in our decisions. See Naftel v. Commissioner, 85 T.C. 527, 533 (1985). In 1988, however, Congress added sec. 6512(b)(2) to the Code, giving us authority to order a refund of any overpayment. Belloff v. Commissioner, 996 F.2d 607, 613 (2d Cir. 1993), affg. T.C. Memo. 1991-350; Technical and Miscellaneous Revenue Act of 1988, sec.

Continued

Respectfully, I dissent.

SWIFT, J., agrees with this dissenting opinion.

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY AND SUBSIDIARIES, PETITIONER v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT

Docket No. 1859-01.

Filed January 17, 2006.

P filed a motion pursuant to Rule 261 to redetermine interest on overpayment. The issue raised in P's motion is whether accrued interest on P's overpayment as of Dec. 31, 1994, is subject to the regular rate of interest or the lower rate of interest provided by sec. 6621(a)(1), I.R.C., beginning on Jan. 1, 1995 (the GATT rate). R's position that the GATT rate applies was previously sustained by the Court of Federal Claims and the Court of Appeals for the Federal Circuit in Gen. Elec. Co. v. United States, 384 F.3d 1307 (Fed. Cir. 2004), affg. in part and remanding in part 56 Fed. Cl. 488 (2003). See also Exxon Mobil Corp. v. Commissioner, 126 T.C. 36 (2006). The parties also dispute whether any portion of the overpayment remains subject to the $10,000 threshold as provided in sec. 6621(a)(1), I.R.C. Held, the GATT rate applies to the accrued interest owed P as of Dec. 31, 1994. Held, further, the entire overpayment of tax remaining is subject to the GATT rate since an amount in excess of the $10,000 threshold was refunded to P on the due date of P's return for the taxable year in question.

Jerome B. Libin, James V. Heffernan, and Mary E. Monahan, for petitioner.

Robert Morrison and Jan E. Lamartine, for respondent.

OPINION

GOEKE, Judge: Before us is petitioner's motion under Rule 2611 seeking a higher rate of interest on petitioner's overpayment. The difference between petitioner's interest computation method and respondent's method stems from a difference of view regarding the effect of a 1994 amendment to section 6621(a)(1), the so-called GATT amendment. That

6244(a), Pub. L. 100-647, 102 Stat. 3342, 3750. Accordingly, whether or not the Tax Court has authority to enforce a decision for an overpayment entered in a sec. 6330 case is simply not relevant to our ability to enter such a decision.

1 Rule references are to the Tax Court Rules of Practice and Procedure. Unless otherwise indicated, all section references are to the Internal Revenue Code as amended.

amendment reduced the rate of overpayment interest applicable to that portion of a corporate tax overpayment that exceeds $10,000 for purposes of determining interest after December 31, 1994. Because we hold that the reduced rate of interest effective after December 31, 1994, applies to interest accrued on petitioner's overpayment as of that date, petitioner's motion will be denied.

Background

Respondent issued a notice of deficiency with respect to petitioner's 1987 taxable year. Petitioner filed a petition and alleged that it had made an overpayment of tax for 1987 in the amount of $56,900,746. On December 19, 2002, this Court held that petitioner had made such an overpayment for 1987. State Farm Mut. Auto. Ins. Co. v. Commissioner, 119 T.C. 342 (2002), affd. 105 Fed. Appx. 67 (7th Cir. 2004). The Court of Appeals for the Seventh Circuit affirmed this Court's decision on June 29, 2004. No petition for certiorari was filed by or on behalf of petitioner, and the decision of this Court became final on September 27, 2004. See sec. 7481(a)(2)(A).

On December 15, 2004, respondent issued two checks aggregating $113,418,286.92 payable to petitioner. The checks ostensibly covered the amount of petitioner's overpayment plus statutory interest thereon. Petitioner was furnished with a copy of respondent's computations supporting the total amount of the checks. In its motion, petitioner takes issue with respondent's computation of the overpayment interest payable to petitioner because respondent computes interest using a reduced rate set forth in section 6621(a)(1), which is commonly referred to as the GATT rate after 1994, in compounding the interest that had accrued prior to 1995.2 Petitioner asserts that the regular rate of interest should continue to apply to the previously accrued interest after January 1, 1995.

As computed by petitioner, the overpayment interest that should have been paid to petitioner is $65,288,523.47, which

2 The GATT amendment was enacted by the Uruguay Round Agreements Act, Pub. L. 103465, sec. 713, 108 Stat. 4809, 5001 (1994). The amendment was adopted as a revenue raiser in connection with the General Agreement on Tariffs and Trade (GATT). Interest computed pursuant to the amendment is generally referred to as GATT interest and the revised interest rate as the GATT rate.

is $4,375,689.66 greater than the $60,912,833.81 computed by respondent as the interest payable.

Respondent's position, which was successfully asserted in Gen. Elec. Co. v. United States, 384 F.3d 1307 (Fed. Cir. 2004), affg. in part and remanding in part 56 Fed. Cl. 488 (2003), is that the lower GATT rate should be applied as of January 1, 1995, in calculating the compound interest on any previously accrued interest attributable to that portion of an overpayment in excess of $10,000. Such interest would have been compounded at the regular corporate overpayment rate up to that date.

Petitioner timely filed a motion pursuant to section 7481(c) and Rule 261 for a redetermination of the interest owed to it on the overpayment of tax previously determined by this Court with respect to its taxable year 1987, and the parties have filed memoranda on the issue raised.

Petitioner also disputes that $10,000 of the overpayment due on the effective date should receive the regular rate of interest rather than the GATT rate. Respondent counters that the refunding of more than $10,000 of the original overpayment on the due date of petitioner's return relieves the need for any further application of the $10,000 threshold in section 6621(a)(1).

Discussion

Interest on overpayments is authorized by section 6611(a) at the rate established in section 6621. Section 6622(a) requires that the overpayment interest be compounded daily. The issue before us concerns whether the GATT rate change in corporate overpayment interest applies in computing interest on the interest accrued before the effective date. This change results in 1.5 percent less interest after December 31, 1994. The following sentence was added to section 6621(a)(1) by the Uruguay Round Agreements Act, Pub. L. 103-465, sec. 713(a), 108 Stat. 5001 (1994):

To the extent that an overpayment of tax by a corporation for any taxable period (as defined in subsection (c)(3)) exceeds $10,000, subparagraph (B) shall be applied by substituting "0.5 percentage point" for "2 percentage points."

The effective date of this change is described in the Uruguay Round Agreements Act, sec. 713(b), 108 Stat. 5002:

(b) Effective Date.-The amendment made by this section shall apply for purposes of determining interest for periods after December 31, 1994.

Section 6621(a)(1), effective after December 31, 1994, provides as follows:

SEC. 6621. DETERMINATION OF RATE OF INTEREST.

(a) GENERAL RULE.—

(1) OVERPAYMENT RATE.-The overpayment rate established under this section shall be the sum of

(A) the Federal short-term rate determined under subsection (b), plus

(B) 3 percentage points (2 percentage points in the case of a corporation)

To the extent that an overpayment of tax by a corporation for any taxable period (as defined in subsection (c)(3), applied by substituting "overpayment" for "underpayment") exceeds $10,000, subparagraph (B) shall be applied by substituting "0.5 percentage point" for "2 percentage points".

By virtue of its placement in section 6621 and the effective date description, this was a change in the rate of interest. Petitioner maintains the scope of this change was limited to the overpayment itself, not the interest on accrued interest. In addressing this question, we first examine the precedent in the Court of Appeals for the Federal Circuit.

The General Electric Case

In Gen. Elec. Co. v. United States, supra, the entire amount of the taxpayer's (General Electric's) 1978 overpayment of $15.5 million had been refunded or credited in 1988, but $810,000 of accrued interest on the 1978 overpayment was not credited and remained unpaid until 2002. The taxpayer's position was that the unpaid interest should continue to be compounded at the regular rate until paid. The United States argued that as of January 1, 1995, the GATT rate replaced the regular rate for purposes of compounding interest. The Court of Federal Claims held that the full amount of General Electric's pre-1995 accrued interest was subject to the GATT rate as of January 1, 1995. Gen. Elec. Co. v. United States, 56 Fed. Cl. 488 (2003). The Court of Appeals for the Federal Circuit affirmed the primary holding but remanded the case for a determination whether the taxpayer was entitled to any additional interest at the regular rate after January 1, 1995, on the interest that had accrued