Washington, D.C., February 3, 2011 – Today, the United States Tax Court ruled in favor of Miller & Chevalier's client in Exxon Mobil Corp. v. United States (136 T.C. No. 5), a case of significant importance involving the appropriate computation of interest on an overpayment previously determined in Exxon Mobil's favor by the Tax Court. In Exxon Mobil Corp., the Tax Court rejected the Internal Revenue Service's longstanding interpretation of a special rule governing retroactive application of Code section 6621(d), legislation passed in 1998 that eliminated the interest rate differential on overlapping periods of interest on overpayments and underpayments. The special rule made interest netting available for periods before 1998. In an earlier case involving a different taxpayer, the Court of Appeals for the Federal Circuit had sustained the IRS position.
"Certain taxpayers who were in an interest netting situation prior to July 22, 1998 can cite this decision in support of a claim to recover interest that they paid for periods when they had no net tax due," said Miller & Chevalier's Alan Horowitz, who together with Kevin Kenworthy represented Exxon Mobil.
The IRS also unsuccessfully argued that the Tax Court did not even have jurisdiction to hear this dispute, claiming that the court's limited jurisdiction over interest disputes did not extend to interest netting claims. Kevin Kenworthy explained, “The Tax Court correctly found that the interest netting claims raised by Exxon Mobil were well within its judicial authority. Had the court found otherwise, many taxpayers would face a significant hurdle enforcing their statutory right to interest netting relief."
Alan Horowitz and Kevin Kenworthy of Miller & Chevalier represented Exxon Mobil.
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Alan I. Horowitz, Member, Tax Department, Miller & Chevalier, 202-626-5839
Kevin L. Kenworthy, Member, Tax Department, Miller & Chevalier, 202-626-5848
Laura Miller, Media Relations, Greentarget, 312-252-4104