Rev. Ruling 57-271
Interest on Overpayment of Tax
Advice has been requested
whether, in a case where interest was allowed on an overpayment of tax
and was later adjusted for the reason that it was determined to be insufficient,
the taxpayer is entitled to receive interest compensating him for the
delay in payment of the increase in interest allowable on the
In the instant case, interest of $4,000 was allowed on an overpayment of $10,000. The taxpayer protested the computation of the amount of interest on the overpayment as being insufficient. On recomputation an additional amount of $2,000 was allowed and paid to the taxpayer. The taxpayer now requests interest on the additional interest for the period from the date of the original payment to the date of the interest adjustment.
It is a well established legal principle that the allowance of interest by a sovereign is a manner of grace, depending in every instance upon its consent. Thus, no fixed right to interest exists except that which is specifically provided and allowed by statute. See Boston Sand & Gravel Co. v. United States, 278 U.S. 41.
Section 6611 of the Internal Revenue Code of 1954, relating to interest on overpayments, provides that "Interest shall be allowed and paid upon any overpayment in respect of any internal revenue tax at the rate of 6 percent per annum." The Code in this respect is unambiguous and must be strictly construed. Therefore, there appears to be no authority for the payment of interest on the interest which the statute provides shall be allowed on a overpayment.
Accordingly, it is held that where interest was allowed on an overpayment of tax and was later adjusted for the reason that it was determined to be in sufficient, a taxpayer will not be entitled to interest compensating him for the delay in the payment of the amount determined to be additional interest on the overpayment.
26 U.S.C. 6611