            In the United States Court of Federal Claims
                                  No. 13-1021 T
                               (Filed July 16, 2015)

 * * * * * * * * * * * * * *          *
 EAGLEHAWK CARBON, INC.,              *
 TWIN STAR MINING, INC.,              *
 WHITE FLAME ENERGY, INC.,            *
 RED RIVER COAL COMPANY,              *
 INC., and USIBELLI COAL              *     Tax; Interest Rate on
 MINE, INC.,                          *     Overpayment, 26 U.S.C.
                                      *     § 6621(a)(1) (2012); Subchapter
                 Plaintiffs,          *     S Corporations Treated as
                                      *     Corporations.
           v.                         *
                                      *
 THE UNITED STATES,                   *
                                      *
                 Defendant.           *
 * * * * * * * * * * * * * *          *

       John Yates Merrell, Jr., McLean, VA, for plaintiffs Eaglehawk Carbon,
Inc., Twin Star Mining, Inc., White Flame Energy, Inc., and Red River Coal
Company, Inc. Steven H. Becker, New York, NY, for plaintiff Usibelli Coal Mine,
Inc.

      Miranda Bureau, United States Department of Justice Tax Division, with
whom were Caroline D. Ciraolo, Acting Assistant Attorney General, David I.
Pincus, Chief, Court of Federal Claims Section, Mary M. Abate, Assistant Chief,
Washington, DC, for defendant.

                    ________________________________

                                OPINION
                    ________________________________
Bush, Senior Judge.

      This case is before the court on cross-motions for summary judgment filed
under Rule 56 of the Rules of the United States Court of Federal Claims (RCFC).
The motions have been fully briefed, and oral argument was held on April 21,
2015. For the reasons stated below, defendant’s motion for summary judgment is
granted and plaintiffs’ motion for summary judgment is denied.

                                 BACKGROUND

       Plaintiffs are five coal mining companies which are organized as “‘small
business corporation[s]’ under Subchapter S of the Internal Revenue
Code.” Compl. ¶¶ 2-6 (citing 26 U.S.C. §§ 1361-1379 (2012)). It is undisputed
that these coal companies overpaid certain coal sales excise taxes and were owed
refunds, plus interest, of their overpayments. The tax years in question span from
1990 through 1996. The overpayment refunds were all made in April of 2009, and
the amounts of those refunds are not in dispute. Plaintiffs’ claims focus instead on
the interest they received on their overpayments, which, according to plaintiffs,
was calculated according to a lower formula than was appropriate.

      The governing statute for computing the interest owed taxpayers on their
overpayments is 26 U.S.C. § 6621 (2012). If plaintiffs’ interpretation of
§ 6621(a)(1) is correct, they should have been paid the interest rate paid to
individuals, not the interest rate paid to corporations. The difference is not
insignificant because plaintiffs’ claims identify additional interest allegedly owed
to them through 2009, which totals approximately $6 million dollars, and
reference further interest which has allegedly accrued since that date.

                                  DISCUSSION

I.    Standard of Review

       “[S]ummary judgment is a salutary method of disposition designed to secure
the just, speedy and inexpensive determination of every action.” Sweats Fashions,
Inc. v. Pannill Knitting Co., 833 F.2d 1560, 1562 (Fed. Cir. 1987) (internal
quotations and citations omitted). The moving party is entitled to summary
judgment “if the movant shows that there is no genuine dispute as to any material

                                          2
fact and the movant is entitled to judgment as a matter of law.” RCFC 56(a). A
genuine issue of material fact is one that could change the outcome of the
litigation. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986).

       Tax controversies are well-suited to disposition on cross-motions for
summary judgment when the outcome turns on the proper interpretation of the
Internal Revenue Code (IRC or Code), rather than on disputes of fact. See Dana
Corp. v. United States, 174 F.3d 1344, 1347 (Fed. Cir. 1999) (stating that
summary judgment was appropriate in that tax refund suit because issues of law
were the only disputed issues before the trial court). Here, there are no material
facts in dispute. To prevail on their motion for summary judgment, plaintiffs bear
the burden to show that they are entitled, as a matter of law, to receive the
additional interest requested in the complaint. See, e.g., Transamerica Corp. v.
United States, 902 F.2d 1540, 1543 (Fed. Cir. 1990) (“The ruling of the
Commissioner of Internal Revenue enjoys a presumption of correctness and a
taxpayer bears the burden of proving it to be wrong.” (citing Welch v. Helvering,
290 U.S. 111, 115 (1933))).

II.   Analysis

       As a threshold matter, both parties assert that the meaning of § 6621(a)(1) is
clear, although their interpretations of this statutory provision are at odds and
conflicting. See Pls.’ Reply at 1 (“[I]f anyone, it is plaintiffs who are best able to
argue that a plain reading of the statute favors them.”); Def.’s Mot. at 7 (“The
language of § 6621(a)(1) is not ambiguous.”). To determine whether a statute has
a clear meaning and is unambiguous, this court examines the plain text and
employs traditional tools of statutory construction. See, e.g., Cathedral Candle
Co. v. U.S. Int’l Trade Comm’n, 400 F.3d 1352, 1362 (Fed. Cir. 2005) (citations
omitted). In this analysis, the plain text of the statute is of paramount importance.
See, e.g., Timex V.I., Inc. v. United States, 157 F.3d 879, 882 (Fed. Cir. 1998)
(“Because a statute’s text is Congress’s final expression of its intent, if the text
answers the question, that is the end of the matter.”) (citations omitted).

      To assist in deciphering the meaning of a statute, various tools of statutory
construction may be employed. Beyond the plain text of the statute, the court may
consider the structure of the statute, applicable canons of statutory construction,
and legislative history. Id. (citations omitted). If the plain text and structure of the

                                           3
statute do not decide the issue, courts often turn to canons of construction to
interpret the statute. E.g., Cooper Techs. Co. v. Dudas, 536 F.3d 1330, 1340 (Fed.
Cir. 2008). Legislative history may also be considered in appropriate instances,
even where the statutory text is plain and unambiguous. See, e.g., In re City of
Houston, 731 F.3d 1326, 1333 (Fed. Cir. 2013) (noting that even when a statute
“is quite plain on its face [this] conclusion does not preclude an examination of
legislative context”). To overcome the plain text of a statute, however, legislative
history must clearly evidence legislative intent. See, e.g., Gardner v. Brown, 5
F.3d 1456, 1459-60 (Fed. Cir. 1993) (“The [party relying on legislative history]
must make an extraordinarily strong showing of clear legislative intent in order to
convince us that Congress meant other than what it ultimately said.” (citing Glaxo
Operations UK Ltd. v. Quigg, 894 F.2d 392, 395 (Fed. Cir. 1990))).

       A statute is ambiguous if its terms permit two conflicting but reasonable
constructions. See, e.g., Rosete v. Office of Pers. Mgmt., 48 F.3d 514, 518-19
(Fed. Cir. 1995) (finding a statute to be ambiguous because a key term was
“capable of two reasonable interpretations”). Here, however, as explained below,
only the government has a reasonable interpretation of § 6621(a)(1). The court
begins, as it must, with an analysis of the plain text of the statute.

      A.     The Plain Text of Section 6621(a)(1)

       For the majority of the time period relevant to plaintiffs’ claims, the
pertinent statutory text has distinguished between individual and corporate interest
rates for tax overpayments:

             (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”

                                         4
               for “underpayment”) exceeds $10,000, subparagraph (B)
               shall be applied by substituting “0.5 percentage point”
               for “2 percentage points”.

26 U.S.C. § 6621(a)(1). Thus, the formula for calculating interest on tax
overpayments generally includes the variable Federal short-term rate (STR) plus a
constant, either three percentage points (for individuals), or two percentage points
(for corporations). There is also a special, reduced rate for interest on tax
overpayments exceeding $10,000 which applies only to corporations, although this
particular provision relies upon a separate section of the statute for clarification
purposes. Plaintiffs in this suit allege that they are subject to neither the lower
(STR plus 2 percentage points) interest rate applicable to “a corporation,”
§ 6621(a)(1)(B), nor the special reduced rate of interest (STR plus .5 percentage
point) applicable to “a corporation” whose tax overpayment exceeds $10,000,
§ 6621(a)(1).1

               1.      S Corporations are Corporations for § 6621(a)(1)(B)
                       Interest Purposes

       Taking the simpler issue first, the plain text of § 6621(a)(1)(B) singles out
corporations for a lower (STR plus 2 percentage points versus STR plus 3
percentage points) interest rate on tax overpayments. S corporations are
corporations, as both a common sense interpretation of this designation and the
IRC indicate. See Def.’s Mot. at 7-8 (citing, among other authorities, 26 U.S.C.
§ 7701(a) (2012), which provides a definition for ‘corporation’ for use throughout
the Code “where not otherwise distinctly expressed or manifestly incompatible
with the intent thereof”); Oral Argument Transcript (Tr.) at 8 (Plaintiffs’ Counsel)
(“An S corporation is a corporation.”). Because plaintiffs are S corporations, and
thus, are corporations as generally defined by the IRC, the lower (STR plus 2
percentage points) interest rate applies to their tax overpayments under $10,000




       1
        / The second formula, for the special reduced rate for interest on larger corporate
overpayments, is contained in a portion of the statute that the parties refer to as the “flush
language” of § 6621(a)(1), meaning that it is published flush with a left margin and is not
indented.

                                                  5
during the time that § 6621(a)(1)(B) existed in its current form (1998 and later).2

                 2.      S Corporations are Corporations for the Reduced Interest
                         Rate for Corporate Tax Overpayments Exceeding $10,000

       Section 6621(a)(1) also provides, in its flush language,3 an even lower
interest rate for corporations whose tax overpayments exceed $10,000. The court
begins with the initial presentation of this special interest rate before turning to the
other statutory guidance referenced in the flush language of § 6621(a)(1). As
stated earlier, the statute provides that

                 [t]o 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”.

26 U.S.C. § 6621(a)(1). This flush language text governing overpayments
exceeding $10,000 establishes that the lower corporate interest rate in
§ 6621(a)(1)(B), i.e., the STR plus 2 percentage points rate, will be reduced further
when .5 percentage point replaces the 2 percentage points constant.

       The cited flush language text of § 6621(a)(1) also directs the Internal
Revenue Service (IRS) to borrow a definition from § 6621(c)(3), although a
substitution of the word ‘overpayment’ for ‘underpayment’ must occur in order to
get an accurate definition. The text of § 6621(c)(3) is reproduced here:

                 (3)     Large corporate underpayment
                         For purposes of this subsection–
                         (A) In general
                               The term “large corporate underpayment”

       2
         / Plaintiffs present a variety of arguments challenging the plain meaning of
§ 6621(a)(1)(B), but these are best addressed after considering the second formula the special
interest rate for corporate tax overpayments over $10,000.
       3
           / See supra note 1.

                                               6
                    means any underpayment of a tax by a C
                    corporation for any taxable period if the amount of
                    such underpayment for such period exceeds
                    $100,000.
                    (B) Taxable period
                          For purposes of subparagraph (A), the term
                    “taxable period” means–
                                 (i) in the case of any tax imposed by
                          subtitle A, the taxable year, or
                                 (ii) in the case of any other tax, the
                          period to which the underpayment relates.

26 U.S.C. § 6621(c)(3). The parties disagree as to what, in particular, must be
borrowed from § 6621(c)(3) to interpret the flush language of § 6621(a)(1). As
explained below, defendant provides the only sensible interpretation of the flush
language of § 6621(a)(1).

       Stated succinctly, defendant looks to § 6621(c)(3)(B), for the definition of
the term “taxable period” in the flush language of § 6621(a)(1), whereas plaintiffs
focus upon § 6621(c)(3)(A), for the definition of the term “overpayment of tax by
a corporation for any taxable period” to apply to the flush language of
§ 6621(a)(1). Defendant’s borrowing from § 6621(c)(3) is relatively effortless –
the IRS can determine whether an overpayment of over $10,000 has occurred in
the taxable period for the corporation, which is clearly defined in § 6621(c)(3)(B)
as the taxable year for the corporation or any other tax period which may differ
depending on the tax. Once “underpayment” had been replaced by “overpayment”
in § 6621(c)(3)(B)(ii), the definition of “taxable period” in the special interest rate
described in the flush language of § 6621(a)(1) (STR plus .5 percentage point) is
clear and any potential ambiguities as to the meaning of “taxable period” have
been eliminated.

       Challenging defendant’s identification of the definition which must be
borrowed from § 6621(c)(3), plaintiffs complain that Congress should have
pointed only to § 6621(c)(3)(B), not the entirety of § 6621(c)(3), for a borrowed
definition of the term “taxable period.” See Pls.’ Mot. at 8 (“[I]f Congress
intended to refer only to subsection (c)(3)(B) [for the definition of “taxable
period”], it would not have chosen to refer to (c)(3) in its entirety.”). The court is

                                           7
not convinced by this argument. First, the definition for taxable period is indeed
found in § 6621(c)(3), and the statutory language directing the reader to consult
§ 6621(c)(3) would point the reader to the appropriate subsection of § 6621.
Second, as defendant points out, only one term explicitly defined in § 6621(c)(3)
is present in both the flush language of § 6621(a)(1) and § 6621(c)(3) – that term
is “taxable period.” Def.’s Mot. at 11. Third, Congress might have cited to
§ 6621(c)(3) generally, and not to § 6621(c)(3)(B) specifically, to address the fact
that the definition of taxable period in § 6621(c)(3)(B) itself references
§ 6621(c)(3)(A), another part of § 6621(c)(3) which gives context for the
definition of taxable period. Defendant’s correct interpretation, and indeed, the
only reasonable interpretation of the flush language of § 6621(a)(1) is not
controverted by the statute’s reference to § 6621(c)(3), rather than a reference
specifically to § 6621(c)(3)(B).

       Plaintiffs face two major obstacles in their proposed borrowing from
§ 6621(c)(3). First, when plaintiffs rely on § 6621(c)(3)(A), Pl.’s Mot. at 7-8, they
cannot avoid the obvious discrepancy between a provision penalizing
overpayments over $10,000, 26 U.S.C. § 6621(a)(1), and a rewritten
§ 6621(c)(3)(A) which would target, incongruously, overpayments over $100,000.
If plaintiffs’ approach to borrowing is followed, and the substitution of
‘overpayment’ for ‘underpayment’ occurs as required by § 6621(a)(1),
§ 6621(c)(3)(A) would read:

             The term “large corporate [over]payment” means any
             [over]payment of a tax by a C corporation for any
             taxable period if the amount of such [over]payment for
             such period exceeds $100,000.

26 U.S.C. § 6621(c)(3)(A). If such a definition is inserted into § 6621(a)(1), the
conflicting $10,000 and $100,000 terms become irreconcilable and render the
statutory provision meaningless and unenforceable.

      For this reason alone, defendant’s argument as to the plain meaning of
§ 6621(a)(1) must prevail. When an S corporation has overpaid its taxes for the
relevant taxable period in an amount exceeding $10,000, the correct interest rate is
STR plus .5 percentage point. This formula applies to such overpayments
exceeding $10,000 during the time the relevant language of § 6621(a)(1) existed

                                          8
in its current form (after 1994).4 The court turns now to the second major obstacle
to plaintiffs’ proposed interpretation of the statute.

       B.      Canon of Statutory Construction

       Plaintiffs’ second major obstacle to their proposed borrowing from
§ 6621(c)(3)(A) is the rule of the last antecedent. The disputed sentence in the
statute reads:

               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”.

26 U.S.C. § 6621(a)(1). According to defendant, the parenthetical “(as defined in
subsection (c)(3), applied by substituting ‘overpayment’ for ‘underpayment’)”
modifies “taxable period.” Although plaintiffs do not concede the applicability of
the doctrine of the last antecedent, arguing that it is overcome by other indicia of
meaning, plaintiffs’ analysis would have the parenthetical modify “an
overpayment of tax by a corporation for any taxable period.” Pls.’ Mot. at 7-8;
Def.’s Mot. at 10-11. Contrary to plaintiffs’ contentions, the rule of the last
antecedent, in addition to the first obstacle to plaintiffs’ interpretation discussed
supra, is determinative in this dispute.

       There is not much disagreement as to how the rule of the last antecedent
operates. The meaning of a statute may be discerned using “the grammatical ‘rule
of the last antecedent,’ according to which a limiting clause or phrase . . . should
ordinarily be read as modifying only the noun or phrase that it immediately
follows.” Barnhart v. Thomas, 540 U.S. 20, 26 (2003) (citation omitted).
Applying that rule to the flush language of § 6621(a)(1), the borrowing from
§ 6621(c)(3) defines “taxable period,” not “corporation” and not “an overpayment
of tax by a corporation for any taxable period.” This is defendant’s position, and it


       4
        / A minor clarification of the wording of this statutory formula did not actually occur
until 1997, but the basic framework for the formula was established in 1994.

                                                9
is a sound one. Although plaintiffs correctly argue that the rule of the last
antecedent can be “overcome by other indicia of meaning,” Barnhart, 540 U.S. at
26, the court finds no such indicia here, as discussed infra.

       Plaintiffs also rely on a recent pronouncement by the United States Court of
Appeals for the Federal Circuit which states that the rule of the last antecedent
“provides only marginal assistance.” Res. Conservation Grp., LLC v. United
States, 597 F.3d 1238, 1245 (Fed. Cir. 2010) (citing Finisar Corp. v. DirecTV
Grp., Inc., 523 F.3d 1323, 1336 (Fed. Cir. 2008)). This limited focus on one brief
commentary on the rule of the last antecedent ignores other discussions of the rule
and its usefulness in statutory construction. E.g., Jama v. Immigration & Customs
Enforcement, 543 U.S. 335, 343 (2005); Anhydrides & Chems., Inc. v. United
States, 130 F.3d 1481, 1483 (Fed. Cir. 1997). Indeed, the Federal Circuit has not
discarded the rule since it commented in Resource Conservation that the rule was
of “marginal assistance.” See Energy East Corp. v. United States, 645 F.3d 1358,
1361 (Fed. Cir. 2011) (citing Barnhart and construing a tax statute by applying the
rule of the last antecedent). Although the rule of the last antecedent is not always
helpful in statutory construction, the court sees no need to refrain from applying
the rule of the last antecedent in this case to ensure that the statutory text of
§ 6621(a)(1) is properly interpreted. See, e.g., Rojas v. Attorney Gen. of U.S., 728
F.3d 203, 209 (3d Cir. 2013) (following the rule of the last antecedent and
holding, in that case, that a parenthetical in statutory text which borrowed a
definition – “(as defined in section . . . of Title . . .)” – only modified its immediate
antecedent). Because the flush language of § 6621(a)(1) employs an “as defined”
parenthetical to modify the last antecedent “taxable period,” defendant’s
grammatical construction of the statute is correct.

      C.     Legislative History

       The court now considers whether the legislative history of § 6621 offers any
insights into the appropriate interest to be applied to overpayments by an S
corporation. Because plaintiffs challenge two different interest rate formulas that
have been applied to their overpayments, the court addresses the statutory
enactments of these formulas separately. One formula is the “STR plus 2
percentage points” formula set forth in § 6621(a)(1)(B), which differentiates
between the interest rate paid individuals (STR plus 3 percentage points) and the
rate paid corporations. This corporate interest rate provision was enacted in 1998.

                                           10
       The other interest rate formula applies to corporate overpayments which
exceed $10,000, and this formula (“STR plus .5 percentage point”) in the flush
language of § 6621(a)(1) was enacted in 1994. The court addresses the earlier
enactment first. As a threshold matter, the record before the court shows that
neither of the relevant legislative acts amending § 6621(a)(1) has legislative
history which contains any direct reference to S corporations. Nor is there
reference to the difference between S corporations and C corporations, or to the
impact of the amendments to § 6621(a)(1) on S corporations or pass-through
entities in general.5 Thus, plaintiffs have no clear statement of congressional
intent with which they might persuade the court to ignore the plain text of
§ 6621(a)(1).

               1.     1994 Uruguay Round Agreements Act

       Section 6621(a)(1), along with numerous other provisions of law, was
amended in 1994 to implement international trade agreements established by the
Uruguay Round of the General Agreement on Tariffs and Trade (GATT). See
Uruguay Round Agreements Act, Pub. L. No. 103-465, Title VII, § 713, 108 Stat.
4809, 5001-02 (1994). It is not surprising that there is almost no commentary on
this change to § 6621(a)(1), given that it was part of a massive set of statutory
amendments produced through the Uruguay Round negotiations. Plaintiffs cite
only one portion of a House Report section titled “Reduction in rate of interest
paid on certain corporate overpayments of tax,” which comments on the
amendment of § 6621(a)(1):

               Distortions may result if the rates of interest in the Code
               differ appreciably from market rates. Reducing the
               overpayment rate for large corporate overpayments of
               taxes will reduce the possibility of distortions.

Pls.’ Mot. at 9 (citing H.R. Rep. No. 103-826, pt.1, at 178 (1994) (House Report)).

       5
         / The term “pass-through entity,” a term upon which plaintiffs greatly rely, refers to
business entities such as partnerships which for income tax purposes are taxed largely at the
individual owner level, as opposed to the entity level. See Pls.’ Mot. App. at 3-4 (describing the
income taxation of S corporations, which are treated more like partnerships than C corporations).
As plaintiffs’ counsel conceded at oral argument, however, this is not an income tax case but an
excise tax case, where the tax was paid by the S corporations at the corporate level. Tr. at 46.

                                               11
Although plaintiffs ask the court to infer that “distortions” from “large corporate
overpayments” must refer exclusively to C corporations, the court sees no reason
to make such a leap based on this anodyne passage of the House Report.

       Moreover, plaintiffs avoid any quotation of another relevant portion of the
report’s commentary:

               The overpayment rate is reduced to the sum of the
               Federal short-term rate plus one-half percentage point for
               any portion of an overpayment of tax by a corporation
               for a taxable period that exceeds $10,000. (The
               overpayment rate is the same as under present law for the
               first $10,000 of any overpayment of tax by a
               corporation.) The provision applies to all types of taxes.

H.R. Rep. No. 103-826, pt.1, at 178. When the entirety of the relevant legislative
commentary on Section 713 is considered, there is nothing Congress has said
which indicates that S corporations should be treated any differently under
§ 6621(a)(1) than any other type of corporation. The legislative history is
fundamentally silent on the issue before the court.

       The court notes, too, that in the House Report the reference to “large
corporate overpayments” is coupled with a reference to overpayments exceeding
$10,000. Plaintiffs argue that “[i]t is only logical that in decreasing overpayment
rates in 1994, Congress chose to favor S corporations [again] by referencing the
same subsection (c)(3) by which Congress excluded S corporations from the
higher underpayment rate [for underpayments over $100,000] just four years
earlier.”). Pls.’ Reply at 7. It is more logical, in the court’s view, to infer that the
Uruguay Round negotiations produced a tax provision which Congress
implemented without regard for prior enactments of differential treatment in the
Code for S corporations and C corporations.6 The court finds nothing in the
legislative history of the 1994 amendment to § 6621(a)(1) which supports
plaintiffs’ interpretation of the statute.



       6
       / Plaintiffs have not suggested that any differences in the tax treatment of S corporations
and C corporations in the IRC were discussed during the Uruguay Round negotiations.

                                               12
             2.     Internal Revenue Service Restructuring and Reform Act of
                    1998

       In 1998, § 6621(a)(1) was amended so as to increase the interest rate on
overpayments for individuals but to retain the same interest rate for corporations.
See Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. No.
105-206, Title III, § 3302, 112 Stat. 685, 741-42 (1998) (the IRS Reform Act).
The amendment to § 6621(a)(1), which is just one among many other changes to
the Code, is located within Title III of the IRS Reform Act, a group of changes to
the IRC denoted “Taxpayer Protection and Rights.” IRS Reform Act, 112 Stat. at
726. The subdivisions of Title III include such topics as “Low-Income Taxpayer
Clinics,” “Disclosures to Taxpayers,” “Protections for Taxpayers Subject to Audit
or Collection Procedures,” “Relief for Innocent Spouses and for Taxpayers Unable
to Manage their Financial Affairs Due to Disabilities,” and “Provisions Relating to
Interest and Penalties.” Id. at 734-76. In this context, the fact that Congress
increased the rate of interest for overpayments by individuals but did not do so for
corporations appears to indicate a concern for individual taxpayers more than a
concern for particular types of business entities. Indeed, the title of this section of
the IRS Reform Act is “[i]ncrease in overpayment rate payable to taxpayers other
than corporations.” IRS Reform Act § 3302, 112 Stat. at 741 (emphasis added).
Plaintiffs do not cite any passages from the legislative history of the IRS Reform
Act.

       The House Conference Report explaining Section 3302 of the IRS Reform
Act is succinct:

             The House bill [which is the same as the Senate bill in
             this respect] provides that the overpayment interest rate
             will be [ST]R plus three percentage points, except that
             for corporations, the rate remains at [ST]R plus two
             percentage points.

H.R. Conf. Rep. No. 105-599, at 257-58 (1998). Interestingly, in the preceding
section of the IRS Reform Act – Section 3301 – the Conference Report noted that
there are different interest rates which apply to various overpayments and
underpayments, and in particular noted the circumstances of pass-through entities
such as partnerships. Id. at 257. Obviously, Congress in 1998 was aware of pass-

                                          13
through entities and could state a special concern for them, as it did in the
commentary on Section 3301 of the IRS Reform Act amending 26 U.S.C.
§ 6621(d):

               Where interest is payable and allowable on an equivalent
               amount of underpayment and overpayment that is
               attributable to a taxpayer’s interest in a pass-thru entity
               (e.g., a partnership), the conferees intend that the
               benefits of the [interest-netting] provision apply.

H.R. Conf. Rep. No. 105-599, at 257.

       No such concern for pass-through entities is expressed in the Conference
Report as to the application of Section 3302 of the IRS Reform Act which
amended § 6621(a)(1). The Conference Report therefore contains no indication
that Congress acted in 1998 to exclude S corporations from the interest rate
formula applicable to corporate overpayments.7 After a thorough review of the
legislative history that might inform an alternate construction of the plain text of
§ 6621(a)(1), the court finds nothing to support plaintiffs’ interpretation of the
interest provisions which should be applied to the tax overpayments of S
corporations.

       D.      Review of Plaintiffs’ Principal Remaining Arguments Contesting
               the Plain Meaning of Section 6621(a)(1)

       Having considered and rejected plaintiffs’ interpretation of the plain text of
§ 6621(a)(1), their opposition to the applicability of the rule of the last antecedent
to the flush language of § 6621(a)(1), and their misplaced reliance on the


       7
         / Plaintiffs also rely on a Senate committee staff report issued in 1999. Pls.’ Reply at 7
n.1; Tr. at 17, 47. Defendant argues that this report is not part of the legislative history of any of
the amendments to § 6621(a)(1) relevant to this suit. Def.’s Reply at 7. The court must agree
with defendant. This report is not part of the legislative history explaining the 1994 and 1998
amendments to § 6621(a)(1). See, e.g., Ogilvie v. United States, 519 U.S. 79, 90 (1996) (stating
that “the view of a later Congress cannot control the interpretation of an earlier enacted statute”)
(citations omitted); AD Global Fund, LLC ex rel. N. Hills Holding, Inc. v. United States, 67 Fed.
Cl. 657, 685 (2005) (“Congress cannot effect an authoritative interpretation of a law passed by
the prior Congress using the vehicle of a committee report.”).

                                                  14
legislative history of § 6621(a)(1), the court now turns, briefly, to the other
principal topics raised by plaintiffs in their briefs.8 The first argument focuses
upon the nature of S corporations as “pass-through” entities; plaintiffs contend
that Congress must have meant to treat S corporations more like partnerships than
C corporations for the purposes of overpayment interest rates. The second
argument is that the chronology of various amendments to overpayment and
underpayment interest rate provisions in the IRC must indicate that Congress
granted favorable overpayment interest rate treatment for S corporations similar to
the favorable underpayment interest rate provision for S corporations. Lastly,
plaintiffs urge this court to follow the United States Tax Court, in one respect but
not another, in its interpretation of § 6621(a)(1) as contained in a short opinion
issued in 2006. The court addresses each of these topics in turn.

               1.     Whether Congress, Sub Silentio, Provided that S
                      Corporations Should Be Treated Like Partnerships, and
                      Not Like C Corporations, in § 6621(a)(1)

       Plaintiffs contend that pass-through entities like S corporations and
partnerships, because they are so different from C corporations, must have all been
excluded from any corporate overpayment interest rate set by § 6621(a)(1). See
Pls.’ Reply at 12 (“Section 6621 conforms to the inherent differences between C
and S corporations by allowing S corporations, like other pass-through entities, to
pay and receive interest at the regular rates that apply to individuals.”). Plaintiffs
found their contentions in this regard on “reason”:

               Congress could have reasonably wanted to treat S
               corporations like partnerships, and not like C
               corporations, not because they are partnerships, but
               because the incidents of taxation in an S corporation, as
               in a partnership, fall directly upon the owners. . . . Thus,
               there is ample reason why Congress would have wanted
               to treat interest owed by and owed to S corporations
               differently from that of C corporations and why through
               the provisions of Section 6621 it did so.


       8
       / The court has considered all of plaintiffs’ arguments raised in briefing and at oral
argument. None of these arguments has been persuasive.

                                                15
Id. at 11-12.

       The fundamental problem with plaintiffs’ argument is that although
Congress could have reasonably exempted S corporations from the corporate
overpayment interest rates set by § 6621(a)(1), it has stated no such intent, either
in the language of the statute or in relevant legislative history. The court cannot
rewrite § 6621(a)(1) simply because it might be reasonable to do so. If plaintiffs
wish to have the statute amended in their favor, they must address such concerns
to Congress, not to this court. See Def.’s Reply at 12 (“Even if subjecting the
plaintiffs to reduced overpayment interest rates were somehow unfair, the
plaintiffs’ argument is best directed to Congress.”).

       Plaintiffs also place undue reliance on a decision issued by the United States
District Court for the District of New Jersey, Naporano v. United States, 834 F.
Supp. 694 (D.N.J. 1993). Plaintiffs construe Naporano to hold that the word
“corporation” in the Code does not always refer to S corporations:

                Applying the same reasoning invoked by the government
                in Naporano and accepted by the court, “corporation” in
                Section 6621 should be defined as C corporation [and
                excluding S corporations]. . . . It should be read as C
                corporation not only in the flush language of subsection
                (a)(1), but also in subsection (a)(1)(B).

Pls.’ Reply at 14. The Naporano court, however, was not interpreting
§ 6621(a)(1), but another, entirely unrelated statute, 26 U.S.C. § 245(c)(1) (2012).
834 F. Supp. at 699. As defendant notes, there is no holding in Naporano which
applies to every instance of the utilization of the word “corporation” in the IRC.
Def.’s Reply at 9. The court finds no useful guidance in Naporano to determine
whether S corporations should be excluded from the ambit of the term
“corporation” in § 6621(a)(1). Notwithstanding the inapposite statutory analysis
provided by Naporano, this court holds that because S corporations are
corporations they are subject to the overpayment interest rates for corporations
established by § 6621(a)(1). See supra.

                2.    Whether Congress’s Amendments to § 6621 Show an Intent
                      to Create Parallel Advantages for S Corporations in

                                           16
                    § 6621(a)(1) and § 6621(c)

       Plaintiffs argue that the history of various changes to § 6621 and the fact
that § 6621(c) contains different treatment of C corporations and S corporations
regarding underpayment interest show that Congress could not have treated C and
S corporations the same in § 6621(a)(1) for the purposes of determining
overpayment interest. See Pls.’ Mot. at 7-8, 10-11; Pls.’ Reply at 3-4, 8, 10-11; Tr.
at 10-14. According to defendant, plaintiffs are asking the court to infer that the
text of § 6621(a)(1) means not what it says, but instead expresses a general
concern for S corporations that has been present since 1990 in § 6621(c). Def.’s
Reply at 9. The court must agree with defendant’s characterization of plaintiffs’
argument, i.e., a faulty premise that the intent of Congress should be inferred from
the enactment of disparate legislative measures over the course of a number of
years.

       Such an inference, in the court’s view, would ignore the likelihood that the
specific legislative acts which amended § 6621(a)(1) in 1994 and 1998 had
different goals than the legislation which favored S corporations in 1990.
Although plaintiffs contend that such a change in concern for the tax realities of S
corporations would be an “anomaly,” Tr. at 13, amendments to the IRC are not
constrained by the concerns of any prior Congress, particularly where, as here,
different topics (overpayment interest versus underpayment interest) are addressed
in successive amendments. See, e.g., Wells Fargo & Co. v. United States, 641
F.3d 1319, 1322-23 (Fed. Cir. 2011) (describing certain amendments to the IRC
from 1981 through 2004 which adjusted statutory provisions to address the
evolving concerns of Congress).

        The court has considered all of plaintiffs’ arguments which focus on the
history of the amendments to § 6621 and which highlight the allegedly anomalous
differences between the treatment of C corporations and S corporations in
§ 6621(a)(1) and § 6621(c), if the government’s view of the statute is adopted by
this court. None of plaintiffs’ arguments persuade the court that the plain text of
the statute should be ignored or that a rewritten § 6621(a)(1) should override the
corporate overpayment interest rate provisions clearly set forth in the text of this
statute. For these reasons, the court rejects plaintiffs’ interpretation of § 6621 and
its history as unpersuasive.



                                          17
               3.      Whether a Tax Court Interpretation of § 6621(a)(1) is
                       Persuasive

       “Although decisions by judges of the United States Tax Court are not
binding on this court, the court gives their interpretations [of the IRC] due
consideration.” RP1 Fuel Cell, LLC v. United States, 120 Fed. Cl. 288, 345
(2015); see also Otis Elevator Co. v. United States, 618 F.2d 712, 719 (Ct. Cl.
1980) (noting that Tax Court decisions do not provide binding precedent for this
court). Here, plaintiffs rely, in part, on Garwood Irrigation Co. v. Commissioner,
126 T.C. 233 (2006). Plaintiffs agree with the holding in Garwood concluding
that S corporations are not included in the definition of corporation for purposes of
the STR plus .5 percentage point overpayment interest rate for overpayments
exceeding $10,000. Pls.’ Mot. at 9-10. Plaintiffs disagree, however, with the
holding in Garwood which included S corporations in the STR plus 2 percentage
points interest rate formula for smaller corporate overpayments. Id. at 13.

       The court disagrees with the portion of Garwood upon which plaintiffs rely,
for a number of reasons. While the Garwood court found the flush language of the
statute to be ambiguous, the text of § 6621(a)(1), as stated supra, is unambiguous
and only defendant’s proposed reading of the statute provides a reasonable,
enforceable corporate overpayment interest rate formula for overpayments
exceeding $10,000 (STR plus .5 percentage point). Inappropriately, in this court’s
opinion, the Garwood court chose to rely on legislative history that is silent as to
the treatment of S corporations. The Tax Court discerned significance in a mere
“echo[]” between language in § 6621(c), a provision enacted at an earlier date, and
a similar phrase in the 1994 House Report. 126 T.C. at 235 (identifying the
similarities between the phrases “large corporate underpayment” and “large
corporate overpayments” as providing “some guidance”). In this court’s view, the
Garwood court discerned congressional intent where there was none. See supra.

       The court notes, too, that Garwood contains a very brief statutory analysis
of the STR plus .5 percentage point provision in the flush language of
§ 6621(a)(1).9 Garwood therefore does not provide a sufficiently persuasive


       9
          / The lawsuit in Garwood was primarily concerned with a determination of the tax
liabilities of the petitioner, not with the proper interest rate to be calculated upon any
                                                                                         (continued...)

                                                  18
analysis of this issue. Further, Garwood has not been followed by any other court.
See Maimonides Med. Ctr. v. United States, 54 F. Supp. 3d 194, 205 n.11
(E.D.N.Y. 2014) (stating that “to the extent Garwood might suggest a contrary
outcome, the Court declines to follow it”), appeal docketed, No. 14-4279 (2d Cir.
Nov. 14, 2014); see also United States v. Talley Def. Sys., Inc., 393 F. Supp. 2d
964, 971-72 (D. Ariz. 2005) (commenting that S corporations should be subject to
the corporate overpayment rates in § 6621(a)(1)). For all of these reasons, the
court declines to follow the portion of Garwood upon which plaintiffs rely.

       E.     IRS Administrative Materials

       Finally, the court considers whether administrative materials issued by the
IRS offer any guidance for the interpretation of § 6621(a)(1). One type of
administrative material is contained in the Internal Revenue Manual (IRM).
Plaintiffs cited to provisions of the IRM as support for their interpretation of
§ 6621(a)(1). Before turning to the IRM, however, the court first discusses
another type of IRS administrative material that addresses the legal issue presented
by this case – a program manager technical assistance memorandum issued in
1998.

              1.      Program Manager Technical Assistance Memorandum

       Although the parties did not cite to any IRS memoranda in their briefs, the
court discovered one IRS memorandum potentially relevant to this dispute and
requested that the parties comment on this document at oral argument. See Order
of April 20, 2015. The document is labeled “Technical Assistance Memorandum”
and is dated December 22, 1998. See TAM CC-TAM-PMTA-00244 (Dec. 22,
1998) (hereinafter, “1998 Memorandum”).10 Before turning to the content of this


       9
       (...continued)
overpayment. See Garwood Irrigation Co. v. Comm’r, 88 T.C.M. (CCH) 173 (2004).
       10
         / The original document is available on the IRS’s website, at
http://www.irs.gov/pub/lanoa/pmta00244_7034.pdf (last visited July 1, 2015). The acronym
PMTA signifies “program manager technical assistance memorandum.” E.g.,
http://www.irs.gov/pub/lanoa/pmta_2012-16.pdf (last visited July 1, 2015). Such documents are
indexed by year and are described as “Legal Advice Issued to Program Managers.” See
                                                                                  (continued...)

                                              19
document, the court notes that a technical assistance memorandum occupies a low
place in the hierarchy of documents released to the public by the IRS. See, e.g.,
Treas. Reg. § 301.6110-2(a) (stating that “a [formal] written determination [issued
by the IRS] does not include for example, . . . technical assistance memoranda”).

        As plaintiffs pointed out at oral argument, a technical assistance
memorandum is of limited utility in tax litigation. It is undisputed that a technical
assistance memorandum lacks precedential value. See
http://www.irs.gov/uac/Legal-Advice-Issued-to-Program-Managers (last visited
July 1, 2015) (noting that program manager technical assistance memoranda
“cannot be used or cited as precedent”). In this case, the only significance that
should be accorded the 1998 Memorandum is that it states the legal position of the
Office of Chief Counsel of the IRS regarding the interest provisions of
§ 6621(a)(1) as they apply to S corporations, in response to an inquiry in 1998
from the acting director of an IRS department that occupied itself with “Interest
Administration.” See Tax Analysts v. I.R.S., 294 F.3d 71, 81 (D.C. Cir. 2002)
(noting that program manager technical assistance memoranda present the Office
of Chief Counsel’s “final legal position concerning the Internal Revenue Code”)
(emphasis removed).

      For the sole purpose of illustrating the legal position taken by the IRS in
1998, the court reproduces the text of the 1998 Memorandum here. After
introducing the subject as “Overpayment Interest Rate for S Corporations,” the
memorandum states:

              This responds to your request for clarification of the
              interest rate on overpayments for S corporations under
              § 6621(a)(1) of the Internal Revenue Code (Code).

              General Overpayment Rate

              Section 3302 of the Internal Revenue Service
              Restructuring and Reform Act of 1998, Pub. L. 105-206,


       10
         (...continued)
http://www.irs.gov/uac/Legal-Advice-Issued-to-Program-Managers (last visited July 1, 2015).


                                              20
             112 Stat. 685, 745 (RRA 1998) amended § 6621(a)(1) of
             the Code to provide that for the calendar quarter
             beginning on January 1, 1999 and succeeding calendar
             quarters, the overpayment rate is the Federal short term
             rate plus 3 percentage points (2 percentage points in the
             case of a corporation). Section 1361(a)(1) of the Code
             defines an “S corporation” as a small business
             corporation that made the election provided under
             § 1362(a). Nothing in the legislative history
             accompanying § 3302 of RRA 1998 indicates that
             Congress intended to exclude S corporations from the
             term corporation as used in that subsection.
             Accordingly, the general overpayment rate for S
             corporations for the calendar quarter beginning on
             January 1, 1999 and succeeding calendar quarters, is the
             Federal short term rate plus 2 percentage points.

             Overpayments in Excess of $10,000

             The last sentence of § 6621(a)(1) provides that to the
             extent that an overpayment of tax by a corporation for
             any taxable period exceeds $10,000, the overpayment
             rate is the Federal short term rate plus 0.5 percentage
             point.

TAM CC-TAM-PMTA-00244 (Dec. 22, 1998). The court notes that the position
taken by the Office of Chief Counsel of the IRS in 1998 is consistent with the
position the government takes in this litigation in 2015. Beyond that observation,
however, the court finds no further significance in the 1998 Memorandum.

             2.    Internal Revenue Manual

      Plaintiffs rely, to some extent, on a provision of the Internal Revenue
Manual (IRM) which discussed the overpayment interest due corporations under
the Code, although the text cited by plaintiffs has since been replaced. Before
turning to the cited content of a historical version of the IRM, and related
provisions of the IRM that plaintiffs did not cite, the court briefly examines the

                                         21
weight courts typically accord provisions in the IRM. As a threshold matter, the
IRM itself notes that its provisions are made available to the public to fulfill
certain statutory disclosure requirements, but describes the function of the IRM as
providing “instructions to staff”:

             The IRM is the primary, official source of “instructions
             to staff” that relate to the administration and operation of
             the IRS. It details the policies, delegations of authorities,
             procedures, instructions, and guidelines for daily
             operations for all IRS organizations.

IRM 1.11.2.2(1) (05-08-2014). see also IRM 1.11.1.3.1 (09-04-2009) (discussing
disclosure requirements as they pertain to instructions to IRS staff).

       Both parties agree that the IRM binds neither the IRS nor the courts. Pls.’
Mot. at 12; Def.’s Mot. at 16. The only case cited by plaintiffs for the proposition
that the IRM may provide “guidance” to courts, Pls.’ Mot. at 13; Pls.’ Reply at 16,
is Ransom v. FIA Card Services, N.A., 562 U.S. 61 (2011). Although criticized by
Justice Scalia in his dissent, the majority of the Court in Ransom defended its
citation to “guidelines” issued by the IRS by stating that “[t]he [IRS] might . . .
have something insightful and persuasive (albeit not controlling) to say about
[collection standards set forth in the IRM].” Ransom, 562 U.S. at 73 n.7. It is
noteworthy that the statute at issue in Ransom specifically referenced the
collection standards that are set forth in the IRM. Id. at 69 (citing 11 U.S.C.
§ 707(b)(2)(A)(ii)(I) (2006 and Supp. III)). Thus, Ransom is a rather unusual case
of statutory interpretation where the statute at issue specifically references the
IRM. That is not the case here. Ransom contains no general pronouncement as to
the weight that the IRM should be accorded in interpreting the Code.

       Courts generally rely very little, if at all, on the IRM for guidance in
interpreting the Code. First, it is beyond cavil that the IRM does not have the
force of law. E.g., Fargo v. Comm’r, 447 F.3d 706, 713 (9th Cir. 2006) (citing
cases). Second, this court, when it has cited the IRM, typically uses IRM
provisions to understand the procedural facts of a case, not as a tool of statutory
construction so as to determine money damages due a tax plaintiff. See
Adamowicz v. United States, 101 Fed. Cl. 485, 487-88 (2011) (relying on
regulations as well as the IRM to resolve a jurisdictional challenge to a claim

                                          22
against the IRS brought before this court); Kennedy v. United States, 95 Fed. Cl.
197, 204-05 (2010) (relying on the IRM to determine the nature of a suit brought
by the government in a district court tax collection proceeding); Sara Lee Corp. &
Subsidiaries v. United States, 29 Fed. Cl. 330, 334 (1993) (relying on the IRM to
understand the nature of a “formal action” taken by the IRS against the plaintiff in
that case). Third, it is well-established that IRM provisions are not precedential
and may not be used to overcome the plain meaning of a statute. E.g., Ransom,
562 U.S. at 73; Electrolux Holdings, Inc. v. United States, 71 Fed. Cl. 748, 759
(2006) (citation omitted). Fourth, if and when courts rely on the IRM for guidance
in interpreting the Code, the IRM is typically cited last, or in a footnote, showing
that the IRM is not considered to carry much weight. See, e.g., Cencast Servs.,
L.P. v. United States, 729 F.3d 1352, 1363 n.5 (Fed. Cir. 2013) (citing the IRM in
a footnote, after construing a Code provision, to show the weakness of the
plaintiff’s contrary construction of that provision). Because neither Ransom nor
the court’s independent research have shown that the IRM carries significant
weight in the interpretation of a Code provision, the court is wary of giving any
substantive weight to the IRM for the purposes of construing § 6621(a)(1).11

       The court now turns to the content of the IRM to determine whether it offers
any useful “guidance” as to the interpretation of the overpayment interest
provisions contained in § 6621(a)(1). There are several provisions of the IRM
which might inform the court’s analysis here, but the guidance provided in these
provisions is mixed, and in general these provisions support defendant’s position
more than plaintiffs’ position. Plaintiffs rely specifically on the 2010 version of
IRM 20.2.4.9, but concede that the 2002 and 2015 versions of IRM 20.2.4.9 are
not clearly supportive of their construction of § 6621(a)(1). Defendant urges the
court to ignore the IRM as having “no substantive effect in this case.” Def.’s
Reply at 9 n.5 (citation omitted). In the end, the court adopts defendant’s view
that the IRM provides no significant assistance for the statutory interpretation
required by this case. The following analyses will elaborate on how the court
reached this determination.



       11
         / The United States Supreme Court has on two occasions cited to the IRM for the
purposes of statutory construction, but the statutes at issue were part of the Bankruptcy Code, not
the IRC. See Hall v. United States, 132 S. Ct. 1882, 1889-90 (2012) (construing 11 U.S.C.
§ 503(b) (2012)); Ransom, 562 U.S. at 66-73 & nn.2, 7 (construing 11 U.S.C. § 707(b)(2)(A)).

                                                23
                   a.     2002 Version of IRM 20.2.4.9

       Turning first to IRM 20.2.4.9, there are three different versions that discuss
overpayment interest due corporations during the years pertinent to this suit. In
2002, this IRM provision stated that “[t]he corporate overpayment interest rate is
applicable to . . . Form 1120 returns.” IRM 20.2.4.9 (03-01-2002) (“Special Credit
Interest Rules for Corporations”). As plaintiffs concede, this version of IRM
20.2.4.9 does not clearly indicate that S corporations, which file Form 1120S
returns, are excepted from the “corporate overpayment interest rate.” See Pls.’
Reply at 15 n.6 (stating that “[b]ecause this subsection provides that the corporate
overpayment interest rate is applicable to Form 1120 Returns, it is possible to
conclude that this [corporate overpayment interest rate] includes Form 1120S, the
return filed by an S corporation”). The court notes that in 2002 this IRM
provision also stated, more generally, that “[a] corporate overpayment interest rate
is established for returns deemed to be corporations,” and that “corporate filers”
are not entitled to the individual overpayment interest rate. IRM 20.2.4.9 (03-01-
2002).

       The court agrees with plaintiffs that the 2002 version of IRM 20.2.4.9 does
not explicitly exclude S corporations from the corporate overpayment interest rates
in § 6621(a)(1). Further, the court reads this provision as a whole to target
corporate filers as entities that are restricted to the corporate overpayment interest
rates set forth in § 6621(a)(1). For these reasons, the 2002 version of IRM
20.2.4.9 appears to favor defendant’s position in this suit, not plaintiffs’ position.

                   b.     2010 Version of IRM 20.2.4.9

       Plaintiffs find support, however, in a change to IRM 20.2.4.9 in 2010. Pls.’
Mot. at 11-13; Pls.’ Reply at 15-16 & n.6. This version appears to exclude S
corporations from the definition of corporations which are subject to the corporate
overpayment interest rates set forth in § 6621(a)(1). The phrase upon which
plaintiffs rely states that:

             A corporation is any . . . taxable entity with at least one
             of the following significant filing requirements:
             ...
             Form 1120 with Doc. Code other than 16 (i.e., Form

                                          24
             1120S).

IRM 20.2.4.9 (09-03-2010) (“Special Credit Interest Rules for Corporations”).

       Although other more general pronouncements in the 2010 version of IRM
20.2.4.9 continue to indicate that corporate filers are subject to the corporate
overpayment interest rates set forth in § 6621(a)(1), the specific reference to Form
1120S in the 2010 version of IRM 20.2.4.9 is a departure from the 2002 version.
In the 2010 version of IRM 20.2.4.9, Form 1120S is not, apparently, considered a
corporate return for the purposes of § 6621(a)(1). Because S corporations file
Form 1120S returns, the 2010 version of IRM 20.2.4.9 does not indicate that S
corporations should necessarily be subject to the corporate overpayment interest
rates set forth in § 6621(a)(1). Thus, the 2010 version of IRM 20.2.4.9 appears to
favor plaintiffs’ position in this suit, not defendant’s position.

                   c.     2015 Version of IRM 20.2.4.9

       In 2015, the IRS changed IRM 20.2.4.9 again, and the text largely reverted
to the content provided in the 2002 version. The court excerpts here a few
relevant pronouncements: (1) “A corporate overpayment interest rate is
established for entities deemed to be corporations.”; (2) “A corporation is any . . .
taxable entity with [a] significant filing requirement[] [such as] Form 1120”; and
(3) “‘corporate’ filers are [not] allowed overpayment interest at the equalized
non-corporate rate.” IRM 20.2.4.9 (03-05-2015). As plaintiffs conceded at oral
argument, the 2015 version of IRM 20.2.4.9 removed the language of the 2010
version upon which they relied. Tr. at 24 (Plaintiffs’ Counsel) (asserting that IRM
20.2.4.9 supported plaintiffs’ position “up until” March 2015). In the court’s
view, nothing in the 2015 version of IRM 20.2.4.9 indicates that S corporations
are exempted from the lower overpayment interest rates applicable to corporations.
Instead, according to this IRM provision, corporate filers, such as S corporations,
appear to fall within the category of entities that are subject to the corporate
overpayment interest rates set forth in § 6621(a)(1). For this reason, the court
views the 2015 version of IRM 20.2.4.9 as slightly favoring defendant’s
interpretation of § 6621(a)(1).

                   d.     IRM 20.2.4.9 Summary



                                         25
       The court cannot read IRM 20.2.4.9 as providing clear guidance with
respect to the IRS’s position on the proper interpretation of § 6621(a)(1). The
versions of this manual provision have oscillated from appearing slightly pro-
defendant, to appearing slightly pro-plaintiffs, and now appear to be slightly pro-
defendant again. Even if the 2010 version of IRM 20.2.4.9 were considered to be
the clearest indication of the proper treatment of S corporations, the IRS has now
chosen to publish a version of this manual provision that greatly resembles the
2002 version. Thus, were the court to accord the IRM significant weight in its
construction of § 6621(a)(1), as urged by plaintiffs despite the weight of authority
which counsels against such an undertaking, IRM 20.2.4.9 slightly favors
defendant’s position, not plaintiffs’ position. For these reasons, the court finds
plaintiffs’ reliance on IRM 20.2.4.9 to be unavailing.

                   e.     Other IRM Provisions

       The court has also examined other IRM provisions that discuss corporate
overpayment interest rates and corporate filing requirements. No extensive
analysis of these provisions is required here. The court simply notes that once an
inquiry into the content of the IRM was expanded beyond the passages cited by
plaintiffs, plaintiffs’ arguments based on the 2010 version of IRM 20.2.4.9 are
weakened and/or rebutted.

      One example is IRM 20.2.4.9.1, the provision in the IRM which
immediately follows the one cited by plaintiffs. Titled “GATT Credit Interest
Computations on Overpayments,” this provision, in its 2002 version, stated in
relevant part:

             Effective after December 31, 1994, the General
             Agreement on Tariffs and Trade (GATT) established a
             lower credit interest rate for large corporate
             overpayments. The GATT rate is one and a half points
             below the normal corporate credit interest rate for
             overpayments exceeding $10,000 for all business
             taxpayers with a corporate filing requirement (Forms
             1120, 990C, 990T).

IRM 20.2.4.9.1 (03-01-2002). The phrase “all business taxpayers with a corporate

                                         26
filing requirement (Forms 1120, 990C, 990T),” id., is broad enough, in the court’s
view, to include S corporations which file Form 1120S returns.12

      The court’s interpretation of the phrase “all business taxpayers with a
corporate filing requirement (Forms 1120, 990C, 990T),” id., is informed by the
current IRM’s discussion of corporate filing requirements, which is found at IRM
21.7.13.7.5.2 (10-01-2008). That provision, titled “Tax Form and Filing
Requirement Descriptions for Corporations,” states in relevant part that:

               (1) Entities that are incorporated with a state are also
               incorporated for federal tax purposes. When an entity is
               incorporated, it must file the appropriate Form 1120,
               unless it is a non-profit/exempt organization. . . .
               ....
               (3) This subsection describes Form 1120 filing
               requirements for various types of corporations.

IRM 21.7.13.7.5.2 (10-01-2008). Thus, the IRM specifies that incorporated
entities have corporate filing requirements, which in the for-profit context means
filing the “appropriate Form 1120” return and observing the “Form 1120 filing
requirements for various types of corporations.” Id. The IRM thus uses the term
Form 1120 filing requirements broadly, to encompass several different types of
Form 1120.

      These “Form 1120 filing requirements,” id., are detailed in IRM sub-
sections addressing various types of corporations; the listed types of Form 1120
returns include Form 1120, Form 1120-C, Form 1120-SF, Form 1120-H, Form
1120-IC-DISC, Form 1120-F, Form 1120-FSC, Form 1120L, Form 1120-ND,
Form 1120-PC, Form 1120-POL, Form 1120-RIC, Form 1120-REIT, and Form
1120S. See IRM 21.7.13.7.5.2.1 (10-01-2009) through IRM 21.7.13.7.5.2.14 (10-

       12
         / Unlike IRM 20.2.4.9, there was no 2010 rewrite of IRM 20.2.4.9.1. Thus, the 2002
version of IRM 20.2.4.9.1 co-existed with the 2010 version of IRM 20.2.4.9 for approximately
five years. The fact that arguably contradictory guidance was provided IRS staff during this
period further diminishes the persuasive value, if any, of the 2010 version of IRM 20.2.4.9 upon
which plaintiffs rely. The court notes, too, that the 2015 version of IRM 20.2.4.9.1, like the 2002
version, provides no support for plaintiffs’ position in this suit. See IRM 20.2.4.9.1
(03-05-2015).

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01-2005). As is the case for plaintiffs here, a corporation that elects to be taxed as
an S corporation must file Form 1120S. IRM 21.7.13.7.5.2.14 (10-01-2005).
Construing these IRM provisions together, IRS staff are instructed that S
corporations, like other for-profit corporations, have a corporate filing
requirement, and are also instructed that S corporations, for the purposes of
overpayment interest, fall within the category of “all business taxpayers with a
corporate filing requirement [such as Form 1120 and Form 1120S]” who receive
only the lower overpayment interest rates set forth in § 6621(a)(1). See IRM
20.2.4.9.1 (03-01-2002).

                    f.    IRM Provisions Provide No Significant Guidance in
                          This Case

       Having reviewed a number of current and historical versions of IRM
provisions which discuss corporate overpayment interest rates established by
§ 6621(a)(1), and corporate filing requirements, the court finds that these
provisions, taken together, are generally more supportive of defendant’s
interpretation of the statute than plaintiffs’ strained reading of the statutory text.
For the reasons stated above, however, the court does not believe that significant
reliance on the IRM to interpret the Code is appropriate in most instances. The
court sees no reason to depart from that sound practice in this case. The court has
not, therefore, placed any significant weight on the instructions provided by the
IRM to IRS staff for this court’s analysis of § 6621(a)(1).

                                  CONCLUSION

       Pursuant to the language of § 6621(a)(1), the corporate overpayment interest
rate formulas set forth in the statute apply to S corporations as well as C
corporations. The court’s reading of the statute is supported by its plain text as
well as the canon of statutory construction known as the doctrine of the last
antecedent. Neither the statute’s legislative history nor IRS administrative
materials provide support for a contrary interpretation. Because defendant has
shown that there are no genuine issues of material fact and that the government is
entitled to judgment as a matter of law, it is hereby ORDERED that

      (1)    Plaintiffs’ Motion for Summary Judgment, filed November 19, 2014,
             is DENIED;

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(2)   Defendant’s Cross-Motion for Summary Judgment, filed December
      22, 2014, is GRANTED;

(3)   The Clerk’s Office is directed to ENTER final judgment in favor of
      defendant, DISMISSING the complaint with prejudice; and

(4)   No Costs.


                                     /s/ Lynn J. Bush
                                     LYNN J. BUSH
                                     Senior Judge




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