## United States Court of Appeals for the Federal Circuit

05-5014

COMPUTERVISION CORPORATION, Plaintiff-Appellant,

v.
UNITED STATES, Defendant-Appellee.

John S. Brown , Bingham McCutchen LLP, of Bo ston, Massachusetts, argued for plaintiff-appellant. With him on the brief were George P. Mair , Donald-Bruce Abrams and Matthew D. Schnall

. Bruce R. Ellisen , Attorney, Tax Division, United States Departm ent of Justice, of Washington, DC, argued for defendant-appelle e. With him on the brief were Eileen J. O’Connor , Assistant Attorney General; Richard T. Morrison , Deputy Assistant Attorney General; and Gilbert S. Rothenberg and Francesca U. Tamami , Attorneys. Appealed from: United States Court of Federal Claims Judge Marian Blank Horn

## United States Court of Appeals for the Federal Circuit

05-5014 COMPUTERVISION CORPORATION, Plaintiff-Appellant,

v.
UNITED STATES, Defendant-Appellee.

_________ __________________ DECIDED: April 20, 2006

_________ __________________ Before NEWMAN, RADER, and DYK, Circuit Judges

. DYK, Circuit Judge

. Computervision Corporati on (“Computervision”) appeal s the decision of the United States Court of Federal Claims which held that Comput ervision is not entitled to a refund of deficiency interest assessed and pai d with respect to its 1982 tax year. The court granted the United States’ motion to di smiss on the ground that the statute of limitations barred an interest suspension claim because the plai ntiff failed to file a claim with the Internal Revenue Service (“IRS”) until more than 10 years after the expiration of the two year limitation peri od of 26 U.S.C. § 6511(a). The court also held that an interest netting claim failed to state a clai m because the requirement s of 26 U.S.C. § 6621(d) were not met under our decision in Federal National Mortgage Ass’n v. United States , 379 F.3d 1303 (Fed. Cir. 2004). We affirm.BACKGROUND The facts of this case are not in dispute. On September 14, 1983 , Computervision, a manufacturer of compute r-aided manufacturing pr oducts, overpaid it s tax liability shown on its 1982 return by $4,750,231, and elected to apply this overpayment to its 1983 tax year

. 1 On September 17, 1984, Com putervision overpaid the amount of taxes shown on the 1983 r e turn by $7,329, 276, and again elected to apply this overpayment to t he following year, the 1984 tax year. Finally, on July 2, 1985, Com putervision filed a return for the 1984 tax year showing an over payment of $7,166,031, and requested a ref und of the entire amount. The IRS paid the refund, without interest, on August 2, 1985. Following an audit, the IRS issued an “exa mination report” on January 7, 1986, in which it as serted that the taxpayer’s 1982 return had understated its tax liability and proposed a deficiency of $6,224,982 for the 1982 ta x y ear. A portion of this deficiency resulted from the IRS’s det ermination t hat a subsidiary of Computervision, Computervision International, Inc

. (CVI), di d not qualify as a domestic int e rnational sales corporation, or DISC, during the 1983 tax year. See 26 U.S.C. § 992(a)(1) (1982). 2 Another portion of the deficiency concerned what we refer to as non-DISC issues.

1 Under 26 U.S.C. § 6402(b) , the IRS permits a corporate taxpayer that has overpaid it s liab ility in one yea r to clai m a credit for the overpayment against its estimated taxes for the succeeding y ear. 26 U.S.C. § 6402(b) (2000).

2 The DISC provisions a llow a domestic production company to establish a DISC to handle its export sales and leases . The DISC itself is not subject to tax on its earnings. 26 U.S.C. § 991 (2000) . Instead, a portion of the DI SC’s earnings is taxed t o the DISC’s shareholders as a constructive dividend, 26 U.S.C. § 995(b)(1), and the remaining income is not taxed to the s hareholders unt il distributed. 26 U.S.C. § 995;

05-5014 2On April 11, 1986, Computervision s ubm itted a protest regarding the IRS’s position with respect to the 1982 tax year to the Boston Appeals Office of the IRS, disputing among other issues the determination that CVI was not a DISC. The nonDISC iss u es in the exami nation report were resolv ed by an agreement that the tax liability relating to the non-DISC issues was $2,215,952. 3 The IRS propos ed a total 1982 tax deficiency of $7,886,409. Of that amount, $5,670,457 wa s attributable to the DISC issue, and $2,215,952 to non-DISC iss ues. A 1985 net operating loss car r yback el iminated all of the proposed 1 9 82 deficiency (except for a defic iency of $37,776 attributable to investment tax credit recapture). Howev e r, the carryback did not eliminate Computervision’s liability for interest which had acc r ued on the 1982 defic iency. On June 3, 1988, the IRS assessed Computervision deficiency inte rest totaling $4,095,974.42, pl us t a x in the amount of $37,776. After corrections, the $4,095,974 interest assessment was revised to $4,063,073. Importantly for purposes of this appeal, the $4,063,073 interes t assessment included (1) interest in the am ount of $2,808,888 attri butable to the stilldisputed DISC qualification is sue, and (2 ) interest in the amount of $1,254,186 attributable to the resolved non-DISC issues. The IRS computed the deficienc y interest based on the entire 1982 deficien cy amount, from the due date of the 1982 return to the due date of the 1985 return (when the NOL carryback offset the deficienc y). Computervision paid the $37,77 6 tax defic iency on March 7, 1989. Computervision eventually also paid t he defic ie ncy interest claimed by the IR S, with the final payment of $4,045,011.64 occurring on April 28, 1989.

see Dow Corning Cor p . v. United States , 984 F.2d 416, 417 (Fed. Cir. 1993).

05-5014 3The statute bars suit for recovery of t he deficiency interest unless “a claim for refund . . . has been duly filed wit h the [IRS] . . . .” 26 U

. S. C. § 7422(a) (2000). A claim is timely filed if file d “within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever . . . expires the later . . . .” 26 U.S.C. § 6511(a). Within two years of the final pay ment, on A ugust 4, 1989, Computervision filed a refund claim with the IRS (the “origina l refund claim”), in which it claim ed “that portion of the interest relating to the [DISC] disqualificat ion issue” for the 1982 tax year. The refund claim specifically request ed $2,808,888, the amount of inte rest assessed by the IRS on the DISC tax liab ility. The refund claim also inclu ded a boilerplate provision stating that: Computervision c l aims as a bas is for the refund of the interest paid with respect to its 1982 taxable y ear such other grounds as are shown to be appropriate by the tax returns, boo ks and records and the Examination Report and related Protest of Com putervision and [CVI] for their respective tax years ended Decem ber 31, 1982, and January 31, 1983. J.A. at 1228. Section 65 32 allo ws the taxpay er to co mmence suit six month s after filin g a refund claim if the IR S fails to disallow the cl aim during that time. 26 U.S.C. § 6532(a). By April 4, 1990, the IRS had not acted on the matter, so Computervision filed a complaint in the Court of Feder al Claims. The complaint a lleged that “Comput ervision is aggrieved by the defendant’s failure to refund t he interest attributable to the purported disqualification of [CVI] as a DISC.” Meanwhile, on Novem ber 4, 199 3, Computervision filed a petition in the Unit ed States Tax Court disputing def iciencies that were assessed for two different tax years, 1983 and 1984—primarily on the theory that the IRS had improperly denied DI SC

3 Apparently, this amount was later re vised by agreement to $2,102,421.

05-5014 4treatment for those y ears. Proceedings in the Court of Federal Claims rela ting to the 1982 tax year interest assessment were st ayed pending the resolution of the DISC issue by the Tax Court, apparently on the t heory that the DISC determination for the 1983 and 1984 tax years would also resolv e the issue for the 1982 tax year . On March 18, 1996, the Tax Court ruled in Computervision’s favor on the DISC issue, holding that CVI qualified as a DISC. Computervision Int’l Corp. v. Comm’r , 71 T.C.M. (CCH) 2450 (1996). The Tax Court’s decision on the DISC issue became final on May 25, 1998. 4 Following the resolution of t he DISC issue by the Tax C ourt, the Court of Federa l Claims lifted its stay with re spect to the 1982 tax year proceedings on June 22, 1998. Computervision and the Depar tment of Justice (“DOJ”) engaged in settlement negotiations relating t o the 1982 DISC issu e. On July 22, 1998, Congress enacted a new provision of 26 U.S.C. § 6621, requiring interest netting, that is, requiring the IRS to “apply a z e ro net interest rate to overlapp ing periods o f mutual indebtednes s between a taxpayer and the IRS.” Fed. Na t. Mortgage Ass. V. United States , 379 F.3d 1303, 1306 (2004) (describing 26 U.S.C. § 6621(d)). In May 2, 2000, letters to both DOJ and the IRS, Computervision claimed the right to a refund of non- DISC interest based on the theory of interest netti ng under 6621(d). Comput ervisio n did not in these letters assert a claim for interest suspension. The IRS repl ied on August 17, 2000, treating the claim as including an interest suspens ion claim for 1982. Specifica lly, the IRS’s August 17 letter stated “Revenue ruling 99-40 (S equa) [interest suspension] is applied regarding the credit elect [from the 1982 tax ye ar] to 1983. No claim is nece ssary.” J.A. at 1405. The

4 The Tax Court proceeding remains pending with respect to certain computational issues.

05-5014 5DOJ sent a letter on October 25, 2000, stating that the DOJ was “not in agreement [wit h the IRS computations suggesti ng] that an additional refu nd or overpayment can be allowed in the instant litigation – over and above that negotiated on the basis of the issues in s u it – bas ed upon Rev enue Ruling 99- 40 absent the filing of a tim e ly claim for refund raising the iss u e .” J.A. at 1428 (emphasis in or igin al). In a March 14, 2002, letter, the DOJ reiterated its position and stated that “we do not believe that a timely claim for r e fund has been filed on [the interest suspension] issue.” J.A. at 1430. Computervision filed a formal amendment with the IRS on Ap r il 4, 2002, in which it claimed non-DISC interest under the interest suspension theory. On July 9, 2003, Computervision fil ed an amended complaint in the Cour t of Federal Claims, claim i ng $820,9 46.13 in deficiency interest relating to non- DISC iss u es on theories of interest sus pension and interest netting. The gov ernment contended that t he interest suspension claim was barred by the statute of limitations. Unlike the DISC interest claim, wh ich involved a challenge to th e underlying tax liabilit y, the claim for interest suspensio n did not inv o lve any ch allenge to the underly ing deficiencies asse rted with respect to the non-DISC issues. Rather, the taxpayer c ontended that, even though the underlying tax liability had been properly determined with respect to non-DISC issues, interest was not owed. The taxpayer relied on t he princ i ple of inte rest suspension, whic h derives from 26 U.S.C. § 6601(a), and was formally set out in Rev enue Ruling 99-40, publis hed on October 4, 1999, more than three years earlier. 1999- 2 C.B. 441. Section 6601(a) requires the payment of interest by the taxpay er with respect to “any amount of tax [that] . . . is not paid on or before the last date prescribed for payment,” and provides t hat “interest on such amount

05-5014 6. . . shall be paid for t he period f r om such last date to the date pai d.” Revenue Ruling 99-40 addressed “the manner in which in terest on a subsequently determined deficiency is computed under § 6601(a) when the taxp ayer makes an election to apply
an overpay ment to the succeeding year’s estimated taxes.” Id. Under Rev enue Ruling 99-40, in terest suspension applies when (a) a taxpa y er elects to credit an ov erpayment reported on t he return for year one [here 1982] to year two [here 1983]; (b) a defic ienc y is s ubse quently determined for y ear one [1982]; and (c) the credit elect to year two is not “needed” to satisf y the required payments of estimated tax for year two [1983]. Rev. Rul. 99-40. Under these circ umstances, interest is suspended relating to the defic iency for year one [1982]. Her e , in other words, the taxpay er asserted that deficie ncy interest was not owed for 1982 becaus e the tax for that year had been overpaid, and that the credit-elect transferring that payment to the 1983 tax year should be ignor ed for purposes of computing interest. Similarly, taxpayer’s credit elect from 1983 to 1984 was not needed to pay its 1984 liability, because the 1984 taxes had also been overpaid. 5 As part of the 2003 amended complaint, the taxpay er asserted an alternative theory for recovery of the non-DISC inter e st based on a theory of interest netting. “Interest netting” is set forth in 26 U.S.C. § 6621(d), which pr ovides that the IRS applies a net interest rate of zero to overlapping underpayments and overpaym ents of tax. With respect to interest netting there is a differe nt limitations issue (described below), but there is no issue as to whether the claim itse lf was timely filed with the IRS because the

5 The interest suspension theory is described in our decision in Marsh & McLennan Cos., Inc. v. United States , 302 F.3d 1369, 1378 (Fed. Cir. 2002).

05-5014 7statute provides for retroactive relief if t he statutory conditions are satisfied. See 26 U.S.C. § 6621(d), Pub. L. No. 105-206, § 3301(c )(2), 112 Stat. 741 (1998), as amended. The parties agree that interest netting provides id entical relief as interest suspension. On September 9, 2004, the Court of Federal Claims r endered a final dec is ion. Computervision Corp . v. United States , 62 Fed. Cl. 299 (2004). By agree ment of the parties, the Court of Federal Claims awarded judgment in favor of the taxpayer in the amount of $2,997,761. 42, representing the deficiency in terest paid with respect to the DISC defic iency. 6 I d

. at 332. Howev e r, the Court of Federal Claims granted the government’s motion to dismiss the taxpay er’s claim for a refund of deficiency interest on the non-DISC deficiencies. It held that the interest suspens ion claim was barred by the statute of limitat ions becaus e a claim was not filed with the IRS within two years of the date of payment as requir ed by 26 U.S.C. § 6511(a). Id. at 328-29. It al so held that Computervision failed to state a claim for interest-netting u nder section 6621(d). Id. at 332. Section 6621(d) only applies to overlapping per iods when underpaym ent interest is “payable” and ov erpayment inte rest is “allowable.” The c ourt held that interest is not “allowable” on an overpayment credited to a su cceeding year’s estima ted tax, nor on an overpayment refunded within 45 days. Co mputervision’s 1982 a nd 1983 ov erpayments were credit ed to succ eeding years, and it s 1984 overpayment was refunded within 45 days, so it failed to meet the r equirements of sect ion 6621(d). See id. at 331-32. The taxpay er timely appealed, and we hav e jurisdiction pursuant to 26 U.S.C. §

6 There is a slight disc repancy between the award of $2,997,761.42 and Computervision’s origi nal claim of $2,808,888.

05-5014 81295(a)(3). DISCUSSI ON
I We first address the s t atute of limitations is sue with respect to Computervision’s interest suspension claim. Statutes of limitations play an im portant role in tax administration, benefiting both the government and taxpayers. The gover nment’s authority to assess taxes is limited by 26 U.S. C. § 6501, under which taxes mu st be assessed within three years of the filing of the return. 26 U.S.C. § 6501 (2000)

. Similarly, the taxpay er must file its refund claim with the IRS “wit hin 3 years from the ti me the return was fil ed or 2 years from the time the tax was paid, whichev er . . . expi res the later . . . .” 26 U.S.C. § 6511(a). 7 H e r e the taxpay er’s original clai m for refund was filed with the IRS within the limitations period bec ause it was filed on A ugust 4, 1989, within two years of the date of the last payment, April 28, 1989. Howeve r, that claim did n o t specif ically inc l ude the interest suspension claim with respect to the non-DISC issues. A formal claim with the IRS was not filed until April 4, 2002, more than 10 y e ars after the lim itations period had expired. Nonetheles s , the taxpayer claims that for a variety of reas ons the claim was timely. Understanding the taxpay er’s contentions requires a de scription of the overall regulatory scheme. Section 742 2(a) of the Internal Re venue Code bars a taxpay er from filing a su it for refund “until a claim for ref und or cre d it has b e en du ly filed with the

7 The taxpay er may file suit for refund after “the expiration of 6 mont hs from the date of filing the c l aim . . . unless the Secretary renders a d e cisio n the r eon with i n that time,” and must file the suit within “2 years from t he date of mailin g . . . to the taxpayer of a notic e of the di sallowance of the part o f the claim to which t he suit or proceeding relates.” 26 U.S.C. § 6532(a)(1).

05-5014 9Secretary, according t o the provisions of la w in that r egard, and the regulations of the Secretary established in pursuance ther eof.” 26 U.S.C. § 7422(a) (2000). The Secretary by regulation requires that claims for refund “set forth in detail each ground upon whic h a credit or ref und is c l aimed and facts sufficient to apprise the Commissioner of the exact basis thereo f.” 26 C.F.R § 301.6402-2(b)(1) (2005) (emphasis added). Earlier r egulations contained simila r provisions. See, e.g. , United States v. Kales , 314 U.S. 186, 193 (1941) (citing Ar ticle 1306 of Treasury Regulation 65, promulgated under the 1924 Revenue Act) ; U.S. Pipe & F oundry, Co. v. United States , 155 F. Supp. 231, 232 (Ct. Cl. 1957) (c iting Regs. 111, sec. 29.322-3). The requir e ment for filing a pro per ref und claim “is design ed b o th to prevent surprise and to giv e adequate notice to t he Service of the natur e of the claim and the specific facts upon which it is predicated, thereby permitting an administrative investigation and determi nation.” Alexander Proudfoot Co. v. United States , 454 F.2d 1379, 1383 (Ct. Cl. 1972) (quoting Uni on Pac. R.R. v. United States , 389 F.2d 437, 442 (Ct. Cl. 1968), cert denied , 395 U.S. 944 (1969)). This requi rement for claim specificity applies equally to c l aims for deficiency intere st which are separate from claims for the underlying tax liabilit y. John B. Lamert & Asso cs. Inc. v. United States , 212 Ct. Cl. 71, 1986 WL 22198, at *10 (1976). The Supreme Court has held t hat in s o me circumstances a taxpay er’s claim is not barred by the statute of lim itations even though the taxpay er did not timely file the formal, detailed claim required by the regulat ions. See, e.g. , Kales , 314 U.S. at 196-97; United States v. Andrews , 302 U.S. 517, 524 (1938) ; United St ates v. Memphis Cotton Oil Co. , 288 U.S. 62, 70-71 (1933); Tucker v. Alexander , 275 U.S. 228, 231 (1927).

05-5014 10Unfortunately in implementi ng the Supreme Court’s decis ions the language used to describe these exceptions has not always been uniform in courts outside of this circuit. In this circuit this aggregation of rules has come to be known as the substantial variance doctrine. See Lockhe ed Martin Corp. v. United State s , 210 F.3d 1366, 1371 (Fed. Cir. 2000); see also Wester n Co. of N. Am. v. United States , 323 F.3d 1024, 1034 (Fed. Cir. 2003); Union Pac. R.R. , 389 F.2d at 442-47; Armstrong Rubber Co. v. United States , 207 Ct. Cl. 1023, 1975 WL 3232, at *1 ( 1975). T h e doctrine permits consideration of a c l aim for refund despite fa ilure to t i mely file d e tailed formal cla i ms with the IRS when a substantia l variance from the requirement s of the regulation is no t involv ed. 8 But this doctrine applies only in four limited situations. Each of these has itself come to be identifi ed as a separate doctrine. A First, formal compliance with the statut e and regulations is excused when the informal claim doctrin e is app lic able. Under the infor m al cl aim doctrine, a timely claim with purely formal defects is permissible if it fairly apprises the IRS of the basis for the claim within the limitations period. The informal claim doctrine is best describ ed in the Supreme Cou r t’s decisio n in Kales , 314 U.S. 186. There within the limita tions period the taxpayer submitted an informal letter claiming a refund of tax. The letter did not comply with the IRS’s regulations becaus e it was not filed on the correct form. The taxpayer later filed an

8 In many cases, the issue is whethe r there is a substant ial variance from a timely filed claim. See Lockheed , 210 F.3d 1366 at 1371 (Fed.Cir .2000) (holding that taxpayer may not “present[ ] claims in a tax refund suit that ‘subst antially vary’ the legal theories and factual bases set forth in the tax refund claim present ed to the IRS”).

05-5014 11untimely amendment that complied with the r egulations. The Supreme Court held that “a [timely] notice fairly advising the Commissioner of the nature of the taxpayer’s claim . . . will nev ertheless be treated as a[n effective] claim, where formal defects . . . have been remedied by amendment filed after the lapse of the statut ory period.” Id. at 194. The informal claim doctrine is we ll recognized in ot her circuits

. 9 We and our predecess o r court, the Court of Claims, have spec ifically applied the doc t rine. See,
e.g. , Arch Eng. Co., Inc. v. United States , 783 F.2d 190, 192 (Fed. Cir. 1986); Barenfeld v. United States , 442 F.2d 371, 374 (Ct. Cl. 1971) ; Stuart v. United States , 130 F. Supp. 386, 388-90 (Ct. Cl. 1955); Am. Radiator & Standard Sanita ry Corp. v. United States , 318 F.2d 915, 920-22 (Ct. Cl. 1963). In American Radiator the Court of Claims held that “[i]nformal refund claims have long been held valid” when th ey “have a written com ponent . . . [and] adequately apprise the Internal Revenue Service that a re fund is s ought and f o r certain y ears.” 318 F.2d at 920 (citing Kales , 314 U.S. 186). The Court of Claims found that the taxpay er

9 See Kaffenberger v. United States , 314 F.3d 944, 954-957 (8th Cir. 2003) (upholding jury verdict permitting untimely am endment to informal claim, wher e informal claim had been filed on “Automat ic Extens ion Request” Form 4868, rather than Form 1040, and the IRS was on notice of claim bec ause the “information held by the IRS described t he refund sought with sufficient parti cularit y to allow t he IRS to investigate the claim”); PALA, In c. v. United States , 234 F.3d 873, 877-79 (5th Cir. 2000) (holding that “an informal claim is sufficient if it is filed within the statutor y period, put s the IRS on notice that the taxpay er believes an e rroneous tax has been assessed, and describes the tax and year with suffici ent particularity to allo w the I R S to undertake an investigatio n”) (citing Kales , 314 U.S. at 194); BCS Fin. Corp. v. United States , 118 F.3d 522, 524-25 (7th Cir. 1997) (citing Kales , 314 U.S. at 194); Unit ed States v. Commercial Nat’l Bank of Peoria , 874 F.2d 1165, 1170-76 (7th Cir . 1989) (permitting untimely amendment where taxpay ers’ a ttorney wrote a letter to IR S within limitations period, contesting the IRS’s c a lcul ations) ; see also generally Martin v. United State s , 833 F.2d 655, 660, 662-63 (7th Cir. 1987); Michael I. Saltzman, IRS Practice and Procedure ¶ 11.08[2] (2d student ed. 1991) (“IRS Prac. & Proc.”).

05-5014 12filed an informal claim by writing “various notations and figures” on its timely filed income tax return. Id

. ; see also Newton v. United States , 163 F. Supp. 614, 619-20 (Ct. Cl. 1958) (finding informal refund claim based on written pr otests prior to payment); Night Hawk Leasing Co . v. United States , 18 F. Supp. 938, 941-42 (Ct. Cl. 1937) (finding inf o rmal refund claim based on objection on the back of a check paying the tax). In Western Co. of North America v. Unit ed States , 323 F.3d 1024 (Fed. Cir. 2003), we recogniz ed that the doctrine applies in circumstances in which the taxpayer’s action involved a request for information. Western Co. , 323 F.3d 1035. The IRS mistakenly assessed the taxpayer a “f ailure-to-file” (“FTF”) penalty. Id. ; see also Western Co. of N. Am. v. United States , 52 Fed. Cl. 51, 54 ( 2002). The taxpayer, unaware of what had caused this penalty, repeatedly reques ted information about t he basis for the penalty but did not file a forma l claim for a refund. The IRS documented this reques t in writing. 323 F. 3d at 1035. W e held that the substantial var i ance doctrine did not bar the taxpay er’s refund claim bec aus e, during the limitati ons period, Western had “repeated[ly] request[ed] . . . information that would hav e allowed filing of an informed claim,” and thereby “put the IRS on notic e of its challenges to [the] false assessment.” Id. at 1034-35. The informal claim doctrine is of no assistance to the taxpayer here. Computervision’s original comp laint was for m al, and c ontained no specific suggestion that non-DISC interest was in dispute. The complaint si mply alleged that “Computervision is aggrieved by the defendant’s failure to refund the interest attributable to the pur ported disq ualific ation of [CVI] as a DI SC.” There was no further communication from Computervi sion to the IRS during the lim itations period s uggesting

05-5014 13that Computervision was asserting a claim for non-DISC interest. As the Court of Federal Claims found, “the orig inal claim could not reasonably provide notic e to the IRS of [the interest suspension c l aims].” Computervision , 62 Fed. Cl. at 324. Thus, Computervision’s refund claim wa s not a valid informal claim.
B A second exception exists know n as the waiver doc trine. If the taxpayer files a timely formal claim but fails to include the specific claim for relief, the claim may nonetheles s be considered timely if the IRS c onsiders that specific claim within the limitations period. The IRS’s consideration of the specif ic claim is held to be a waiver of the requirement of the regulat ion that the refund claim “set forth in detail each ground upon whic h a credit or ref und is c l aimed and facts sufficient to apprise the Commissioner of the exact basis thereo f.” 26 C.F.R. § 301.6402-2(b)(1). The Supreme Court recogniz ed the wa iv er doctrine in Memphis Cotton , 288 U.S. 62, and Angelus Milling Co. v. Commissioner , 325 U.S. 293 (1945). In Memphis Cotton , the Supreme Court found a waiver where (during investigation of the taxpayer’s origina l claim and within the limitations period) the Commissioner di scov e red that the taxpayer was entitled to a refund on a specific grou nd, and notified the taxp ayer that a refund would be made. 288 U. S. at 65, 73. After the lim itations period expired, the Commissioner reversed its position and refused to grant the refund. The taxpayer then filed an amendment asserting it s right to a refund. Id. at 65-66. The C ourt held that the amendment was timely because “[l]ong bef ore the amendment the Commissioner had ascertained the facts and had ev en notified the taxpay er of the justice of its claims and of the ruling of the Bureau that adjust ments would be made a ccordingly.” Id. at 73.

05-5014 14In Ange lus Milling , the Court held that the clai m was untimely but stated that a waiver might be found where “[t]he evidence [is] clear that the Commissioner understood the specific claim that was m ade even though there was a departure from form in its submission,” and “[t]h e showing [is] unmistakable that the Commissioner has in fact seen fit to dispense with [the] fo rmal requirements and to ex amine the merits of the claim.” 325 U.S. at 297; see, e.g. , United States v. Garbutt Oil , 302 U. S. 528, 533 (1938) (“[W]hile the Commissi oner might have enforced t he regulation and rejected a claim for failure to comply with it in omi tting to state with particularity the grounds on which the c l aim was based, he was not bound to do so, but might waive the r equirement of the regulation and consider a general claim on its merits.”). Various other courts and authorities hav e also recognized the waiver doctrine. 10 Our predecessor court also recognized the doctrine. In Consolidated Coppermines Corp v. United States , 296 F.2d 743, 744 (Ct. Cl. 1961), the Court of Claims held that a claim could be filed outside t he limitations period if it ra ised a ground that t h e IRS ha d discovered, within the lim itations period, during investigation of the original claim. The court found that “the amendment [filed outside the limitations period] merely made more definite the matters already within the k nowledge of the Commi ssioner, which in the course of his investigation he actually did ascertain.” 296 F.2d at 744 (Ct. Cl. 1961) (internal quotations and citations omitted); see U.S. Pipe & Fou n d ry , 155 F.Supp. 231, 232-34 (Ct. Cl. 1957) (“[W]here the Commi ssioner determines and applies newly

10 See, e.g. , BCS Fin., 118 F.3d at 525-26; Herri ngton v. United Sta t es , 416 F.2d 1029, 1032 (10th Cir. 1969); IRS Prac. & Pr oc. ¶ 11.09[5]; Gerald A. Kafka & Rit a A. Cavanagh, Litigation of F ede ral Civil Ta x Controversies ¶ 16.02[1] (2d ed. 1997 & supp. 2005).

05-5014 15discovered or different grounds in computing the [taxpayer’s liability] . . . [he] is precluded from thereafter denying the refund becaus e the claim was incompatible with his regulations . . . .”); Nat’l Forge & Ordnance Co. v. United Stat es , 151 F. Supp 937, 941 (Ct. Cl. 1957) (allowing taxpayer to asse rt a claim in court where “the claim for refund was sufficient to cause the Commiss ioner to co nsider the matters which are the basis of the present s u it”); see also Un ion P a c. R.R. , 389 F.2d at 442 (recog n izing that “an item rai s ed in litigation but not specifically adverted to in the [original] claim might be permitted if it is found that . . . the Commi ss ioner cons idered that unspecified ground in reaching his decision on the items fo r which a refund was requested”). The central purpose of the waiver doctrine is “to prevent IRS agents from lulling taxpayers into missing the [limit ations] deadline . . . .” BCS Fin. , 118 F.3d at 526; PALA , 234 F.3d at 880 (quoting BCS F i n. , 118 F.3d at 526). Where t he taxpayer learns, within the limitations period, t hat t he IRS has addressed the merits of a particular ground, and thus fails t o file a timely formal claim rais ing that ground, the ta xpay er’s claim is not barred. Howev e r, we agree with the Court of Federal Claims that the IRS ca nnot waiv e the requirements of its regulat ions by conduct outside of the limitations period. See Computervision , 62 F ed. Cl. at 327. In Garbutt Oil , the Commissioner considered the merits of a claim for a tax refund after the limitations period had ex pired. 302 U.S. at 533. The argument was that the Commissioner had waived the requirements of the regulation. The Court held t hat the claim was not timely, reasoning that “no officer of the government has power to waive the statute of l i mitations . . .” Id. at 534. This conclus i on follows from the st atute itself. E v en the erroneous allowance of a refund that

05-5014 16is barred by the statute of limitations cann ot prevent the government from recovering that allowance. Section 7405 allows the governme n t to bring suit to recover an “erroneous” refund. 26 U.S.C. § 7405(a) & (b). Section 6514 pr ovides that a refund is “erroneous” if it is made after the expiration of the limitat ions period and no timely claim was filed. 26 U.S.C. § 6514(a)(1). Our predecessor court has similarly held t hat a waiv er may not occur after the limitations period expires. In Sicanoff Vegetable Oi l Corp. v. United State s , 181 F. Supp. 265 (Ct. Cl. 1960), the Court of Clai ms refus ed to find a waiver where the taxpayer filed timely c l aim asserting one gr ound, the limitations period exp i red, and th e Commissioner then by mistake considered a different second ground. The taxpayer filed an unt imely ame ndment asserting the second ground. Id. at 268. The court held that the C o mmissioner “was not permitted by law to pay such a claim, and his consideration of it could not en large his legal authority.” Id. at 268-69; see als o Melchior v. United States , 145 F. Supp. 193, 194 (Ct. Cl. 1956). The taxpayer relies on a few Excess Profits Tax cas e s decided in other jurisdictions for the proposit ion that the requirements of what is now 26 C.F.R § 301.6402-2(b)(1) may be waived a fter the statute of lim itat ions has e x pired. See Da le Distrib. Co. v. Comm’r , 269 F.2d 444 (2d Cir. 1959); Eisens tadt Mfg. Co. v. Comm’r , 2 8 T.C. 221 (1957); Marti n Weiner Corp. v. Comm’r , 26 T.C. 128 (1956). 11 Many of those

11 The taxpay er also relies on Sc henley Indus., Inc. v. Comm’r , 42 T.C. 129 (1964). There the Tax Court held that t he IRS “waived” the spec ificity requirement by failin g to timely raise the variance defense during litig ation. Id. at 170; see also Tucker v. Alexander , 275 U.S. 228, 230-31 (1927 ). The is sue in the present case is not whether the government can waive the v a riance defense through inaction during litigation, but rather whet her it can waive the defense through administrative action.

05-5014 17cases inv o lved special regulations under t he Excess Profits provis ions that imposed unusually detailed clai m requirements. S e e Eisenst adt , 28 T.C. at 231-32; Dale , 269 F.2d at 445. Those decisions are not binding on this court, and are inconsistent with Garbutt Oil and Sic a noff if they are viewed as a llo win g a waiv er after the limitations period. M o reover, as other circuits have recognized, 12 expanding the scope of the waiver doctrine as the taxpay er urges would appear to be in consist ent with m o re recent Supreme Court authority holding that actions of regulator y authorities cannot either extend the statute of limitat ions under sec t ion 6511 by equit able tolling or create an estoppel against the government. See Brockamp , 519 U.S. 347, 352 (holding that equitable t o lling does not apply to toll sect ion 6511); Office of Pers . Mgmt. v. Richmond , 496 U.S. 414, 434 (1990) (hol ding that conduct of a gover nment agent could not estop the government from denying benefits not ot herwise permitted by law). T he taxpayer has not called our at tention to any post-Brockamp or Richmond decis i ons in other jurisdictions that have applied the waiver doctrine to actions by the IRS taking plac e after the running of t he limitations period. 13
Here there is no contention that the IRS considered the taxpay er’s claim for nonDISC interest within the limit ations period. Rather Com putervision cont ends that the IRS waived the specificity requi rement nine years after the lim itations per i od expired in

12 See BCS Fin. , 118 F

. 3d at 525 (noting that t he except ions are in tension with United States v

. Brockamp , 519 U. S. 347 (1997), and other Su preme Court authority); PALA , 234 F.3d at 880 n.37 (“ We share t he Sev enth Circuit’s concern that the Supreme Court’s decision in [Brockamp ] calls into question th e continu i n g viab ility o f the waiver/estoppel strand of the informal claim doctrine.”).

13 But cf. Kaffenberger , 314 F.3d 944, 953 (8th Cir. 2003) (holding that explic it waiver authorized under § 6501 allows the IRS and the taxpayer to agree to extend the assessment period after st atute of limitations expires).

05-5014 18an August 17, 2000, letter from the IRS to Com putervision that incl uded a s e t of interest computations applying interest suspension to the non-DISC interest. The letter also stated that “Revenue r u ling 99-40 (Sequa) [interest suspension] is applied regarding the credit elect to 1983. No claim is necessary.” J.A. at 1405. Computervision cannot benefit from the waiv er doctrine because t he IRS con s ideration o ccurred long after the expiration of the lim itations period. C A third exc eption, which we refer to as the general c l aim doctrine, exists where (1) the taxpayer has filed a fo rmal general claim within the limitations period; and (2) an amendment is filed outside the limitations period that ma kes the general claim more specific. The Supreme Court described this exception in United States v. Andrews , 302 U.S. 517, 524 (1938): Where a claim whic h the Commissioner could have rejected as too general, and as omitting to specify t he matters needing investigation, has not misled him but has been the basis of an invest igation which disclosed facts necessary to hi s action in making a refund, an amendment which merely makes more definite the matters already within his k nowledge, or which, in the cours e of his inve stigation, he woul d naturally hav e ascertained, is permissible. The Supreme Court thus rec ognized that an amendment ma king a general claim more specific may be permissible even when f iled outside the limit ations period. The Supreme Court applied the general claim doct r ine in United States v. Factors & Fin. Co. , 288 U.S. 89 (1933). There th e IRS performed an audit of the taxpayer, but the audit was incom p lete when the statute of limitations expired. In order to preserve any c l aims resulting from the aud it, the taxpayer filed a general c l aim before the limitations period expired requesting a refund of all t he taxes it had paid. The claim

05-5014 19did not set forth any specif ic ground, and explained that its purpose was “to permit the Commissioner to refund to deponent any excess paid over taxes actually f o und to b e due.” Id. at 91. The Court held that the taxpayer’s subsequent amendment was not barred by the statute of limitations. Id. at 96. “[A] general claim for refund, not specifying grounds, is subject to amendment until final rejection irrespective of a limitation r unning in t he interval. ” Id. at 93 (citing Memphis Cotton Oil , 288 U.S. 62). Similarly, in Memphis Cotton the Court held that an amendmen t to a genera l claim, filed outside the limitations period, was timely w here the original claim merely stated the amount of the tax paid, the correct tax an d the amount of overpayment, but did not specify the facts or reasons justifyi ng a refund. 288 U.S. at 64-65, 71. Our predecessor court recogniz ed the gener al claim doctrine in at least one case, Cochran v. United States , 62 F. Supp. 872, 872 (Ct. Cl. 1945), where the court permitted an untimely amendment to a general claim that requested refunds relating to “losses not claimed.” The court held that the amendment “perfe cted and made specific” the original general ground. Id. at 875. Howev e r, the general claim doc trine onl y applies when the original claim is general rather than specific. In Un ited States v. Henry Prentiss & Co. , 288 U.S. 73 (1933), the Supreme Court held t hat where the origin al timely claim asserted a spec ific ground, it could not be amended out of time to claim a new bas is for relief unrelated to the original claim. Id. at 83. Like wise in Andrews the Court found that an amendment to a claim raising a s p ecific ground was untim ely because “[t]he very specific ation of the items of complaint would tend to confine the investigation to those items and there is no evidenc e that the examination was more extended.” 302 U.S. at 525.

05-5014 20Here Com putervision’s original claim wa s not general b u t specific. It contained a specific req uest for DISC-related interest wh ich claimed “the portion of the int e rest paid that is attributable to the [DISC disqualification issue].” 14 J.A. at 1225. To be sure the original 1989 claim incl uded a secondary, general claim. The general claim was a boilerplate provision stating: Computervision c l aims as a bas is for the refund of the interest paid with respect to its 1982 taxable y ear such other grounds as are shown to be appropriate by the tax returns, boo ks and records and the Examination Report and related Protest of Com putervision and [CVI] for their respective tax years ended Decem ber 31, 1982, and January 31, 1983. J.A. at 1228. In Andr ews the Supreme Court rejected t he argu ment that the general claim doctrine was applicable under such circ umstances. As here, the taxpayer’s clai m in Andrews “not only called for redress of a s pecified grievance but demanded general relief as well.” 302 U.S. at 525. The Co urt held that the taxp ayer’s amendment was barred by the statute of limitations, reasoning t hat “[t]he very specific ation of t he items of complaint would tend to confine the inv e stigation to those it ems and t h ere is no evidenc e that the examinati on was more extended.” Id. at 526. T hus Computervision’s untimely claim for non-DISC interest does not meet the requireme nts of the general claim doctrine. 15
D Where the general claim doctr ine is inapplic able because the original c l aim was

14 Computervision’s original c l aim also inc l uded an “alternative” claim regarding t he comput ation of the so called “DISC Commission” paid by Co mputervision to CVI.

15 In any event, as disc ussed imm ediately below, the amendment had to be filed while the IRS s t ill had jurisdiction ov er the cla i m, and th e IRS no longer ha d jurisdiction once the taxpay er filed the refund suit.

05-5014 21not general but spec ific, a related doctrine, the germaneness doctrine, may allow relief. This fourth exc eption only a pplies where the taxp ayer (1) files a f o rmal claim within the limitations period making a spec ific claim; and (2) after the limitations period but, while the IRS still has jurisdiction over t he claim, files a formal amendmen t raising a new legal theory--not specifically raised in the original claim--that is “germane” to the original claim, that is, it depends upon facts that th e IRS ex amined or should have ex amined within the s t atutory period while determining the me rits of the original claim. Unlike the waiver doc trine, the inquiry here is not whether the particular legal theory for recovery has been c onsidered by the IRS during the li mitations period but whether the underlying facts supporting that legal theor y were discovered or should have been discovered by the IRS in considering the original claim during the lim itations period. The Supreme Court recognized this exce ption in Bemis Brothers Bag Co. v. United States 289 U. S. 28 (1933). In Bemis , the taxpay er filed a timely claim for a refund with the Comm issioner, arguing that the Commissioner sh ould allow a so-called “special as sessment” for determi ning “inves ted capital” for excess profits tax purposes because invested capital could not be calculated with precision. Id. at 31. To support this claim, the taxpayer ur ged that the precise values of certain items could not be ascertained. The Commissioner denied the clai m. After the limitations period expired but before the refund suit was filed, the taxpayer filed an amendment specifically urging that the items should be inc l ude d in invested capita l because they could be calculated, and that the tax should be reca lc ulated on that basis. Id. at 31-32. Thus, the taxpay er’s amendment did not require inquiry into a new set of facts, but simply adapted the form of relief to the facts which would have to be examined during inves t igat ion of the original

05-5014 22claim. The Court held that “the claim as amended does not differ in matter of substance from the claim as first presented,” because “[i]f the [Commissioner] found that there had been omis sions, but that he was able to his ow n s a tisfaction to identify and apprais e them, he w ould learn in the process that there had been an undervalu ation of invested capital, and that the asse ssment of the tax was corres pondingly erroneous.” Id. at 35. This doctrine also was described in t he Supreme Court’s decision in Andr ews

. There, in addition to holdi ng that the general claim wa s inadequate bec ause it was accompanied by a s pecific c l aim, the court held the s pec ific claim was inadequat e because it was not “germane” to t he later asserted ground. Andrews , 302 U.S. at 524. Other circuits have als o recogniz ed this exc eption. 16 Our predecessor court has also recognized this doctrine. In Addressograph , for example, the Court of Claims held that an amendment filed outsi de the lim itations period was “proper and germane” because investigation of the merits of t he original claim “would hav e necessarily involv ed a consideration of [the facts t he amendment depended on].” AddressographMultigraph Corp. v. United Sta t es , 78 F. Supp. 111, 122-23 (Ct. Cl. 1948). The amendment “merely made more definite the ma tters already within the knowledge of the Commissioner, which in the course of his inve stigation he actually did asc e rtain.” Id.

16 See, e.g. , United States v. Ideal Bas i c Indus., Inc. , 404 F.2d 122, 124 (10th Cir. 1968) (permitting amendment where “’facts upon which the amendment is based would necessarily have been ascertained by the commi ssioner in d e termining t he merits of the original c l aim’ ”) (quoting Pink v. United States , 105 F. 2d 183, 187 (2d Cir. 1939)); Pink , 105 F.2d 183, 187 ( c iting Bemis Bros. Bag , 289 U.S. 28); see also United States v. Henderson Clay Prods

. , 324 F.2d 7, 18 (5th Cir. 1963) (limitations r equirement satisfied for refund claim based on erroneous computation of deplet ion deduction wher e amended claim “assert[ed] no ot her ground for recovery than its original” because “[b]oth are based upon 114(b)(4)(B), and the amended complaint merely takes account of a definitive construction of that subs ection which was handed down between the date of the claims and the date of trial.”); 113 Am. Law Reports 1291 sec. II(e) (1938 & supp.

05-5014 23Similarly, in Consolidated Coppermines the cour t observed that “[w]here the amendment is inconsistent wit h the former claim, or has injected new and unrelated matter, we have not allowed it, but where it is germane to the original c l aim and sets up matter discovered in the course of the investigation of the or iginal one, we h a ve allowed it.” 296 F.2d at 745. Here Com putervision’s interest suspensi on claim as to non- DISC issues cannot benefit from the germaneness doc trine for two separate reasons. First, the amend e d claim was not in fact germane to the original c l aim. The or iginal claim di d not merely claim an identical am ount under a different t heory. It claimed a di fferent amount under a different theory. Moreover, as the Court of Federal Claims conclu ded, “the interest suspension relief that plaintiff is seeking is not a necessary step in completing the interest computation that was explic itly placed at issue in the Original Refund Claim . . . .” Computervision , 62 Fed. Cl. at 319 (internal quotation marks omitted). The IRS did not discover the interest suspension clai m as a result of its investigat ion of the original claim, but rather as a result of Computervision’s May 2, 2 0 00, letter raising the interest netting issue. Indeed, Computervision admitted that even as of late 1999, it was unaware that an interest suspension claim was available. The IRS consideration of the claim “was s i mply a mistake. ” Id. at 321 n.24. T he dete rmination of the interest attributable to the DISC deficienc y did not r equire the IRS to compute non-DISC interest under the interest suspension th eory. Even if the IRS posse ssed the facts necessary to make this computation, “it is not enough t hat somewher e under the Commissioner's roof is the information which might enable him to pass on a cl aim for refund.” Angelus

2006); 15 Mertens Law of Federal Income Taxation § 58:38 (1991 & supp. 2006).

05-5014 24Milling , 325 U.S. at 299 (rejecting argument that a taxpayer’s refund claim, together with the refund claim of another taxpayer, supplied the IRS with the information needed to determine the merits of an untimely claim). 17 Second, as the Court of Federal Clai ms held here, the formal amendment was itself filed t oo late. Computervision , 62 Fed. Cl. at 328-29. The formal amendment, if filed after the expiration of the limitations peri od, must be filed while the original claim is still b e in g considered by the I R S. T h is requireme nt “is designed both to preven t surprise and to [permi t] . . . an administrat ive investigation and determination.” Union Pacific R.R. , 389 F.2d at 442. Thus an am endment is ineffective if filed after the original claim has either been allowed or disallowed by the IRS. Fo r example, in Union Pacific , the Court of Claims c oncluded that “[t]he di spos ition of a taxpayer’s refund claim by allo wance of the amount requested in full, however, precludes an amendment asserting an additional amount after the expiration of t he statutory period for refund.” Id. at 447 (emphasis added). So too in Allsta te Insurance Co. v. United States , the Court of Claims held that “[i]t is a rule of long standing that once a refund claim has been disallowed , it is not subject to amendment.” 550 F.2d 629, 633 (emphasis added); see also 15 Mertens Law of Federal Income Taxation § 58:38 (“Although amendments to a properly filed cla i m can be mad e even tho ugh the sta t utory period for filing a claim h a s expired, the amendment must be germane, and must be pr esented before the original claim is resolved.”); Memphis Cotton , 288 US at 72 (observing that if “at the time of [the]

17 See also Andrews , 302 U.S. at 524 (“[A] claim which demands relief upon one assert ed fact situation, and asks an inv e stigation of t he elem ents appropriate to the requested relief, cannot be ame nded to dis c ard that basis an d invoke action requiring examination of other matters not germane to the first claim.”).

05-5014 25amendment the claim had been finally reject ed,” then “the proceeding [had] thereby ended” and the amendment “was too late”). The same rule neces sarily applies where the tax p ayer elects to terminate the IRS’s jurisdiction by f iling a suit for refund. While the taxpayer has the right to file a refund suit if the IRS has not acted on the claim for six months, the IRS’s jurisdiction over the claim necess a rily terminates on the date a refund suit is filed. See Ex ec. Order No. 6166, § 5 (June 10, 1933), reprinted in 5 U.S.C. § 901 (2000). 18 The IRS no longer has the authority to resolve the claim, and therefore is without power to “allow” o r “disallow” it. We recognize that, as the taxpay er urges, two of our s i ster circuits have adopted a different rule, holding that an amendment is effective for purposes of the germaneness doctrine after the IRS has lost jurisdiction ov er the claim. Mutual Assurance Inc. v. United States , 56 F.3d 1353 (11th Cir. 1 995); St. Joseph’s Lead Co. v. United States , 299 F.2d 348 (2d Cir. 1962) (fi nding amendment filed after commencement of suit was timely). Thus, fo r example, the Eleventh Circuit in Mutual Assurance quoted the Court of Claims’ decision in Union Pacific holding that the amendment could not be filed after the allowanc e of the original cl aim, but held that

18 Section 5 of Exec utiv e Order 6166 is entitled “Claims By or Against the United States,” and reads as follows: As to any case referred to the Depar tment of Justice for prosecution or defense in the courts, t he function of decis ion w hether and in what manner to prosecute, or to defend, or to compromise, or to appeal, or to abandon prosecution or defense, now exercis ed by any agency or officer, i s transferred to the Depar tment of Justice. Exec. Order No. 6166, § 5 (June 10, 1933), reprinted in 5 U.S.C. § 901 (2000); see also Computervision , 62 Fed. Cl. at 326 n.26 (citi ng Exec. Order No. 6166, § 5).

05-5014 26“[Union Pa cific ] is not binding prec edent in this circuit.” Mutual Assurance , 56 F.3d at 1357. Unlike the Eleventh Circ u it we are, of course, bound by the precedent of the Court of Claims. S. Corp. v. United States , 690 F.2d 1368, 1369 (Fed. Cir. 1982) (en banc ) (the Federal Circuit is bound by decisi ons of the Court of Claims “announc e d before the close of busine ss on September 30, 1982”). In any event it seems to us that the C ourt of Federal Claims was correct here in suggesting the rule adopted by our sist er circuits in St. Joseph’s L ead and Mutual Assurance is untenable since it would allow amendments submitted after filing the refund suit to extend t he limitations period indefin itely

. Computervision , 62 Fed. Cl. at 328-29. Here Computervision fil ed its original refund suit in the Court of Federal Claims on April 4, 1990, and t hen filed an amendment with the IRS on Ap ril 4, 2002, in whic h it claimed non-DISC interest under the interest suspension theor y. Computervision’s amendmen t in 20 02, 12 years a fter filing s u it and after the IRS’s jurisdictio n had bee n terminated by the filing of the refund suit, came too late. Thus this exception does not apply to Computervision’s claim.
E For the foregoing reasons, Computervision’s interest suspension claim must fail. There was no informal claim, and the wa iver , general claim and germaneness doctrines are also inapplicable. II The taxpay er also ass e rts t hat it was entitled to recove ry of the non-DISC int e rest under the theory of interest netting. Under sect ion 6621(d), the IRS applies a net interest rate of zero to overlapping

05-5014 27underpaym ents and overpayments of tax. Section 6621(d), en acted on July 22, 1998, provides: Elimination of interest on overlappi ng periods of tax overpayments and underpaym ents.—To the extent that, for any period, interest is payable under subchapter A and allowable under subchapt er B on equivalent underpaym ents and overpayments by the s a me taxpayer of tax imposed by this title, the net rate of interest under this section on such a m ounts shall be zer o for such period.
26 U.S.C. § 6621(d) (2000). Co mputervision argues that it s overpayment for the 1982 year, which arose on March 15, 1983, the d ue date of its 1982 return, should be netted against the subsequently deter mined under payment for 1982. Although the 1982 overpayment was credited towar d s subsequent years, it was not needed to pay liability for those years. Thus, according to Com putervision, the overpayment retained its status as a 1982 overpayment until August 2, 1985, when it was finally refunded. The gov ernment does not claim t hat the tax payer’s failure to file t he claim within the limitations period is a bar, because the interest ne tting statute provides for retroactive relief under certain circumstances . However, the government asserts that the doctrine is inapplicable for a number of reasons. We need to address only one because we agree with the government that under our decision in Federal Nation a l Mortgage Association v. United States , 379 F.3d 1303 (Fed. Cir. 2004) (“FNMA ”), the taxpayer has failed to satisfy the requirement for retroactive applicat ion of the statute. The interest Computervision contests ar ose prior to the enactment of section 6621(d). Section 6621(d) applies retroacti vely only under certain circum stances. 19 Specifically , section 6621(d) is “[s]ubject to any applic abl e s t atute of limitation not

19 The requirements for retroactive applic ation of interest netti ng are

05-5014 28having expired with r egard to either a ta x underpaym ent or a tax overpay ment” as of July 22, 1998. Pub. L. No. 105-277, § 4002(d), 112 Stat. 2681 (1998), amending Pub. L. No. 105-206, § 3301(c)(2), 112 Stat. 741 (1998). In FNM A , we interpreted this language to require that the st atute of limitations must be open with respec t to both the underpaym ent and the overpayment. A claim for a refund of paid underpayment in terest is b a rred if not filed within the later of three years fr om the dat e the return was filed or two years from the date the interest was paid. 26 U.S.C. § 6511. The underpay ment interest in this case is the 1982 deficiency interest, which wa s paid on April 28, 1989. T he limitations period for the underpayment closed two years later, on April 28, 1991 -- several years before the July 22, 1998, date specified in s e ction 3301(c)(2). A claim for interest from overpayments must be filed within six years after the due date of the return that gave rise to the overpayment interest. See 28 U.S.C. § 2401 (2000). In Computervision’s case, the overpayment limit ations periods expired on March 15, 1989, for the 1982 tax y ear; Marc h 15, 1990, for the 1983 tax year; and August 2, 1991, for the 1984 tax year. All these periods were c l osed as of the July 22, 1998, critical date s pecified in § 3301(c)(2). Computervi sion’s argument that the limitations periods remained op en indefinitely while it s DISC claim was being litigated is without merit. Thus, as of July 22, 1998, the statute of limit ations was closed with respect to both underpayment and overpa yment interest, and thus Computervision’s claim for interest netting fails to satisfy the requirement s for retroactive applic ati on of the statute.

explained in Revenue Procedure 99-43. Rev. Proc. 99-43, 1999-2 C.B. 579.

05-5014 29CONCLUS ION For the foregoing reasons, the judgment of the Court of Federal Claims is
AFFIRMED

. COSTS No costs.

05-5014 30