Rev. Rul. 76-74

Advice has been requested concerning interest allowable on overpayments of Federal income taxes if the delivery of the refund check is delayed, as in the situations described below.

Section 6611(b)(2) of the Internal Revenue Code of 1954 provides that in the case of a refund, interest shall be allowed and paid from the date of the overpayment to a date, to be determined by the Secretary or his delegate, preceding the date of the refund check by not more than 30 days, whether or not the refund check is accepted by the taxpayer after tender of the check to the taxpayer. The acceptance of the refund check shall be without prejudice to any right of the taxpayer to claim any additional overpayment and interest thereon. No interest is allowable under section 6611(b)(2) beyond the date determined by the Secretary or his delegate preceding the date of the refund check by not more than 30 days except in unusual circumstances.

Accordingly, when the delay in effecting the delivery of the refund check is not due to any fault of the Government, interest will not be allowed beyond the date determined by the Secretary or his delegate preceding the date of the refund check by not more than 30 days, except in cases when the refund check, because it was erroneously drawn, could not be negotiated by the taxpayer. The following are situations in which no interest will be allowed beyond the date determined by the Secretary or his delegate preceding the date of the initial refund check by not more than 30 days:

Situation 1. A refund check is made payable to a deceased taxpayer, but the check may be negotiated by the decedent's personal representative in accordance with the rules applicable to checks drawn on the Treasurer of the United States. See Dresser v. United States, 180 F.2d 410 (10th Cir. 1950).

Situation 2. The Government, after making reasonable efforts to do so, is unable to deliver a refund check, and the check is deposited with the Treasurer of the United States until the refund is claimed by the taxpayer. The issuance of a substitute check to the taxpayer provides no basis for further interest under section 6611 of the Code, since the first refund check was negotiable by the taxpayer.

The following are situations in which additional interest will be allowed beyond the date determined by the Secretary or his delegate preceding the date of the initial refund check by not more than 30 days:

Situation 3. A refund check is made payable to a person other than the taxpayer, and therefore may not be negotiated by the taxpayer. See M. J. Whittall Assoc., Ltd. v. United States, 50 F.2d 307 (Ct. Cl. 1931). In such cases, the check subsequently issued payable to the taxpayer fixes the period of interest under section 6611(b)(2) of the Code.

Situation 4. A taxpayer's refund is deposited by check as an offset against an asserted claim of another agency, but the offset is invalid or the amount due to the taxpayer exceeds the claim of the other agency. In such cases, the check subsequently issued payable to the taxpayer fixes the period of interest under section 6611(b)(2) of the Code.

Rev. Rul. 57-82, 1957-1 C.B. 451, Rev. Rul. 56-445, 1956-2 C.B. 958, and Rev. Rul. 55-477, 1955-2 C.B. 498, are superseded, since the positions set forth therein are restated in this Revenue Ruling.