The Court introduced the concept as follows (footnotes omitted):
Under section 6621 of the Internal Revenue Code ("I.R.C."), interest is calculated at a higher rate for corporate tax underpayments than it is for corporate tax overpayments. In principle, therefore, a corporate taxpayer could owe the Treasury underpayment interest even if the amount by which the taxpayer had underpaid its taxes in one tax year (or set of tax years) was entirely offset by the amount by which it had overpaid in another tax year (or set of tax years). To remedy this apparent inequity, Congress amended section 6621 in 1998 to include a provision for "global interest netting," by which the interest rate differential is adjusted to yield a net interest rate of zero for periods of reciprocal indebtedness — that is, periods during which the taxpayer's overpayments in one set of tax years overlap and offset its equivalent underpayments in another set. See I.R.C. § 6621(d), 26 U.S.C. § 6621(d).By noncodified contemporaneous legislation (called the "special rule"), Congress allowed the retrospective application of global interest netting. The issue in Exxon Mobil was whether the taxpayer qualified for the special retrospective relief provision.
The narrow question the Court resolved was "whether retrospective global interest netting is permitted when the limitations period for either of the 'legs' of the period of overlapping indebtedness has not expired, or only when the period of limitations for both legs is open." Since this is an issue that arises only under the retrospective relief provision that has no continuing significance, I will not get into the substantive issues.
I will develop in this blog entry the Court's process of statutory interpretation because the Court made some interesting analyses. Here are the points I think worthy of development in this blog:
