14‐4279 Maimonides Medical Center v. United States
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
August Term, 2015
(Argued: October 6, 2015 Decided: December 18, 2015)
Docket No. 14‐4279‐cv
MAIMONIDES MEDICAL CENTER,
Plaintiff‐Appellant,
— v. —
UNITED STATES OF AMERICA,
Defendant‐Appellee.
B e f o r e:
LYNCH, LOHIER, and CARNEY, Circuit Judges.
__________________
Plaintiff‐Appellant Maimonides Medical Center (“MMC”) appeals from a decision of the United States District Court for the Eastern District of New York (Eric N. Vitaliano, Judge) granting summary judgment to the government. The parties agree that MMC is entitled to a refund for an overpayment of taxes, but disagree as to the interest rate to be applied under I.R.C. § 6621(a)(1). MMC argues that the lower interest rates applicable to “corporation[s]” apply only to for‐profit corporations, and that because it is a nonprofit corporation, it is entitled to the higher standard rate. We disagree, and hold that the lower corporate interest rates provided by § 6621(a)(1) are also applicable to nonprofit corporations.
AFFIRMED.
THOMAS D. SYKES, Gould & Ratner LLP, Chicago, Illinois, for Plaintiff‐ Appellant.
ARTHUR T. CATTERALL (Richard Farber and Deborah K. Snyder, on the brief), Attorneys, Tax Division, Department of Justice, for Caroline D. Ciraolo, Acting Assistant Attorney General (Kelly T. Currie, United States Attorney, of counsel), Washington, District of Columbia, for Defendant‐Appellee.
GERARD E. LYNCH, Circuit Judge:
When an ordinary taxpayer receives a refund for an overpayment of taxes,
interest is applied to the overpayment amount at a rate equaling the Federal
short‐term rate (“FSTR”) plus three percentage points. I.R.C. § 6621(a)(1)(B). If
the taxpayer is a corporation, however, it is entitled only to a lower interest rate:
the FSTR plus two percentage points on the first $10,000 for each taxable period,
2 and the FSTR plus half a percentage point on the remainder. I.R.C. § 6621(a)(1).
Plaintiff‐Appellant Maimonides Medical Center (“MMC”) and the government
agree that MMC is entitled to an overpayment refund and further agree on the
amount of that overpayment, but disagree on the interest rate to be applied.
MMC argues that, despite being organized as a corporation under New York law,
it should receive the benefit of the higher interest rate applicable to non‐
corporations, because it is a nonprofit corporation and the word “corporation” in
§ 6621(a)(1) should be construed to refer only to for‐profit corporations. We
disagree, and hold that § 6621(a)(1)’s lower interest rate applies equally to for‐
profit corporations and nonprofit corporations such as MMC. Accordingly, we
AFFIRM the judgment of the district court.
BACKGROUND
MMC, a teaching hospital located in Brooklyn, is organized as a domestic
not‐for‐profit corporation under New York law. Pursuant to § 501(a) of the
Internal Revenue Code, it is exempt from federal income tax as a “[c]orporation[]
. . . organized and operated exclusively for religious, charitable, scientific, testing
for public safety, literary, or educational purposes.” I.R.C. § 501(c)(3). It is not
exempt, however, from paying taxes under the Federal Insurance Contributions
3 Act (“FICA”), I.R.C. §§ 3101 et seq., which requires employers and employees to
pay a tax on “wages” from “employment,” I.R.C. § 3111(a), (b), the proceeds of
which fund Social Security and Medicare.
Services “performed by a student who is enrolled and regularly attending
classes at [a] school, college, or university” are excluded from FICA’s definition
of “employment.” I.R.C. § 3121(b)(10). For several years, teaching hospitals and
the Internal Revenue Service (“IRS”) clashed over whether services performed by
medical residents fell under that exclusion. Eventually, the IRS promulgated a
regulation providing that, effective April 1, 2005, “employee[s] whose normal
work schedule is 40 hours or more per week” – a category that includes medical
residents – are not within the student exclusion. Treas. Reg. § 31.3121(b)(10)‐
2(d)(3)(iii). MMC, which had been paying FICA taxes on its residents’ wages
since at least 1999, then brought this action in the Eastern District of New York,
seeking a refund of the FICA taxes that it had paid before the effective date of the
regulation. In 2010, the IRS agreed that FICA taxes paid on residents’ wages for
tax periods before April 1, 2005 were refundable, see IRS News Release IR‐2010‐
25 (Mar. 2, 2010), and the parties agreed to discontinue this action.
4 On October 1, 2013, however, the case was reopened. The remaining point
of contention between the parties is the interest rate to be applied to MMC’s
refund. The government seeks to apply the lower interest rate which § 6621(a)(1)
provides for overpayments by “corporations,” whereas MMC argues that that
interest rate does not apply to nonprofit organizations that happen to be
organized as corporations under state law, and thus that it is entitled to the
higher standard interest rate. The parties cross‐moved for summary judgment,
and the district court (Vitaliano, J.) granted the government’s motion and denied
MMC’s. MMC timely appealed.
DISCUSSION
The parties’ disagreement centers on the meaning of the word
“corporation” in § 6621(a)(1), which specifies the interest rate to be applied to
refunds for overpayments. As noted above, MMC concedes that it is a
“corporation” both under New York law and for the purpose of obtaining an
exemption from federal income tax under § 501(a) & (c)(3). It contends, however,
that, as used in § 6621(a)(1), the word “corporation” does not include nonprofit
corporations. For the following reasons, we disagree.
5 I. Ordinary Meaning of “Corporation”
We begin with the fact that the word “corporation,” standing alone,
ordinarily refers to both for‐profit and nonprofit entities without distinction. The
dictionary definition of “corporation” is not restricted to entities that carry on
activities for profit. See Webster’s Third New International Dictionary 510 (1993)
(defining “corporation” as “an entity recognized by law as constituted by one or
more persons and as having various rights and duties together with the capacity
of succession,”); Oxford English Dictionary (2d ed. online version 2015) (defining
“corporation” as “an artificial person created by royal charter, prescription, or act
of the legislature, and having authority to preserve certain rights in perpetual
succession”). The famous definition given by Chief Justice Marshall in Trustees
of Dartmouth College v. Woodward is to the same effect: “A corporation is an
artificial being, invisible, intangible, and existing only in contemplation of law.
Being the mere creature of law, it possesses only those properties which the
charter of its creation confers upon it, either expressly, or as incidental to its very
existence.” 17 U.S. (4 Wheat.) 518, 636 (1819). A profit‐seeking motive does not
appear on the list of distinguishing characteristics of a corporation given in one
leading treatise. See 1 William Meade Fletcher, Cyclopedia of the Law of
6 Corporations § 5 (listing those characteristics as follows: a corporation “is an
artificial person, a legal entity, capable of acting through its corporate officers and
agents, of suing and being sued, of taking and holding property, of contracting in
its own name, and of continuing to exist independently of the individuals who
compose it”(footnotes omitted)).1
MMC argues for a different starting point. It contends that, “in ordinary,
everyday usage,” the word “corporation” refers only to for‐profit entities, as in
the assertion that “corporations are a force for good in the world.” That
argument is unpersuasive. While it is true that, in the context of a bar‐ or dorm‐
room political discussion, “corporation” may refer exclusively to profit‐seeking
business entities, that is not, as we have seen, the “ordinary, everyday” definition
supplied in the dictionary. Further, in the colloquial sense advocated by MMC,
“corporation” typically refers to any profit‐seeking legal entity, regardless of
form, and includes entities like partnerships, which are not treated as
corporations by the Internal Revenue Code. See I.R.C. § 7701(a)(2) (defining
“partnership” as an “unincorporated organization . . . which is not, within the
1 Black’s Law Dictionary states that a corporation is “usu[ally] a business.” Corporation, Black’s Law Dictionary (10th ed. 2014). But that statement too necessarily implies that the word sometimes refers to entities that are not businesses. 7 meaning of this title, a . . . corporation”). While such loose use of the word
“corporation” may be appropriate in the context of a casual debate about the role
of the profit motive in contemporary society, it cannot be the meaning that
controls in the Internal Revenue Code.
II. Definitional Provision
Next, we turn to § 7701(a) of the Internal Revenue Code, which provides
definitions for certain words that apply throughout the Code, “where not
otherwise distinctly expressed or manifestly incompatible with the intent
thereof.” The provision relating to the word “corporation” has not changed since
1918. It reads: “The term ‘corporation’ includes associations, joint‐stock
companies, and insurance companies.” I.R.C. § 7701(a)(3).
As we have recognized, that language is not technically a definition: it does
not “specif[y] the characteristics of the entity that it ‘defines.’” McNamee v.
Dep’t of Treasury, 488 F.3d 100, 106 (2d Cir. 2007) (alteration omitted). It does,
however, serve to expand the federal tax law meaning of “corporation” beyond
entities that would ordinarily fall under that term; it offers no hint that Congress
intended to contract the ordinary meaning of the term in any way. The statutory
definition thus strongly suggests that, at a minimum, all entities covered by the
8 core definition of “corporation” are also included. Section 7701(a)(3) does not
provide that core definition itself, but because the ordinary meaning of
“corporation” includes nonprofit entities that take the corporate form, the same
should be true of the core term as used in § 7701(a)(3). That core definition most
plausibly encompasses any entity upon which state law has conferred the rights
and duties characteristic of a “corporation” as defined in the sources quoted
above. Judicial opinions have generally adopted that reading of § 7701(a)(3). See
O’Neill v. United States, 410 F.2d 888, 899 (6th Cir. 1969) (holding “that a
corporation created under state law is a corporation within the meaning of . . .
§ 7701(a)(3)”); United States v. Empey, 406 F.2d 157, 169 (10th Cir. 1969) (noting
“the long followed administrative practice of treating a corporation organized
and chartered under state law as a corporation for federal income tax purposes,”
which Congress “tacitly approved” by repeatedly reenacting § 7701(a)’s
definition of “corporation”).2
2 Because of the open‐ended nature of § 7701(a)(3)’s definition of “corporation,” the IRS has promulgated regulations, known as “check‐the‐box regulations,” “to provide straightforward guidance as to how various types of entities, including single‐owner businesses, are to be classified for tax purposes.” McNamee, 488 F.3d at 107. Much of the district court’s opinion is devoted to showing that MMC is a “corporation” under those regulations, and much of MMC’s briefing on appeal is devoted to arguing that the regulations are invalid. Because MMC is unambiguously a “corporation” under the statutory definition, however, we need not address those arguments. 9 Several other Code provisions use the word “corporation” in a manner that
plainly includes incorporated nonprofit organizations, bolstering our conclusion
that the Code’s generally applicable definition of “corporation” under
§ 7701(a)(3) is not limited to for‐profit entities. For example, under § 501(a) &
(c)(3), “[c]orporations . . . organized and operated exclusively for . . . charitable
. . . purposes” are exempt from federal income tax. If the word “corporation”
referred only to for‐profit entities, that provision would be self‐contradictory.
Similarly, § 1381(a)(2)(A) specifies that the rules governing the tax treatment of
“cooperatives” apply to, inter alia, “any corporation operating on a cooperative
basis other than an organization . . . which is exempt from tax under this
chapter.” The carve‐out for tax‐exempt organizations would not have been
necessary if they were already excluded from the definition of “corporation.”
The same is true of the carve‐out in § 1504(b)(1), which deals with affiliated
groups of corporations, and defines “includible corporation” to include “any
corporation except,” inter alia, “[c]orporations exempt from taxation under
section 501.” Because “we must give effect to every word of a statute wherever
possible,” Leocal v. Ashcroft, 543 U.S. 1, 12 (2004), we cannot easily write off
these last two provisions as instances of overcautious drafting, as MMC urges.
10 III. Textual Analysis of § 6621
As noted above, § 7701(a)(3)’s definition of “corporation” applies
throughout the Code, “where not otherwise distinctly expressed or manifestly
incompatible with the intent thereof.” Having concluded that that definition
includes nonprofit corporations such as MMC, we must next determine whether
§ 6621 “distinctly expresse[s]” a different definition, or whether applying
§ 7701(a)(3)’s definition in the context of § 6621(a)(1) is “manifestly incompatible
with the intent” of the Code. In that respect, MMC’s argument focuses on the
relationship between § 6621(a)(1), the overpayment provision, and § 6621(a)(2) &
(c), which set the interest rate to be applied to underpayments of taxes. The
relevant provisions are set out below:
(a) General rule. – (1) Overpayment rate. – The overpayment rate established under this section shall be the sum of – (A) the Federal short‐term rate . . . 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” for “underpayment”) exceeds $10,000, subparagraph (B) shall be applied by substituting “0.5 percentage point” for “2 percentage points”. 11 (2) Underpayment rate. – The underpayment rate established under this section shall be the sum of – (A) the Federal short‐term rate . . . plus (B) 3 percentage points. . . . . (c) Increase in underpayment rate for large corporate underpayments. – (1) In general. – For purposes of determining the amount of interest payable under section 6601 on any large corporate underpayment for periods after the applicable date, paragraph (2) of subsection (a) shall be applied by substituting “5 percentage points” for “3 percentage points”. . . . . (3) Large corporate underpayment. – For purposes of this subsection – (A) In general. – The term “large corporate underpayment” 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.
Like the overpayment provisions, the underpayment provisions apply a
less favorable interest rate to tax payment errors by corporations above a certain
12 dollar amount. In the underpayment context, however, the less favorable interest
rate explicitly applies only to C corporations, because, under subsection (c)(1), it
applies to “any large corporate underpayment,” which subsection (c)(3) defines
as an underpayment by a C corporation in excess of $100,000. MMC contends
that the limitation to C corporations also applies in the overpayment context, and
that, since it is not a C corporation,3 it should receive the more favorable standard
interest rate on its overpayment refund. The textual basis for MMC’s claim is the
cross‐reference to subsection (c)(3) in the “flush language” of subsection (a)(1)
(that is, the sentence beginning with “To the extent”), which has the effect of
reducing the interest rate on overpayments by corporations above $10,000 from
the FTSR plus two percentage points to the FTSR plus half a percentage point.
The flush language refers to “an overpayment of tax by a corporation for any
taxable period (as defined in subsection (c)(3), applied by substituting
3 The term “C corporation” refers to corporations that are taxed under subchapter C of the income tax provisions of the Internal Revenue Code. Cf. Sidell v. Comm’r, 225 F.3d 103, 105 (1st Cir. 2000) (equating a “so‐called C corporation” with “a regular business corporation”). Section 1361(a)(2) of the Code, however, provides that “the term ‘C corporation’ means . . . a corporation which is not an S corporation.” Relying on that provision, the government argues that, because MMC is not an S corporation, it must in fact be a C corporation, and should receive the lower corporate interest rate regardless of the construction given to § 6621(a)(1). Because we disagree with MMC’s position that the lower interest rate applies only to C corporations, we do not reach that argument. 13 ‘overpayment’ for ‘underpayment’).” According to MMC, the words “as defined
in subsection (c)(3)” have the effect of adding the qualifier “C” to every instance
of the word “corporation” in the overpayment provisions.
Unfortunately for MMC, that argument does not withstand close scrutiny.
The phrase “as defined in subsection (c)(3)” presupposes a term to be defined.
That term, reading the sentence most naturally, is the term immediately
preceding the “as defined” parenthetical – namely, “taxable period.” As it turns
out, “taxable period” is defined in subsection (c)(3), and the only other term
explicitly defined in that subsection – “large corporate underpayment” – does not
appear anywhere in subsection (a)(1). Further, using “taxable period” as the term
to be defined gives meaning to the rest of the “as defined” parenthetical, because
subsection (c)(3)’s definition of “taxable period” includes the word
“underpayment,” for which the word “overpayment” can be substituted (as the
parenthetical directs) without doing any damage to the coherence of the statute.
MMC argues that this reading of § 6621(a)(1) is untenable, because the
parenthetical refers to subsection (c)(3), rather than to subsection (c)(3)(B), which
is more specifically where the definition of “taxable period” is located. It
emphasizes that the reference to subsection (c)(3) survived a 1997 technical
14 amendment to the “as defined” parenthetical itself.4 According to MMC, this
shows that Congress intended to refer to the entirety of subsection (c)(3), rather
than to subsection (c)(3)(B) in particular. That argument is unavailing. The
imprecision MMC complains of pervades the Internal Revenue Code. See, e.g.,
I.R.C. § 42(k)(2)(A) (referring to “a qualified nonprofit organization (as defined in
subsection (h)(5)),” even though “qualified nonprofit organization” is in fact
defined in subsection (h)(5)(C)); I.R.C. § 146(f)(6)(A) (referring to “a qualified
housing issue (as defined in subsection (d)(5)),” even though “qualified housing
issue” is defined in subsection (d)(5)(B)(ii)). Further, because the “as defined”
parenthetical unambiguously modifies only the term “taxable period,” for the
reasons we explain below, there was no need for Congress in 1997 to add a
specific reference to subsection (c)(3)(B).
MMC’s proposed readings of § 6621(a)(1) wreak havoc on the statutory
language. First, the “as defined” parenthetical could conceivably be read as
modifying the entire phrase that precedes it: “an overpayment of tax by a
corporation for any taxable period.” Because subsection (c)(3) defines “large
4 The 1997 technical amendment added the words “applied by substituting ‘overpayment’ for ‘underpayment’” to the parenthetical. Taxpayer Relief Act of 1997, Pub. L. No. 105‐34, § 1604(b)(1), 111 Stat. 788, 1097 (1997). 15 corporate underpayment,” this reading has some superficial plausibility. Upon
closer inspection, however, it renders the statute incoherent. If “an overpayment
of tax by a corporation for any taxable period” means the same thing as a “large
corporate underpayment” (substituting “overpayment” for “underpayment”),
then, under subsection (c)(3)(A), it must exceed $100,000. But subsection (a)(1)’s
flush language only applies “[t]o the extent that [the] overpayment . . . exceeds
$10,000.” Thus, if the parenthetical imported subsection (c)(3)’s definition of
“large corporate underpayment,” the flush language would in effect have to be
read as applying only “to the extent that an overpayment exceeding $100,000
exceeds $10,000” – a nonsensical result which cannot be what Congress intended.
In its reply brief, MMC concedes as much, and suggests that the
parenthetical more narrowly modifies only the phrase “by a corporation for any
taxable period.” Elsewhere, MMC states that the word “corporation” is the term
in the flush language to be defined. We understand MMC to be arguing that the
parenthetical modifies two terms: “corporation” and “taxable period.” See Reply
Br. 16 (recognizing that the flush language makes “a cross reference to the
definition of ‘taxable period’”).
16 That reading, however, fares no better than the previous one. First, the
parenthetical is most naturally read as modifying only the term that immediately
precedes it, rather than that term and an additional term found a few words
earlier in the same sentence. There is no reason why the parenthetical should
modify “taxable period” and “corporation,” but not other terms in the flush
language, such as “overpayment.” MMC’s response – that “overpayment”does
not need defining, because a standard definition for that term already exists –
begs the question: “corporation” is already defined in § 7701(a)(3), and it is
unclear why it would be in any greater need of further definition than
“overpayment.”
Second, and more importantly, while subsection (c)(3) does define “taxable
period,” as discussed above, it does not provide a definition of “corporation,” let
alone a definition restricting the meaning of that word to C corporations. If the
parenthetical modifies “corporation,” the reader following the cross‐reference to
subsection (c)(3) thus comes up empty‐handed. We are not persuaded by MMC’s
argument that subsection (c)(3)’s definition of “large corporate underpayment”
as including only underpayments by C corporations amounts to an implicit
redefinition of the word “corporation” to mean “C corporation.” Subsection
17 (c)(3) provides a definition for a particular phrase – “large corporate
underpayment” – which the statute uses as a technical term of art. The fact that
the statute gives this phrase a specific, narrow meaning does not imply that the
meanings of the constituent words of the phrase are correspondingly narrowed
when they are used independently.
A third problem with MMC’s theory is that the word “corporation”
appears once in the statute before the flush language, in subsection (a)(1)(B),
which sets the default interest rate on overpayments by corporations at the FSTR
plus two percentage points. If MMC is to receive the standard interest rate for
non‐corporations – the FSTR plus three percentage points – then “corporation,”
as it appears in subsection (a)(1)(B), must also be read to mean “C corporation.”
If the “as defined” parenthetical is what effects this redefinition, one would
expect it to be located in subsection (a)(1)(B), immediately after the word
“corporation,” rather than several words after the later appearance of the word
“corporation” in the flush language. MMC’s response is that the language that
sets the interest rate for corporations was added to subsection (a)(1)(B) in 1998,
several years later than the flush language and its “as defined” parenthetical.
MMC argues that, because the parenthetical already defined “corporation” to
18 mean “C corporation,” it would have been “overkill” to include definitional
language in the 1998 amendment. Appellant’s Br. 24. That may be, but MMC
does not explain why Congress, in 1998, could not simply have moved the
parenthetical to subsection (a)(1)(B). The awkward result is that the word
“corporation” appears in the provision twice before the parenthetical
purportedly defines it.
MMC’s invocation of the in pari materia canon of statutory construction is
similarly unavailing. Under that canon, “language used in one portion of a
statute . . . should be deemed to have the same meaning as the same language
used elsewhere in the statute.” Mertens v. Hewitt Assocs., 508 U.S. 248, 260
(1993). MMC complains that the government’s reading of § 6621 fails to give the
words “corporation” and “corporate” a consistent meaning throughout that
section. But it is mistaken: the word “corporation,” standing alone, has only one
meaning throughout § 6621 – namely, the meaning derived from § 7701(a)(3). It
has the meaning “C corporation” only where it is preceded by the qualifier “C.”
By asking us to read “C” into subsection (a)(1), MMC seeks to have the rule of in
pari materia (insofar as it applies at all) override another canon of interpretation,
namely, the rule that “[w]here Congress includes particular language in one
19 section of a statute but omits it in another section of the same Act, it is generally
presumed that Congress acts intentionally and purposely in the disparate
inclusion or exclusion.” Russello v. United States, 464 U.S. 16, 23 (1983). As to
the word “corporate,” it refers specifically to C corporations only because, as we
have explained, it is used as part of the term of art “large corporate
underpayment,” which the statute explicitly restricts to underpayments by C
corporations.
Ultimately, MMC’s position founders because there was another, much
simpler way for Congress to achieve the result MMC seeks here: it could simply
have added the qualifier “C” to the word “corporation” wherever it appears in
subsection (a)(1). MMC asks us to read the “as defined” parenthetical as doing
the work of that qualifier, but that would require us to disregard the placement of
that parenthetical several words after the word “corporation” in the flush
language, the fact that “corporation” is not actually defined in subsection (c)(3),
and the earlier appearance of the word “corporation” in subsection (a)(1)(B).
Reading the parenthetical to apply only to the term “taxable period” is thus the
only plausible way to interpret the statute.
20 IV. Policy Arguments
MMC’s final set of arguments relates to what it perceives as the “wholly
perverse,” “irrational” and “plainly unacceptable” substantive effects of the
government’s reading of § 6621(a)(1). Appellant’s Br. 37. We do not believe that
the effects identified by MMC are so clearly contrary to Congressional intent.
First, MMC complains that the government’s reading discriminates irrationally
between the “siblings” in the nonprofit “nest,” id., that is, between tax‐exempt
entities that happen to be organized as corporations under state law and those
that have chosen not to adopt the corporate form. But § 6621(a)(1) discriminates
between for‐profit entities along the same lines. It is well within the power of
Congress to make distinctions based on whether or not a taxable entity qualifies
as a “corporation” under § 7701(a)(3), and Congress has unambiguously done so
here, regardless of whatever incongruity MMC may perceive in that decision.
Next, MMC finds it objectionable that, under the government’s
interpretation of § 6621(a)(1), nonprofit corporations (which, as tax‐exempt
organizations, are highly favored under the Internal Revenue Code) are treated
identically to C corporations (which are subject to double taxation and, MMC
asserts, are thus the Code’s least favored entities). MMC, however, pays FICA
21 taxes just as for‐profit corporations do, and its exemption from income tax as a
§ 501(c)(3) organization does not obviously entitle it to additional favorable
treatment throughout the Code, particularly in connection with taxes from which
it is not exempt.
Finally, MMC points out that the government’s reading of § 6621(a)(1)
creates an asymmetry between nonprofit corporations’ overpayment and
underpayment interest rates: such corporations receive the least favorable
interest rate on their overpayment refunds, under subsection (a)(1)’s flush
language, but are not similarly “punished” when they underpay their taxes,
because the high interest rate for “large corporate underpayments” applies only
to C corporations. But § 6621 plainly does not reflect a policy of perfect
symmetry between overpayment and underpayment interest rates. For instance,
overpayment rates are generally lower than underpayment rates; corporations
and non‐corporations receive different interest rates no matter the dollar amount
of the overpayment under subsection (a)(1)(B), whereas they pay the same rate
on relatively small underpayments; and the threshold amount for the flush
language’s less favorable corporate interest rate on overpayments is $10,000,
whereas the corresponding threshold for “large corporate underpayments” is
22 $100,000. While the government has offered no policy justification for the
asymmetry MMC complains of, that asymmetry stands in no more need of
explanation, and is no more lacking an obvious rationale, than the other
asymmetries created by § 6621.
CONCLUSION
The district court correctly rejected MMC’s interpretation of § 6621(a)(1).
Accordingly, its judgment is affirmed.