Medical College of Wisconsin Affiliated Hospitals, Inc. v. U.S.

Dist. Ct. did not err in finding in favor of defendant-Internal Revenue Service (IRS) in action by plaintiff-nonprofit corporation seeking restoration of full $13 million in interest that IRS had added to FICA tax refund, which IRS originally gave to plaintiff after IRS had ruled that plaintiff’s medical residents were exempt from such tax. Under 26 USC section 6621(a)(1)(B) interest rate for overpayment of taxes is federal short-term rate plus either 3 percent (which IRS originally paid to plaintiff) or (for “corporations") 2 percent for first $10,000 of overpayment plus .5 percent for remainder of refund that IRS eventually found to apply to instant refund. Ct. of Appeals rejected plaintiff’s argument that term “corporation” as contained in section 6621(a)(1)(B) did not apply to nonprofit corporations, and that it therefore was entitled to full federal short term rate plus 3 percent.