Side
Netting: Nets that cover only the fruiting zone part of the vine have been very popular in Australia and New Zealand, and they are increasingly being used in eastern regions of the U.S.
The Taxpayer Bill of Rights 2000 -- recently passed unanimously by the House of Representatives -- includes a provision that prospectively addresses the interest
netting issue in respect of individuals.
Thus, the transitional rule appears to permit complete
netting for years ending before 1987, but limited
netting for years ending after 1986 and before Sept.
Participants in multilateral
netting arrangements may exchange transactions either at a single designated time (which is typical for a paper-based payment system, such as checks, or for electronic systems that process in a batch mode, such as ACHS) or within a specified period of time (as with some large-value funds and securities transfer systems).
Because
netting bank overdrafts (a liability) against cash in the cash flow statement would prevent agreement between the two cash balances - and since overdrafts can neither be reported as cash nor meet the definition of cash equivalents (only investments can qualify as cash equivalents) - it generally is inappropriate to net them against cash.
(4) Global
netting should only be performed at a taxpayer's request and the taxpayer should bear the burden of computing the interest
netting amounts and providing the supporting documentation.
The ability to reduce the systemic risk to financial markets by
netting is important not only to the safety and soundness of U.S.
Consequently,
netting effectively resulted in a 79% reduction in funds transfer fees ($250,000 transferred versus $1,200,000) and a 90% reduction in foreign exchange conversion fees ($100,000 converted versus $1 million).
Netting is the concept of equalizing interest rates between overpayments and underpayments during any time period when there is a mutuality of indebtedness, i.e., when there is no true debt.
Notwithstanding the legislative history of the Tax Reform Act of 1986, in the intervening decade the IRS has not developed any
netting rules (though some relief from the punitive effects of the interest rate differential has been permitted on a case-by-case basis).
Ten long years have elapsed since Congress created the interest-rate differential on tax assessments and refunds and simultaneously directed the IRS to implement "the most comprehensive
netting procedures that are consistent with sound administrative practice." If a corporate tax executive or information system specialist, over a ten-year period, kept telling a CFO that "everyone agrees on who owes who what for which prescribed period of time, but the company's computer software or hardware is old or has bugs and that prevents the development of interest calculations which treats every situation alike" -- well, frankly, that person or persons would no longer be employed.
Good Tax Policy Favors Comprehensive Interest
Netting