It is difficult precisely to know what this means or make any projection as to the outcome when remanded. Here are some additional pieces of information and thoughts, although I have by no means studied the briefs.
I picked up the following from the the SCOTUSblog, here, which I highly recommend to readers. That blog has linked to the petition and other briefs.
When, if ever, may a court exercising jurisdiction pursuant to a waiver of sovereign immunity invoke the strict construction canon applicable to such waivers to construe a separate statutory provision that creates the substantive rights at issue?
Whether under 26 USC 6611, interest on an overpayment of tax resulting from the conversion of the taxpayer's deposit in the nature of a cash bond into a tax payment begins to run from (i) the date the deposit was remitted to the Internal Revenue Service or (ii) the date the taxpayer elected to convert the deposit into a payment.
Hmmm. Are these parties passing in the night?
Petitioner's complaint invoked 28 U.S.C. 1346(a)(1) as a ground of jurisdiction in the district court. See Pet. 6-7. In the government's view, Section 1346(a)(1) does not apply to this suit. See pp. 16-17, infra. Rather, the only general waiver of sovereign immunity that encompasses petitioner's claim is the Tucker Act, 28 U.S.C. 1491(a), which requires that suit be brought in the United States Court of Federal Claims. In light of controlling circuit precedent holding Section 1346(a)(1) applicable to suits like this one, however, see E.W. Scripps Co. v. United States 420 F.3d 589, 596-598 (6th Cir. 2005), the government did not argue in the courts below that the district court lacked jurisdiction here.
Oh well. I think that the Government's view is consistent with practitioners' long-time understanding that, for deposits before Section 6603 (these deposits were before 6603), there is no overpayment interest while the deposit is a deposit -- i.e., before it is converted to a payment or returned to the taxpayer. I think Ford raises an ingenious -- if stretchy -- argument, probably because the numbers are so large.
Finally, strategically, on the front end, is it wise to remit as a deposit rather than a payment? The only advantage of the deposit is the right to request the payment back without going through the elaborate refund procedures. There is a cost to exercising the right to request the deposit back – i.e., if the taxpayer is ultimately held liable for the deficiency, then the return of the money will result in the accrual of deficiency interest. Further, if the remittance is a deposit rather than a payment and it is ultimately determined that the remittance exceeded the amount of the tax and interest due, the taxpayer will get a lower interest rate on the excess than the taxpayer would have received if it were a payment. n808 For these reasons, I have never seen a case where, on the front end, the mere right to request immediate return of the money was so important as to outweigh the benefits of the straight payment of tax. That is not to say that I cannot imagine a case where a bond would be preferable; I just haven’t seen one. And, because of the downsides of bonds, I recommend that practitioners be able to articulate a clear affirmative reason for remitting as a bond before recommending that to the client.
n808 A good example of this phenomenon is United States v. Domino Sugar Corporation, cited above [349 F.3d 84 (2d Cir. 2003)]. There, although the taxpayer remitted as a bond, the IRS erroneously paid $1,512,100 interest on the bond and then successfully sued to recover the interest erroneously paid. If the remittance had been a payment, the taxpayer would have been entitled to that interest.
Another issue that I have not tracked down is the issue of when a direction to convert a deposit into a payment is effective. The Ford Motor case seems to assume that it was the date the IRS receives the direction. I have not traced down the case to see whether the IRS acted immediately on the direction, but the case discussion seems to assume at least that the IRS gave overpayment interest from the date of the direction, without regard to the date the IRS booked the deposit as a payment. This issue was presented in Principal Life, although not necessary for a decision in favor of the Government in that case. Principal Life Ins. Co. v. United States, 95 Fed. Cl. 786 (Fed. Cl. 2010)., here. See my blog on that case: Principal Life -- A Masterpiece of Tax Procedure (Federal Tax Procedure Blog 11/29/13), here. The resolution of when a deposit is treated as a payment upon direction of the taxpayer seems to call for a single solution resolution whichever way it goes. But, I wonder whether it may make a difference in different contexts. In Ford Motor Co., it would be inequitable for the IRS to delay treating the direction as a payment and paying interest accordingly. But, in Principal Life, overpayment was not the issue (i.e., at least real overpayment, for the taxpayer owed the tax), but an entirely separate issue where the IRS's apparent practice was to transform the payment from a deposit to a payment the time of the assessment.
Leslie Book, Ford v US: Supreme Court Weighs in on Lower Court Jurisdiction in Interest Disputes (Procedurally Taxing Blog 12/3/13), here.