WASHINGTON (AP) _ The federal government lost a Supreme Court appeal today and now must pay New York Life Insurance Co. nearly $32 million _ taxes and interest the Internal Revenue Service said the insurance firm owed for 1984.

The court, without comment, let stand rulings that the $31,912,823 check New York Life sent to the IRS in 1993 was not a tax ``payment'' but a ``deposit'' that must be returned because the tax agency subsequently failed to assess the 1984 tax soon enough.

Following an audit of the insurance company, the IRS proposed a tax-liability increase for the years 1984, 1986 and 1987. New York Life contested the proposed additional taxes but sent the government three checks in 1993 while awaiting to resolve the dispute in court.

The IRS subsequently assessed the contested taxes for 1986 and 1987 but for some unexplained reason never assessed the disputed 1984 taxes.

When New York Life realized the legal deadline for assessing the 1984 taxes had passed, it sued to get back the money paid for that year.

The U.S. Court of Federal Claims ordered the government to pay back the amount of the check for 1984 taxes, ruling that the remittance had to be considered a deposit because the tax had been disputed and was never formally assessed.

The U.S. Court of Appeals for the Federal Circuit upheld the claims court's ruling last July.

In the appeal acted on today, government lawyers said the lower court rulings are ``of exceptional recurring importance.''

Lawyers for New York Life urged the justices to reject the government's appeal, contending that ``the failure to assess taxes was caused by a simple IRS mistake which easily could have been avoided.''

The case is U.S. vs. New York Life Insurance Co., 97-1229.