IRS reduction on Interest Rates

The Internal Revenue Service announced that interest rates will decrease for the calendar quarter beginning Oct. 1, 2011. The rates will be: 

• 3 % for overpayments ( 2% for corporations),
• 3% for underpayments;
• 5% for large corporate underpayments; and
• 0% - 0.5% for the portion of a corporate overpayment exceeding $10,000.

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points. Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points.

  

The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

 

The interest rates announced today are computed from the federal short-term rate during July 2011 to take effect Aug. 1, 2011, based on daily compounding.

 

Source:  IRS.gov

 

 

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