IRS Leaves Interest Rates On Hold

by Leroy Baker, Tax-News.com, New York

18 August 2009

The US Internal Revenue Service has issued a Revenue Ruling announcing that interest rates for the calendar quarter beginning October 1, 2009, will remain unchanged.

According to Revenue Ruling 2007-27, the rates will be:

• 4% for overpayments [3% in the case of a corporation];
• 4% for underpayments;
• 6% for large corporate underpayments; and
• 1.5% for the portion of a corporate overpayment exceeding USD10,000.

The rates of interest on tax overpayments and underpayments are established by Section 6621 of the Internal Revenue Code and are determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3%. Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3% and the overpayment rate is the federal short-term rate plus 2%.

The rate for large corporate underpayments is the federal short-term rate plus 5%. The rate on the portion of a corporate overpayment of tax exceeding USD10,000 for a taxable period is the federal short-term rate plus 0.5%.

The interest rates announced August 14 are computed from the federal short-term rate during July 2009 to take effect August 1, 2009, based on daily compounding.

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