Q4 Interest Rates Unchanged, Says IRS

by Glen Shapiro, LawAndTax-News.com, New York

14 September 2006

The US Internal Revenue Service on Monday announced there will be no change in its interest rates for the calendar quarter beginning October 1, 2006.

The interest rates are as follows:

• 8% for overpayments [7% in the case of a corporation];
• 8% for underpayments;
• 10% for large corporate underpayments; and
• 5.5% 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 0.5 of a percentage point.

Recommended