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IRS Leaves Interest Rates On Hold

by Mike Godfrey, Tax-News.com, Washington

14 March 2007


The Internal Revenue Service has announced that there will be no change in the interest rates for the calendar quarter beginning April 1, 2007.

According to the IRS, the interest rates will remain as follows:

  • 8% for overpayments (7% in the case of corporations)
  • 8% for underpayments
  • 10% for large corporate underpayments;
  • 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 one-half (0.5) of a percentage point.

The interest rates announced this week are computed from the federal short-term rate based on daily compounding determined during January 2007.


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