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IRS Leaves Interest Rates On Hold

by Mike Godfrey, Tax-News.com, Washington

05 September 2007


The US Internal Revenue Service has announced that there will be no change in the interest rates on under- and over-payments for the calendar quarter beginning October 1, 2007.

According to the IRS, the interest rates for that quarter 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.

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 points.

The interest rates announced on September 4 are computed from the federal short-term rate, based on daily compounding determined during July 2007.


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