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IRS Revises Interest Rates On Overpayments, Tax Debts

by Mike Godfrey, Tax-News.com, Washington

08 March 2018


The Internal Revenue Service (IRS) has announced an increase in interest rates for the calendar quarter beginning April 1, 2018.

The new rates will be:

  • Five percent for overpayments [four percent in the case of a corporation];
  • 2.5 percent for the portion of a corporate overpayment exceeding USD10,000;
  • Five percent for underpayments; and
  • Seven percent for large corporate underpayments.

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 three percentage points.

Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus three percentage points and the overpayment rate is the federal short-term rate plus two percentage points. The rate for large corporate underpayments is the federal short-term rate plus five percentage points. 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 of a percentage point.

The interest rates were announced on March 7, 2018. They are computed from the federal short-term rate determined during January 2018 to take effect February 1, 2018, based on daily compounding.

TAGS: tax | interest | Internal Revenue Service (IRS) | United States

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