WASHINGTON – The Internal Revenue Service announced that interest rates will increase for the calendar quarter beginning July 1. The rates will be:
Ÿ 5% for overpayments (4% in the case of a corporation).
Ÿ 2.5% for the portion of a corporate overpayment exceeding $10,000.
Ÿ 5% for underpayments.
Ÿ 7% 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 $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 May 20 are computed from the federal short-term rate determined during April to take effect May 1, based on daily compounding.