Interest Rates to Remain Unchanged for First Quarter of 2007

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The Internal Revenue Service (IRS) has announced there will be no change in interest rates for the calendar quarter beginning January 1, 2007. The interest rates announced in http://www.irs.gov/pub/irs-drop/rr-06-63.pdf Revenue Procedure 2006-63 are:

  • 8 percent for overpayments, 7 percent in the case of a corporation
  • 8 percent for underpayments
  • 10 percent for large corporate underpayments
  • 5.5 percent for the portion of a corporate overpayment exceeding $10,000.

The rate of interest is determined on a quarterly basis under the Internal Revenue Code (IRC). 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 taxable period is the federal short-term rate plus 0.5 of a percentage point. The interest rates just announced are computed from the federal short-term rate, based on daily compounding determined during in October 2006.

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