The Internal Revenue Service (IRS) has announced that there will be no change in the interest rates for the calendar quarter beginning July 1, 2005. The rates announced for the third quarter 2005 are computed from the federal short-term rate based on daily compounding determined during April 2005.
Third quarter interest rates are:
- Six (6) percent for overpayments and underpayments for taxpayers other than corporations.
- Five (5) percent for corporation overpayments
- Eight (8) percent for corporation underpayments
- Three and one-half (3.5) 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. The overpayment and underpayment rate for taxpayers other than corporations is the federal short-term rate plus three percentage points. The underpayment rate for corporations is the federal short-term rate plus three percentage points while the rate for large corporate underpayments is the federal short-term rate plus five percentage points. The overpayment rate for corporations is the federal short-term rate plus two percentage points for overpayments not exceeding $10,000. For corporate overpayments exceeding $10,000 the interest rate if the federal short-term rate plus one-half (0.5) of a percentage point.