Interest Rates to Remain Unchanged for First Quarter of 2007 | AccountingWEB

Interest Rates to Remain Unchanged for First Quarter of 2007

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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