The Internal Revenue Service has announced that interest rates for the calendar quarter beginning April 1, 2008, will drop by one percentage point. The new rates will be:

Six (6) percent for overpayments [five (5) percent in the case of a corporation];

Six (6) percent for underpayments;

Eight (8) percent for large corporate underpayments; and

Three and one-half (3.5) percent for the portion of a corporate overpayment exceeding $10,000.

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 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 a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

The new interest rates are computed from the federal short-term rate based on daily compounding determined during January 2008.

The new rates, as well as historical information about previous rates, appear in Revenue Ruling 2008-10.