IRS Drops Interest Rates | AccountingWEB

IRS Drops Interest Rates

Effective January 1, 2003, the Internal Revenue Service will drop interest rates by one percentage point. The following new rates will apply:

  • 5% interest on tax overpayments
  • 5% interest on tax underpayments
  • 7% interest on tax underpayments by large corporations
  • 2 1/2% interest on the portion of a corporate overpayment exceeding $10,000

These rates will apply for the first quarter of 2003. These are the lowest rates since 1975.

The interest rates are computed from the federal short-term rate based on daily compounding determined during October 2002.

A complete summary of the new rates is described in IRS Revenue Ruling 2002-70.

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