IRS Drops Interest Rates

Posted by accountingweb on Dec 11 2002 102 printer friendly

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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