IRS Lowers Interest Rates For First Time Since January

The Internal Revenue Service has posted its new interest rates for the fourth quarter of 2003. The rates are lower across the board, which should make people owing back taxes happy. People receiving overdue tax refunds from the federal government will find that the interest they receive is going down as well.

New interest rates go into effect October 1, 2003. Here are the new interest rates compared to their predecessors:

  • Tax overpayments owed to individuals: 4%, down from 5%
  • Tax overpayments owed to corporations: 3% down from 4%
  • Tax underpayments owed to the IRS: 4% down from 5%
  • Tax underpayments owed to the IRS by large corporations: 6% down from 7%
  • Tax overpayments in excess of $10,000 owed to corporations: 1.5% down from 2.5%

Taxpayers whose federal income tax refund has not been paid within 45 days of the due date of the tax return, including extensions, are entitled to receive interest on the refund at the overpayment rate. Interest is calculated from the due date of the return or the date you filed the return, whichever is later. The interest is taxable!

The IRS bases its interest rates on a formula that is based on a sum of the federal short-term interest rate plus a fixed number of percentage points, depending on whether it is an over- or an underpayment. The current rates are based on the July 2003 federal short-term interest rate rounded to the nearest full percent, in this case 1%.

The new interest rates are published in Revenue Ruling 2003-104, which includes a complete history of IRS interest rates since July 1975.

You may like these other stories...

IRS must take oath on Lerner emails: judgeMackenzie Weinger of Politico reported on Thursday that a federal judge ordered the IRS to explain under oath how it lost emails connected to Lois Lerner, the ex-IRS official at the...
The Republican-controlled House of Representatives passed a bill on Friday morning that would permanently extend the bonus depreciation tax break for businesses.The measure, HR 4718, which was crafted by Representative Pat...
The Republican-led House of Representatives is expected to pass a bill this week that would permanently extend the bonus depreciation tax break. But don’t expect President Obama to sign it.The Obama administration said...

Upcoming CPE Webinars

Jul 16
Hand off work to others with finesse and success. Kristen Rampe, CPA will share how to ensure delegated work is properly handled from start to finish in this content-rich one hour webinar.
Jul 17
This webcast will cover the preparation of the statement of cash flows and focus on accounting and disclosure policies for other important issues described below.
Jul 23
We can’t deny a great divide exists between the expectations and workplace needs of Baby Boomers and Millennials. To create thriving organizational performance, we need to shift the way in which we groom future leaders.
Jul 24
In this presentation Excel expert David Ringstrom, CPA revisits the Excel feature you should be using, but probably aren't. The Table feature offers the ability to both boost the integrity of your spreadsheets, but reduce maintenance as well.