Somebody must think the economy is improving: IRS raises interest rates
by AccountingWEB on
The Internal Revenue Service (IRS) has announced that interest rates for the calendar quarter beginning April 1, 2011, will increase by one percentage point. The rates will be:
- 4 percent for overpayments (3 percent in the case of a corporation);
- 4 percent for underpayments;
- 6 percent for large corporate underpayments; and
- 1.5 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. Additionally, the rate for determining the addition to tax for failure to pay estimated tax for the first 15 days in April 2011 is the 4 percent rate that applied to underpayments of tax during the first calendar quarter in 2011.
These new interest rates are computed from the federal short-term rate during January 2011 to take effect February 1, 2011, based on daily compounding.
Revenue Ruling 2011-5 contains the official announcement of the rate increase as well as historical data on previous interest rates.
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1 week 1 day ago by claudilocks