IRS lowers interest rates
The Internal Revenue Service has announced that interest rates for the calendar quarter beginning January 1, 2008, will drop by one percentage point. The new rates will be:
Seven percent for overpayments (six percent in the case of a corporation)
Seven percent for underpayments
Nine percent for large corporate underpayments
Four and one-half 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.
These latest interest rates are computed from the federal short-term rate based on daily compounding determined during October 2007.
Revenue Ruling 2007-68 contains the announcement of the new rates of interest as well as historical information about IRS interest rates. The new interest rates will be published in Internal Revenue Bulletin No. 2007-52, dated Dec. 24.