Third Quarter IRS Interest Rates Remain Same

IRS News:

PHOENIX – The Internal Revenue Service today announced that interest rates will remain the same for the calendar quarter beginning July 1, 2016. 

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 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.

The interest rates announced today are computed from the federal short-term rate determined during April 2016 to take effect May 1, 2016, based on daily compounding.

Revenue Ruling 2016-12, announcing the rates of interest will appear in Internal Revenue Bulletin 2016-26, dated June 27, 2016.

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