The IRS announced Monday that interest rates will remain the same for the calendar quarter beginning April 1, 2016. The rates will be:
- three (3) percent for overpayments, [two (2) percent in the case of a corporation};
- one-half (0.5) percent for the portion of a corporate overpayment exceeding $10,000;
- three (3) percent for underpayments; and
- five (5) percent for large corporate underpayments.
Under the IRS 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 Monday are computed from the federal short-term rate determined during January 2016 to take effect Feb. 1, 2016, based on daily compounding.
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