US: Interest rates on tax underpayments and overpayments for the third quarter of 2017

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The Internal Revenue Service on 9 June 2017 announced that interest rates for tax underpayments and overpayments will remain the same for the calendar quarter beginning July 1, 2017.

The rates will be:

  • four percent for overpayments (three percent in the case of a corporation);
  • one and one-half percent for the portion of a corporate overpayment exceeding $10,000;
  • four percent for underpayments; and
  • six percent for large corporate underpayments.

Under the Internal Revenue Code, the rate of interest on tax underpayments and overpayments 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 of a percentage point.

The interest rates are computed from the federal short-term rate determined during April 2017 to take effect May 1, 2017, based on daily compounding. Revenue Ruling 2017-13, announcing the rates of interest, will appear in Internal Revenue Bulletin 2017-26, dated June 26, 2017.

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