On 7 March 2018, The Internal Revenue Service announced that interest rates for overpaid and underpaid increased for the calendar quarter beginning April 1, 2018.
The rates are 5% for both overpayments and underpayments by individuals, and 4% and 5% for corporate overpayments and underpayments, respectively. The rate for corporate overpayments exceeding USD 10,000 in a tax period is 2.5% on the portion exceeding that amount, and the rate for large corporate underpayments exceeding USD 100,000 is 7%.
Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the over-payment Compensation for overpaid tax and refunds 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 over-payment 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 over-payment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.
Revenue Ruling 2018-07, announcing the rates of interest, is attached and will appear in Internal Revenue Bulletin 2018-13, dated March 26, 2018.
