On 8 June 2018, The Internal Revenue Service announced interest rate for the third quarter of 2018 that will remain as they were in the quarter that began on 1 April 2018. The rates that will begin from 1 July 2018 are as follows:
- 5 percent for overpayments, 4 percent in the case of a corporation;
- 5 percent for the portion of a corporate overpayment exceeding $10,000;
- 5 percent for underpayments; and
- 7 percent for large corporate underpayments.
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 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 0.5 of a percentage point.
