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.
The Ministry of Finance published the Resolutions No. DGH-016-2017 and DGA-DGT-006-2017 in the Official Gazette on 27 March 2017. In accordance with Resolutions, an interest rate of 11.73% will be applied for late payment and refunds of taxes, surcharges and penalties effective as of April 1, 2017.
The IRS has announced on 7 March 2017 that the interest rates for the second quarter beginning 1 April 2017, will bet 4 percent for overpayments i.e. tax refunds (3 percent in the case of a corporation), 4 percent for underpayments i.e. tax assessments and late tax payments and 6 percent for large corporate underpayments. The interest rate for the portion of a corporate overpayment exceeding $10,000 is 1.5 percent.
The interest rates on overpayments and underpayments for the second quarter of 2017 are unchanged from the rates announced for the first quarter of 2017.
The tax bureau of Gao Xiong of the Ministry of Finance issued a declaration that interest on the recovery of tax payables due to the incorrect declaration of costs, expenses or losses and interest on tax payments due to the rejection in an administrative complaint process are deductible for income tax purposes. Though, the penalties for late tax payments and other violations may not be considered expenses and are non-deductible in determining taxable income.
The Inland Revenue Service released Revenue Ruling 2016-28 on 5 December 2016 with the announcement of the interest rates on tax overpayments (i.e. tax refunds) and tax underpayments (i.e. tax assessments and late tax payments) for the calendar quarter beginning 1 January 2017.
The interest rates, which apply to amounts bearing interest during that calendar quarter, are as follows;
- 4% for non-corporate overpayments; 3% for corporate overpayments up to USD 10,000
- 5% for corporate overpayments to the extent in excess of USD 10,000
- 4% for non-corporate and corporate (other than large corporate) underpayments
- 6% for large corporate underpayments (i.e. underpayments in excess of USD 100,000)
The interest rates on overpayments and underpayments for the first quarter of 2017 are unchanged from the rates announced for the fourth quarter of 2016. Revenue Ruling 2016-28 also includes interest factors for daily compound interest for an annual rate of 0.5% (Appendix A) and tables including overpayment and underpayment interest rates for prior periods.
Revenue Procedure 2016-28 will appear in the IRS Internal Revenue Bulletin (IRB) as part of IRB 2016-51 dated 19 December 2016.
On 4 August 2016, the Bank of England reduced the base rate to 0.25%. As a result, on 5 August 2016, HMRC announced that interest rates for late payment will be reduced with effect on:
- 15 August 2016 for quarterly installment payments; and
- 23 August 2016 for non-quarterly installment payments.
HMRC is expected to revise information on the interest rates for late payments shortly. Repayment interest rates remain unchanged.
The Financial Supervisory Authority of Colombia recently issued Administrative Regulation 0811 of 2016 about the late payment interest rate. According to the Regulation, the effective annual interest rate is 32.01% that applicable for late payment of taxes. The late payment interest rate was implemented on 1 July 2016 and will be applicable until 30 September 2016.