Interest Rates remain the same for the Fourth Quarter of 2016
WASHINGTON — The Internal Revenue Service announced that interest rates will remain the same for the calendar quarter beginning Oct. 1, 2016. The rates will be:
- four (4) percent for over-payments (three (3) percent in the case of a corporation);
- 1 and one-half (1.5) percent for the portion of a corporate over-payment exceeding $10,000;
- four (4) percent for underpayments; and
- six (6) 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 over-payment 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.
The interest rates are computed from the federal short-term rate determined during July 2016 to take effect Aug. 1, 2016, based on daily compounding.
I created this blog to help understand certain basic aspects of U.S. tax law. Of course, each situation is unique and nothing that is on this site will ever replace the expert advice of a tax professional.
Please do not hesitate to contact me should you have any question