PHOENIX — The Internal Revenue Service has announced that interest rates will remain the same for the calendar quarter beginning July 1. The rates will be:
- 4 percent for overpayments (3 percent in the case of a corporation);
- 4 percent for underpayments;
- 6 percent for large corporate underpayments; and
- 1 and 1/2 percent for the portion of a corporate overpayment exceeding $10,000
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 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 1/2 of a percentage point.
The interest rates announced for the third quarter are computed from the federal short-term rate determined during April to take effect May 1, 2016, based on daily compounding.
Revenue Ruling 2016-12, announcing the rates of interest will appear in Internal Revenue Bulletin 2016-26, June 27.
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