IRS interest rates to remain the same for next quarter

tax-400On Monday, the IRS announced that interest rates will remain the same for the calendar quarter beginning July 1, 2014. The rates will be:

* three (3) percent for overpayments [two (2) percent in the case of a corporation];
* three (3) percent for underpayments;
* five (5) percent for large corporate underpayments; and
* one-half (0.5) 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 one-half (0.5) of a percentage point.

The interest rates announced on Monday, June 2, 2014 are computed from the federal short-term rate determined during April 2014 to take effect May 1, 2014, based on daily compounding.

Revenue Ruling 2014-14 announcing the rates of interest, is available on IRS.gov at http://www.irs.gov/pub/irs-drop/rr-14-14.pdf and will appear in Internal Revenue Bulletin 2014-27, dated June 30, 2014.

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