Tax-related interest rates will remain the same for the calendar quarter beginning October 1, according to the IRS.
The rates will be:
- 3% for overpayments (2% in the case of a corporation);
- 3% for underpayments;
- 5% for large corporate underpayments; and,
- 0.5% for the portion of a corporate overpayment exceeding $10,000.
Under the IRC, the rate of interest is determined quarterly. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus three percentage points.
Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus three percentage points and the overpayment rate is the federal short-term rate plus two percentage points.
The rate for large corporate underpayments is the federal short-term rate plus five 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 0.5 of a percentage point.
The rates are computed from the federal short-term rate determined during July 2014 to take effect Aug. 1, 2014, based on daily compounding.
Revenue Ruling 2014-23 announcing the rates of interest will appear in Internal Revenue Bulletin 2014-40, dated Sept. 29.
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