The Internal Revenue Service announced that the interest rates for the calendar quarter beginning Jan. 1, 2009, will drop by one percentage point. The new rates, as laid out in Revenue Ruling 2008-54 will be: -- 5 percent for overpayments (4 percent in the case of a corporation);-- 5 percent for underpayments;-- 7 percent for large corporate underpayments; and,-- 2.5 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, based on the federal short-term rate. The most recent rates were computed from the federal short-term rate during October 2008 to take effect Nov. 1, 2008, based on daily compounding.

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