IRS INTEREST RATES UNCHANGED FOR THE FIRST QUARTER OF 2005: Interest rates for calculating the amount owed on refunds and deficiencies will remain unchanged for the calendar quarter beginning Jan. 1, 2005, the Internal Revenue Service said.The rates will remain at 5 percent for overpayments (4 percent for corporations); 5 percent for underpayments; 7 percent for large corporate underpayments; and 2.5 percent for the portion of a corporate overpayment exceeding $10,000. The rates are computed from the federal short-term rate based on daily compounding determined during October 2004.
Under the Internal Revenue Code, the rate of interest is determined quarterly. 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 half a percentage point.
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