The Internal Revenue Service recently announced that interest rates would remain the same for the 2013 calendar quarter beginning on April 1.
What are these rates?
In 2013, these rates will remain as:
- 3.0% for overpayments (2% for a corporation)
- 3.0% for underpayments
- 5.0% for large corporate underpayments
- 0.5% for the portion of a corporate overpayment exceeding $10,000
How are these rates determined?
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.
How is this different for large corporations?
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.
These interest rates are computed from the federal short-term rate determined during January 2013 to take effect February 1, 2013, based on daily compounding. Click here for Revenue Ruling 2013-13, which announced these rates of interest.
Need more information regarding these IRS interest rates and their impact on both individual and corporate payments in 2013?
