IRS News Release  
February 28, 1997

IRS Announces Quarterly Interest Rates

WASHINGTON - The Internal Revenue Service today announced that interest rates for the calendar quarter beginning April 1, 1997, will remain at eight percent for overpayments, nine percent for underpayments, and eleven percent for large corporate underpayments. The overpayment rate for the portion of corporate overpayments exceeding $10,000 will remain at 6.5 percent.

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis, the rate on underpayments is one percent higher than the rate on overpayments, and the rate for large corporate underpayments is two percent higher than the rate on underpayments. The interest paid on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the sum of the federal short-term rate plus 0.5 of a percentage point. The interest rates announced today are computed from the federal short-term rate based on daily compounding determined during January 1997.

Rev. Rul. 97-12, announcing the new rates of interest, is attached and will appear in Internal Revenue Bulletin No. 1997-11 dated March 17, 1997.

Part I Section 6621.-- Determination of Interest Rate 26 CFR 301.6621-1: Interest rate.


Rev. Rul. 97-12

Section 6621 of the Internal Revenue Code establishes different rates for interest on tax overpayments and interest on tax underpayments. Under 6621(a)(1), the overpayment rate is the sum of the federal short-term rate plus 2 percentage points, except the rate for the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the sum of the federal short-term rate plus 0.5 of a percentage point for interest computations made after December 31, 1994. Under 6621(a)(2), the underpayment rate is the sum of the federal short-term rate plus 3 percentage points.

Section 6621(c) provides that for purposes of interest payable under 6601 on any large corporate underpayment, the underpayment rate under 6621(a)(2) is determined by substituting "5 percentage points" for "3 percentage points." See 6621(c) and 301.6621-3 of the Regulations on Procedure and Administration for the definition of a large corporate underpayment and for the rules for determining the applicable rate. Section 6621(c) and 301.6621-3 are generally effective for periods after December 31, 1990.

Section 6621(b)(1) provides that the Secretary will determine the federal short-term rate for the first month in each calendar quarter.

Section 6621(b)(2)(A) provides that the federal short-term rate determined under 6621(b)(1) for any month applies during the first calendar quarter beginning after such month.

Section 6621(b)(2)(B) provides that in determining the addition to tax under 6654 for failure to pay individual estimated tax for any taxable year, the federal short-term rate that applies during the third month following such taxable year also applies during the first 15 days of the fourth month following such taxable year.

Section 6621(b)(3) provides that the federal short-term rate for any month is the federal short-term rate determined during such month by the Secretary in accordance with 1274(d), rounded to the nearest full percent (or, if a multiple of 1/2 of 1 percent, the rate is increased to the next highest full percent).

Notice 88-59, 1988-1 C.B. 546, announced that in determining the quarterly interest rates to be used for overpayments and underpayments of tax under 6621, the Internal Revenue Service will use the federal short-term rate based on daily compounding because that rate is most consistent with 6621 which, pursuant to 6622, is subject to daily compounding.

Rounded to the nearest full percent, the federal short-term rate based on daily compounding determined during the month of January 1997 is 6 percent. Accordingly, an overpayment rate of 8 percent and an underpayment rate of 9 percent are established for the calendar quarter beginning April 1, 1997. The overpayment rate for the portion of corporate overpayments exceeding $10,000 for the calendar quarter beginning April 1, 1997, is 6.5 percent. The underpayment rate for large corporate underpayments for the calendar quarter beginning April 1, 1997, is 11 percent. These rates apply to amounts bearing interest during that calendar quarter.

Under 6621(b)(2)(B), the 9 percent rate that applies to individual estimated tax underpayments for the first calendar quarter in 1997, as provided in Rev. Rul. 96-61, 1996-52 I.R.B. 24, also applies to such underpayments for the first 15 days in April 1997.

Interest factors for daily compound interest for annual rates of 6.5 percent, 8 percent, 9 percent, and 11 percent are published in Tables 18, 21, 23, and 27 of Rev. Proc. 95-17, 1995- 1 C.B. 556, 572, 575, 577, and 581.

Annual interest rates to be compounded daily pursuant to  6622 that apply for prior periods are set forth in the tables accompanying this revenue ruling.

DRAFTING INFORMATION

The principal author of this revenue ruling is Marcia Rachy of the Office of Assistant Chief Counsel (Income Tax and Accounting). For further information regarding this revenue ruling, contact Ms. Rachy on (202) 622-4940 (not a toll-free call).

                  TABLE OF INTEREST RATES
PERIODS BEFORE JUL. 1, 1975 - PERIODS ENDING DEC. 31, 1986
               OVERPAYMENTS AND UNDERPAYMENTS

                                DAILY RATE TABLE
PERIOD                        RATE    IN 1995-1 C.B.     
Before Jul. 1, 1975             6%   Table 2,  pg. 557
Jul. 1, 1975--Jan. 31, 1976     9%   Table 4,  pg. 559
Feb. 1, 1976--Jan. 31, 1978     7%   Table 3,  pg. 558
Feb. 1, 1978--Jan. 31, 1980     6%   Table 2,  pg. 557
Feb. 1, 1980--Jan. 31, 1982    12%   Table 5,  pg. 560
Feb. 1, 1982--Dec. 31, 1982    20%   Table 6,  pg. 560
Jan. 1, 1983--Jun. 30, 1983    16%   Table 37, pg. 591
Jul. 1, 1983--Dec. 31, 1983    11%   Table 27, pg. 581
Jan. 1, 1984--Jun. 30, 1984    11%   Table 75, pg. 629
Jul. 1, 1984--Dec. 31, 1984    11%   Table 75, pg. 629
Jan. 1, 1985--Jun. 30, 1985    13%   Table 31, pg. 585
Jul. 1, 1985--Dec. 31, 1985    11%   Table 27, pg. 581
Jan. 1, 1986--Jun. 30, 1986    10%   Table 25  pg. 579
Jul. 1, 1986--Dec. 31, 1986     9%   Table 23, pg. 577       


                      TABLE OF INTEREST RATES
                    FROM JAN. 1, 1987 - PRESENT     

                              OVERPAYMENTS  *  UNDERPAYMENTS
                             RATE TABLE PG  *  RATE TABLE PG
                              1995-1    C.B.   1995-1    C.B.
Jan. 1, 1987--Mar. 31, 1987   8%   21   575 *  9%   23   577
Apr. 1, 1987--Jun. 30, 1987   8%   21   575 *  9%   23   577
Jul. 1, 1987--Sep. 30, 1987   8%   21   575 *  9%   23   577
Oct. 1, 1987--Dec. 31, 1987   9%   23   577 * 10%   25   579
Jan. 1, 1988--Mar. 31, 1988  10%   73   627 * 11%   75   629
Apr. 1, 1988--Jun. 30, 1988   9%   71   625 * 10%   73   627
Jul. 1, 1988--Sep. 30, 1988   9%   71   625 * 10%   73   627
Oct. 1, 1988--Dec. 31, 1988  10%   73   627 * 11%   75   629
Jan. 1, 1989--Mar. 31, 1989  10%   25   579 * 11%   27   581
Apr. 1, 1989--Jun. 30, 1989  11%   27   581 * 12%   29   583
Jul. 1, 1989--Sep. 30, 1989  11%   27   581 * 12%   29   583
Oct. 1, 1989--Dec. 31, 1989  10%   25   579 * 11%   27   581
Jan. 1, 1990--Mar. 31, 1990  10%   25   579 * 11%   27   581
Apr. 1, 1990--Jun. 30, 1990  10%   25   579 * 11%   27   581
Jul. 1, 1990--Sep. 30, 1990  10%   25   579 * 11%   27   581
Oct. 1, 1990--Dec. 31, 1990  10%   25   579 * 11%   27   581
Jan. 1, 1991--Mar. 31, 1991  10%   25   579 * 11%   27   581
Apr. 1, 1991--Jun. 30, 1991   9%   23   577 * 10%   25   579
Jul. 1, 1991--Sep. 30, 1991   9%   23   577 * 10%   25   579
Oct. 1, 1991--Dec. 31, 1991   9%   23   577 * 10%   25   579
Jan. 1, 1992--Mar. 31, 1992   8%   69   623 *  9%   71   625
Apr. 1, 1992--Jun. 30, 1992   7%   67   621 *  8%   69   623
Jul. 1, 1992--Sep. 30, 1992   7%   67   621 *  8%   69   623
Oct. 1, 1992--Dec. 31, 1992   6%   65   619 *  7%   67   621
Jan. 1, 1993--Mar. 31, 1993   6%   17   571 *  7%   19   573
Apr. 1, 1993--Jun. 30, 1993   6%   17   571 *  7%   19   573
Jul. 1, 1993--Sep. 30, 1993   6%   17   571 *  7%   19   573
Oct. 1, 1993--Dec. 31, 1993   6%   17   571 *  7%   19   573
Jan. 1, 1994--Mar. 31, 1994   6%   17   571 *  7%   19   573
Apr. 1, 1994--Jun. 30, 1994   6%   17   571 *  7%   19   573
Jul. 1, 1994--Sep. 30, 1994   7%   19   573 *  8%   21   575
Oct. 1, 1994--Dec. 31, 1994   8%   21   575 *  9%   23   577
Jan. 1, 1995--Mar. 31, 1995   8%   21   575 *  9%   23   577
Apr. 1, 1995--Jun. 30, 1995   9%   23   577 * 10%   25   579
Jul. 1, 1995--Sep. 30, 1995   8%   21   575 *  9%   23   577
Oct. 1, 1995--Dec. 31, 1995   8%   21   575 *  9%   23   577
Jan. 1, 1996--Mar. 31, 1996   8%   69   623 *  9%   71   625
Apr. 1, 1996--Jun. 30, 1996   7%   67   621 *  8%   69   623
Jul. 1, 1996--Sep. 30, 1996   8%   69   623 *  9%   71   625
Oct. 1, 1996--Dec. 31, 1996   8%   69   623 *  9%   71   625
Jan. 1, 1997--Mar. 31, 1997   8%   21   575 *  9%   23   577
Apr. 1, 1997--Jun. 30, 1997   8%   21   575 *  9%   23   577   
              
              
                    TABLE OF INTEREST RATES FOR
                   LARGE CORPORATE UNDERPAYMENTS
                   FROM JANUARY 1, 1991 - PRESENT
                   
                                   RATE TABLE   PG
                                    1995-1    C.B.     
Jan. 1, 1991--Mar. 31, 1991        13%   31     585
Apr. 1, 1991--Jun. 30, 1991        12%   29     583
Jul. 1, 1991--Sep. 30, 1991        12%   29     583
Oct. 1, 1991--Dec. 31, 1991        12%   29     583
Jan. 1, 1992--Mar. 31, 1992        11%   75     629
Apr. 1, 1992--Jun. 30, 1992        10%   73     627
Jul. 1, 1992--Sep. 30, 1992        10%   73     627
Oct. 1, 1992--Dec. 31, 1992         9%   71     625
Jan. 1, 1993--Mar. 31, 1993         9%   23     577
Apr. 1, 1993--Jun. 30, 1993         9%   23     577
Jul. 1, 1993--Sep. 30, 1993         9%   23     577
Oct. 1, 1993--Dec. 31, 1993         9%   23     577
Jan. 1, 1994--Mar. 31, 1994         9%   23     577
Apr. 1, 1994--Jun. 30, 1994         9%   23     577
Jul. 1, 1994--Sep. 30, 1994        10%   25     579
Oct. 1, 1994--Dec. 31, 1994        11%   27     581
Jan. 1, 1995--Mar. 31, 1995        11%   27     581
Apr. 1, 1995--Jun. 30, 1995        12%   29     583
Jul. 1, 1995--Sep. 30, 1995        11%   27     581
Oct. 1, 1995--Dec. 31, 1995        11%   27     581
Jan. 1, 1996--Mar. 31, 1996        11%   75     629
Apr. 1, 1996--Jun. 30, 1996        10%   73     627
Jul. 1, 1996--Sep. 30, 1996        11%   75     629
Oct. 1, 1996--Dec. 31, 1996        11%   75     629
Jan. 1, 1997--Mar. 31, 1997        11%   27     581
Apr. 1, 1997--Jun. 30, 1997        11%   27     581  


               TABLE OF INTEREST RATES FOR CORPORATE
                  OVERPAYMENTS EXCEEDING $10,000
                  FROM JANUARY 1, 1995 - PRESENT

                                              RATE TABLE   PG
                                                1995-1  C.B.    
Jan. 1, 1995--Mar. 31, 1995                   6.5%  18     572
Apr. 1, 1995--Jun. 30, 1995                   7.5%  20     574
Jul. 1, 1995--Sep. 30, 1995                   6.5%  18     572
Oct. 1, 1995--Dec. 31, 1995                   6.5%  18     572
Jan. 1, 1996--Mar. 31, 1996                   6.5%  66     620
Apr. 1, 1996--Jun. 30, 1996                   5.5%  64     618
Jul. 1, 1996--Sep. 30, 1996                   6.5%  66     620
Oct. 1, 1996--Dec. 31, 1996                   6.5%  66     620
Jan. 1, 1997--Mar. 31, 1997                   6.5%  18     572
Apr. 1, 1997--Jun. 30, 1997                   6.5%  18     572  

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