IRS News Release  
September 12, 1997

IRS Announces Quarterly Interest Rates

WASHINGTON - The Internal Revenue Service today announced that interest rates for the calendar quarter beginning October 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 July 1997.

Rev. Rul. 97-40, announcing the new rates of interest, is attached and will appear in Internal Revenue Bulletin No. 1997-39 dated September 29, 1997.

Part .

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


Rev. Rul. 97-40

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)(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 July 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 October 1, 1997. The overpayment rate for the portion of corporate overpayments exceeding $10,000 for the calendar quarter beginning October 1, 1997, is 6.5 percent. The underpayment rate for large corporate underpayments for the calendar quarter beginning October 1, 1997, is 11 percent. These rates apply to amounts bearing interest during that calendar quarter.

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 accompanying tables. DRAFTING INFORMATIO.

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
Jul. 1, 1997--Sep. 30, 1997  8%   21  575   9%   23  577
Oct. 1, 1997--Dec. 31, 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
Jul. 1, 1997--Sep. 30, 1997      11%   27     581
Oct. 1, 1997--Dec. 31, 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
Jul. 1, 1997--Sep. 30, 1997     6.5%  18     572
Oct. 1, 1997--Dec. 31, 1997     6.5%  18     572

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