IRS Announces Quarterly Interest Rates

WASHINGTON - The Internal Revenue Service today announced that interest rates for the calendar quarter beginning April 1, 2000, will rise to nine (9) percent for overpayments (eight (8) percent in the case of a corporation), nine (9) percent for underpayments, and eleven (11) percent for large corporate underpayments. The overpayment rate for the portion of a corporate overpayment exceeding $10,000 will be six and one-half (6.5) percent. In each case, these rates are one percentage point greater than they were in the first calendar quarter for 2000.

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. 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.

The interest rates announced today are computed from the federal short-term rate based on daily compounding determined during January 2000. Rev. Rul. 2000-16, announcing the new rates of interest, is attached and will appear in Internal Revenue Bulletin No. 2000-12, dated March 20, 2000.

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

Section 6621 of the Internal Revenue Code establishes the rates for interest on tax overpayments and tax underpayments. Under § 6621(a)(1), the overpayment rate beginning April 1, 2000, is the sum of the federal short-term rate plus 3 percentage points (2 percentage points in the case of a corporation), 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 date. 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 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).

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 2000 is 6 percent. Accordingly, an overpayment rate of 9 percent (8 percent in the case of a corporation) and an underpayment rate of 9 percent are established for the calendar quarter beginning April 1, 2000. The overpayment rate for the portion of a corporate overpayment exceeding $10,000 for the calendar quarter beginning April 1, 2000, is 6.5 percent. The underpayment rate for large corporate underpayments for the calendar quarter beginning April 1, 2000, is 11 percent. These rates apply to amounts bearing interest during that calendar quarter.

Under § 6621(b)(2)(B), the 8 percent rate that applies to estimated tax underpayments for the first calendar quarter in 2000, as provided in Rev. Rul. 99-53, 1999-50 I.R.B. 657, also applies to such underpayments for the first 15 days in April 2000.

Interest factors for daily compound interest for annual rates of 6.5 percent, 8 percent, 9 percent, and 11 percent are published in Tables 66, 69, 71, and 75 of Rev. Proc. 95-17, 1995-1 C.B. 556, 620, 623, 625, and 629. 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.

The principal author of this revenue ruling is Raymond Bailey of the Office of Assistant Chief Counsel (Income Tax and Accounting). For further information regarding this revenue ruling, contact Mr. Bailey on (202) 622-6226 (not a toll-free call).

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

                In 1995-1 C.B.
              PERIOD         RATE  TABLE
        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 - Dec. 31, 1998

  OVERPAYMENTS  UNDERPAYMENTS
  1995-1 C.B.   1995-1 C.B.
                            RATE TABLE PG  RATE TABLE PG
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
Jan. 1, 1998--Mar. 31, 1998  8%   21   575  9%   23   577
Apr. 1, 1998--Jun. 30, 1998  7%   19   573  8%   21   575
Jul. 1, 1998--Sep. 30, 1998  7%   19   573  8%   21   575
Oct. 1, 1998--Dec. 31, 1998  7%   19   573  8%   21   575


TABLE OF INTEREST RATES
NONCORPORATE OVERPAYMENTS AND UNDERPAYMENTS
FROM JANUARY 1, 1999 - PRESENT

                                1995-1 C.B.
                             RATE TABLE PAGE
Jan. 1, 1999--Mar. 31, 1999  7%   19    573
Apr. 1, 1999--Jun. 30, 1999  8%   21    575
Jul. 1, 1999--Sep. 30, 1999  8%   21    575
Oct. 1, 1999--Dec. 31, 1999  8%   21    575
Jan. 1, 2000--Mar. 31, 2000  8%   69    623
Apr. 1, 2000--Jun. 30, 2000  9%   71    625


TABLE OF INTEREST RATES
CORPORATE OVERPAYMENTS AND UNDERPAYMENTS
FROM JANUARY 1, 1999 - PRESENT


                             OVERPAYMENTS    UNDERPAYMENTS
                             1995-1 C.B.     1995-1 C.B.
                             RATETABLEPG     RATETABLEPG
Jan. 1, 1999--Mar. 31, 1999  6%   17   571   7%   19   573
Apr. 1, 1999--Jun. 30, 1999  7%   19   573   8%   21   575
Jul. 1, 1999--Sep. 30, 1999  7%   19   573   8%   21   575
Oct. 1, 1999--Dec. 31, 1999  7%   19   573   8%   21   575
Jan. 1, 2000--Mar. 31, 2000  7%   67   621   8%   69   623
Apr. 1, 2000--Jun. 30, 2000  8%   69   623   9%   71   625

TABLE OF INTEREST RATES FOR
LARGE CORPORATE UNDERPAYMENTS
FROM JANUARY 1, 1991 - PRESENT

  1995-1 C.B.
                             RATE TABLE PG
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
Jan. 1, 1998--Mar. 31, 1998  11%  27    581
Apr. 1, 1998--Jun. 30, 1998  10%  25    579
Jul. 1, 1998--Sep. 30, 1998  10%  25    579
Oct. 1, 1998--Dec. 31, 1998  10%  25    579
Jan. 1, 1999--Mar. 31, 1999  9%   23    577
Apr. 1, 1999--Jun. 30, 1999  10%  25    579
Jul. 1, 1999--Sep. 30, 1999  10%  25    579
Oct. 1, 1999--Dec. 31, 1999  10%  25    579
Jan. 1, 2000--Mar. 31, 2000  10%  73    627
Apr. 1, 2000--Jun. 30, 2000  11%  75    629

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

  1995-1 C.B.
                             RATE  TABLE PG
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
Jan. 1, 1998--Mar. 31, 1998  6.5%  18    572
Apr. 1, 1998--Jun. 30, 1998  5.5%  16    570
Jul. 1. 1998--Sep. 30, 1998  5.5%  16    570
Oct. 1, 1998--Dec. 31, 1998  5.5%  16    570
Jan. 1, 1999--Mar. 31, 1999  4.5%  14    568
Apr. 1, 1999--Jun. 30, 1999  5.5%  16    570
Jul. 1, 1999--Sep. 30, 1999  5.5%  16    570
Oct. 1, 1999--Dec. 31, 1999  5.5%  16    570
Jan. 1, 2000--Mar. 31, 2000  5.5%  64    618
Apr. 1, 2000--Jun. 30, 2000  6.5%  66    620