Sept. 1, 2005
Interest Rates Rise 1 Percentage Point
in Fourth Quarter 2005
WASHINGTON  The Internal Revenue Service today announced there will be a onepercentagepoint increase in interest rates for the calendar quarter beginning Oct. 1, 2005. The interest rates are as follows:
• Seven (7) percent for overpayments [six (6) percent in the case of a corporation];
• Seven (7) percent for underpayments;
• Nine (9) percent for large corporate underpayments; and
• Four and onehalf (4.5) percent for the portion of a corporate overpayment exceeding $10,000.
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 shortterm rate plus 3 percentage points. Generally, in the case of a corporation, the underpayment rate is the federal shortterm rate plus 3 percentage points and the overpayment rate is the federal shortterm rate plus 2 percentage points. The rate for large corporate underpayments is the federal shortterm 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 shortterm rate plus onehalf (0.5) of a percentage point.
The interest rates announced today are computed from the federal shortterm rate based on daily compounding determined during July 2005.
Rev. Rul. 200562 announces the new rates of interest and will appear in Internal Revenue Bulletin No. 200538, dated Sept. 19, 2005.
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