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December 10, 1996
IRS Announces Quarterly Interest Rates
WASHINGTON - The Internal Revenue Service today announced that interest rates for the calendar quarter beginning January 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 October
1996.
Rev. Rul. 96-61, announcing the new rates of interest, is
attached and will appear in Internal Revenue Bulletin No. 1996-52,
dated December 23, 1996.
Part I
Section 6621.-- Determination of Interest Rate
26 CFR 301.6621-1: Interest rate
Rev. Rul. 96-61
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 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
October 1996 is 6 percent. Accordingly, an overpayment rate of 8
percent and an underpayment rate of 9 percent are established for
the calendar quarter beginning January 1, 1997. The overpayment rate
for the portion of corporate overpayments exceeding $10,000 for the
calendar quarter beginning January 1, 1997, is 6.5 percent. The
underpayment rate for large corporate underpayments for the calendar
quarter beginning January 1, 1997, is 11 percent. These rates apply
to amounts bearing interest during that calendar quarter.
The 9 percent rate also applies to estimated tax
underpayments for the first calendar quarter in 1997 and 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) 622-6232 (not a toll-free call).
TABLE OF INTEREST RATES
PERIODS BEFORE JUL. 1, 1975 - PERIODS ENDING DEC. 31, 1986
OVERPAYMENTS AND UNDERPAYMENTS
PERIOD DAILY RATE TABLE
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
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
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
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