September 11, 2020
WASHINGTON — The Internal Revenue Service
announced on September 3 that interest rates will remain the same for the calendar quarter beginning October 1, 2020. The rates will be:
- 3% for overpayments (2% in the case of a corporation);
- 0.5% for the portion of a corporate overpayment exceeding $10,000;
- 3% percent for underpayments; and
- 5% percent for large corporate underpayments.
- 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 three percentage points and the overpayment rate is the federal short-term rate plus two percentage points. The rate for large corporate underpayments is the federal short-term rate plus five 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 are computed from the federal short-term rate determined during July 2020 to take effect August 1, 2020, based on daily compounding.
Revenue Ruling 2020-18 announcing the rates of interest will appear in Internal Revenue Bulletin 2020-39, dated September 21, 2020.
Stay safe,
David Gibbs, CPA, CCIFP, MBA
Partner
McCarthy & Company
Source: IRS Press Release. September 3, 2020.
Disclaimer: This alert is for informational purposes only and does not constitute professional advice. Information contained in this communication is not intended or written to be used as tax advice, and cannot be used by the recipient to avoid penalties that may be imposed under the Internal Revenue Code. We strongly advise you to seek professional assistance with respect to your specific issue(s).
