IRS News Release  
September 04, 1996

IRS Announces Quarterly Interest Rates

WASHINGTON - The Internal Revenue Service today announced that interest rates for the calendar quarter beginning October 1, 1996, 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 1996.

Rev. Rul. 96-44, announcing the new rates of interest, is attached and will appear in Internal Revenue Bulletin No. 1996-38 dated September 16, 1996.

Part I

Section 6621.-- Determination of Interest Rate

26 CFR 301.6621-1: Interest rate.

Rev. Rul. 96-44

Section 6621 of the Internal Revenue Code establishes different rates for interest on tax overpayments and interest on tax underpayments. Under Section 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 Section 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 Section 6601 on any large corporate underpayment, the underpayment rate under Section 6621(a)(2) is determined by substituting "5 percentage points" for "3 percentage points." See Section 6621(c) and Section 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 Section 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 Section 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 Section 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 Section 6621, the Internal Revenue Service will use the federal short-term rate based on daily compounding because that rate is most consistent with Section 6621 which, pursuant to Section 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 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 October 1, 1996. The overpayment rate for the portion of corporate overpayments exceeding $10,000 for the calendar quarter beginning October 1, 1996, is 6.5 percent. The underpayment rate for large corporate underpayments for the calendar quarter beginning October 1, 1996, 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 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 Section 6622 that apply for prior periods are set forth in the accompanying tables.

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) 622-4940 (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



                     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

                                             
         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

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