No Change in Interest Rates Rise
for the Fourth Quarter of 2006

WASHINGTON - The Internal Revenue Service today announced there will be no change in the interest rates for the calendar quarter beginning October 1, 2006. The interest rates are as follows:

• eight (8) percent for overpayments [seven (7) percent in the case of a corporation];
  • eight (8) percent for underpayments;
  • ten (10) percent for large corporate underpayments; and
• five and one-half (5.5) 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 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 July 2006.

Rev. Rul. 2006-49, below, announcing the new rates of interest, will also appear in Internal Revenue Bulletin No. 2006-40, dated October 2, 2006.

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