The Internal Revenue Service in early December announced that interest rates will remain the same for the calendar quarter beginning January 1, 2021.
The rates will be:
■ 3 percent for overpayments 2 percent in the case of a corporation;
■ 0.5 percent for the portion of a corporate overpayment exceeding $10,000;
■ 3 percent for underpayments;
■ and 5 percent for large corporate underpayments.
The rate of interest is determined on a quarterly basis under the IRS codes. The overpayment and underpayment rate is the federal short-term rate plus 3 percentage points for taxpayers that are not corporations.
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 determined during October 2020 to take effect Nov. 1, 2020, based on daily compounding.