Saturday, February 19, 2011

Interest Rates Increase for the Second Quarter of 2011

Over the weekend, the Internal Revenue Service announced that interest rates for new quarter would increase by one percentage point.

    The rates will be:

    • four (4) percent for overpayments (three (3) percent in the case of a corporation);
    • four (4) percent for underpayments;
    • six (6) percent for large corporate underpayments; and
    • one and one-half (1.5) 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. Additionally, the rate for determining the addition to tax for failure to pay estimated tax for the first 15 days in April 2011 is the 4 percent rate that applied to underpayments of tax during the first calendar quarter in 2011.

Read more here