Interest rates remain the same for fourth quarter 2014

The IRS has announced that interest rates for the calendar quarter beginning October 1, 2014, will remain the same. The interest rates will be 3% for overpayments (2% in the case of a corporation) and underpayments, 5% for large corporate underpayments and 0.5% for the portion of a corporate overpayment exceeding $10,000. The interest rates are computed by using the federal short-term rate based on daily compounding determined during July 2014. The rate of interest is determined on a quarterly basis. (IRS News Release IR-2014-86, September 3, 2014; Rev. Rul. 2014-23.)

The states of Alabama and South Carolina follow the federal underpayment rate. Pennsylvania follows the federal rate in effect as of January 1 of the calendar year, without regard to quarterly changes. Illinois follows the federal underpayment rate as of January 1 and July 1 of the calendar year. Additionally, Virginia’s interest rate on tax underpayments is the federal interest rate plus 2%, while Arizona’s is the federal short-term rate plus three percentage points.
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