The IRS has announced that interest rates for the calendar quarter beginning July 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 April 2014. The rate of interest is determined on a quarterly basis. (IRS News Release IR-2014-70, June 2, 2014; Rev. Rul, 2014-14.)
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.
For more information on this and other topics, consult the Visit our News Library.