IRS Interest Rates 2015 on over and underpayments – The IRS announced that interest rates will remain the same for the calendar quarter beginning July 1, 2015. The rates will be:
- 3% for overpayments or 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.
IRS Interest Rates are NOT an Annual Percentage Rate (APR)
So before you get too excited about these low-interest rates, realize that IRS interest rates are calculated per quarter. So a 5% interest rate for a large corporate underpayment is really a 20% APR.
Also, for underpayment of payroll tax deposits, that is an entirely different set of penalties and interest that may make loan sharks appears to be reasonable.
Remember IRS interest rates are QPR (quarterly percentage rates) not APR (annual percentage rates)
How the IRS sets its quarterly interest rates
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 April 2015 to take effect May 1, 2015, based on daily compounding. Revenue Ruling 2015-12 announcing the rates of interest is attached and will appear in Internal Revenue Bulletin 2015-26, dated June 29, 2015.
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