The Internal Revenue Service announced yesterday that interest rates will remain the same for the calendar quarter beginning July 1, 2016.  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
• 1 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.

The interest rates announced today are computed from the federal short-term rate determined during April 2016 to take effect May 1, 2016, based on daily compounding.

Revenue Ruling 2016-12

Revenue Ruling 2016-12 provides the rates for interest on tax overpayments and underpayments for the third calendar quarter beginning July 1, 2016.  The interest rates will be 4 percent for overpayments (3 percent in the case of a corporation), 4 percent for underpayments, 1 and one-half percent for the portion of a corporate overpayment exceeding 10,000, and 6 percent for large corporate underpayments.  This quarterly determination is required by section 6621 of the Internal Revenue Code.

Revenue Ruling 2016-12 will be published in Internal Revenue Bulletin 2016-26 on June 27, 2016.