The US Internal Revenue Service (IRS) issued Revenue Ruling 2019–27 to announce the annual interest rate to be used to calculate the interest charge for deferred income of US domestic international sales corporations (DISCs). Revenue Ruling 2019–27 was included in the IRS Internal Revenue Bulletin (IRB 2019-51) dated 16 December 2019.
The rate is prescribed pursuant to section 995(f) of the US Internal Revenue Code (IRC), which requires that shareholders of a DISC must pay an annual interest charge on the tax liability associated with DISC income that is deferred from taxation under the IRC, i.e. the income of the DISC that is not currently taxed to the shareholders.
The calculation under IRC section 995(f) is made by multiplying the shareholder's DISC-related deferred tax liability for the year by the applicable base period T-bill rate (i.e. the average of the 1-year US Treasury bill yields for the base period).
Revenue Ruling 2019-27 provides that the base period T-bill rate for the 1-year period ending 30 September 2019 is 2.32%. The rate is required to be compounded daily. A table with the daily compounding factors is included in the ruling.