December 9 2019

IRS releases interest rates on tax overpayments and underpayments: Q1/2020

Source: IBFD Tax Research Platform News

On 6 December 2019, the US Internal Revenue Service (IRS) issued Revenue Ruling 2019-28 with the announcement of the interest rates on tax overpayments (i.e. tax refunds) and tax underpayments (i.e. tax assessments and late tax payments) for the calendar quarter beginning 1 January 2020. The IRS also issued an accompanying News Release (IR-2019-201) dated 6 December 2019.

The interest rates, which apply to amounts bearing interest during that calendar quarter, are as follows:

  • 5% for non-corporate overpayments;
  • 4% for corporate overpayments up to USD 10,000;
  • 2.5% for corporate overpayments to the extent in excess of USD 10,000;
  • 5% for non-corporate and corporate (other than large corporate) underpayments; and
  • 7% for large corporate underpayments (i.e. underpayments in excess of USD 100,000).

Revenue Ruling 2019-28 also includes:

  • interest factors for daily compound interest for an annual rate of 0.5% (Appendix A); and
  • tables including overpayment and underpayment interest rates for prior periods.

The interest rates on overpayments and underpayments for the first quarter of 2020 remain the same as the rates announced for the fourth quarter of 2019.

Revenue Ruling 2019-28 will appear in the IRS Internal Revenue Bulletin (IRB) as part of IRB 2019-52, dated 23 December 2019.