March 2 2020

IRS releases interest rates on tax overpayments and underpayments: Q2/2020

Source: IBFD Tax Research Platform News

On 28 February 2020, the US Internal Revenue Service (IRS) issued Revenue Ruling 2020-7 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 April 2020. The IRS also issued an accompanying News Release (IR-2020-46) dated 28 February 2020.

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 2020-7 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 second quarter of 2020 remain the same as the rates announced for the first quarter of 2020.

Revenue Ruling 2020-7 will appear in the IRS Internal Revenue Bulletin (IRB) as part of IRB Bulletin 2020-12, dated 16 March 2020.