On 7 September 2018, the US Internal Revenue Service (IRS) issued Revenue Ruling 2018-25 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 October 2018. The IRS also issued an accompanying News Release (IR-2018-181) dated 7 September 2018.
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 2018-25 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 fourth quarter of 2018 are unchanged from the rates announced for the third quarter of 2018.