September 2005 News Update

Interest Rates Rise 1 Percentage Point for Fourth Quarter 2005
WASHINGTON — The Internal Revenue Service today announced there will be a one-percentage-point increase in interest rates for the calendar quarter beginning Oct. 1, 2005. The interest rates are as follows:
·          Seven (7) percent for overpayments [six (6) percent in the case of a corporation];
·          Seven (7) percent for underpayments;
·          Nine (9) percent for large corporate underpayments; and
·          Four and one-half (4.5) 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 based on daily compounding determined during July 2005.