The IRS announced that interest rates will decrease for the fourth quarter of 2011.

The Internal Revenue Service today announced that interest rates will decrease for the calendar quarter beginning Oct. 1, 2011. The rates will be:

• three (3) percent for overpayments [two (2) percent in the case of a corporation];
  
• three (3) percent for underpayments;
  
• five (5) percent for large corporate underpayments; and
  
• zero and one-half (0.5) 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 during July 2011 to take effect Aug. 1, 2011, based on daily compounding.

How does this change effect you or your business? Call us now for a free consultation!

Robert A. Branting, Sr., EA

Security Tax Services LLC

North Sound                                       South Sound

2802 Wetmore Ave, Suite 212           33530 1st Way S, Suite 102

Everett, WA 98201                             Federal Way, WA 98003

425.339.2400                                     253.237.0751

fax 425.259.1099                               fax 253.237.0701

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