Interest rates remain the same for the fourth quarter 2021

Written on Aug 30, 2021

The IRS says interest rates will remain the same for the calendar quarter beginning Oct. 1, 2021. The rates will be:

  • 3% for overpayments (2% in the case of a corporation)

  • 0.5 % for the portion of a corporate overpayment exceeding $10,000

  • 3% for underpayments

  • 5% for large corporate underpayments

Under the Internal Revenue Code, the rate of interest is determined quarterly. 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 of a percentage point.

The interest rates announced are computed from the federal short-term rate determined during July 2021 to take effect Aug. 1, 2021, based on daily compounding.

Revenue Ruling 2021-17, announcing the rates of interest, will appear Sept. 13 in Internal Revenue Bulletin 2021-37.