Resources

Thomson Reuters Tax & Accounting News

Featuring content from Checkpoint

Back to Thomson Reuters Tax & Accounting News

Subscribe below to the Checkpoint Daily Newsstand Email Newsletter

IRS correction; overpayment and underpayment rates increase 1% for second quarter, 2016

Rev Rul 2016-6, 2016-13 IRB; IR 2016-41

IRS has announced that the interest rates for tax overpayments and underpayments will increase by one percentage point for the second quarter of 2016.

RIA observation: Earlier this week, IRS issued versions of the above Revenue Ruling and Information Release that provided that rates had not changed for the second quarter of 2016. It has now corrected those earlier documents..
RIA observation: The interest rates for tax overpayments and underpayments had remained constant for eighteen quarters in a row (i.e., beginning Oct. 1, 2011 and ending on Mar. 31, 2016).

For noncorporate taxpayers, the rate for both underpayments and overpayments for the second quarter of 2016 will be 4%. The 4% rate also applies to estimated tax underpayments for the second quarter in 2016.

For corporations, the overpayment rate for the second quarter of 2016 will be 3%. Corporations will receive 1.5% for overpayments exceeding $10,000. The underpayment rate for the second quarter of 2016 for corporations will be 4%, but will be 6% for large corporate underpayments.

Under Code Sec. 6621(b)(2)(B), the 3% rate that applies to estimated tax underpayments for the first calendar quarter in 2016, as provided in Rev Rul 2015-23, 2015-52 IRB, also applies to such underpayments for the first 15 days in April 2016.

Interest factors for daily compound interest for annual rates of 1.5%, 3%, 4% and 6% are published in Tables 56, 59, 61, and 65 of Rev Proc 95-17, 1995-1 CB 556.

References: For interest on tax overpayments, see FTC 2d/FIN ¶  T-8002; United States Tax Reporter ¶  66,214; TaxDesk ¶  807,001; TG ¶  70901. For interest on tax underpayments, see FTC 2d/FIN ¶  V-1101; United States Tax Reporter ¶  66,214; TaxDesk ¶  851,001; TG ¶  71566.

Tagged with →