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Individual Tax

Overpayment and underpayment rates remain the same for fourth quarter, 2019

Thomson Reuters Tax & Accounting  

Thomson Reuters Tax & Accounting  

Rev Rul 2019-21, 2019-38 IRBIR 2019-146, 8/28/2019

IRS has announced that the interest rates for tax overpayments and underpayments for the calendar quarter beginning Oct. 1, 2019 will be the same as for the third quarter of 2019.

For noncorporate taxpayers, the rate for both underpayments and overpayments for the fourth quarter of 2019 will be 5%.

The 5% rate also applies to estimated tax underpayments for the fourth calendar quarter beginning Oct. 1, 2019. Pursuant to Code Sec. 6621(b)(2)(B), in determining the addition to tax under Code Sec. 6654 for any tax year for an individual, the federal short-term rate that applies during the third month following the tax year also applies during the first 15 days of the fourth month following the tax year.

The rate of interest on Code Sec. 6603 deposits is 2% for the fourth quarter of 2019.

For corporations, the overpayment rate for the third quarter of 2019 will be 4%. Corporations will receive 2.5% for overpayments exceeding $10,000. The underpayment rate for corporations will be 5% but will be 7% for large corporate underpayments.

Interest factors for daily compound interest for annual rates of 2.5%, 4%, 5% and 7% are published in Tables 10, 13, 15 and 19 of Rev Proc 95-17, 1995-1 CB 556.

References: For interest on tax overpayments, see FTC 2d/FIN ¶T-8002United States Tax Reporter ¶66,214. For interest on tax underpayments, see FTC 2d/FIN ¶V-1101United States Tax Reporter ¶66,214.

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