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IRS won’t raise interest rates in 2021 third quarter

The Internal Revenue Service has announced interest rates will not change for the quarter beginning on July 1, 2021. The interest rates are determined on a quarterly basis, as per the Internal Revenue Code.

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For most taxpayers who are not corporations, the overpayment and underpayment rate is the federal short-term rate plus three percentage points. Corporation interest rates remain at the federal short-term rate plus three percentage points for underpayments and the federal short-term rate plus two percentage points. For large corporate underpayments, the interest rate is the federal short-term rate plus five percentage points. Finally, the rate for corporate overpayments exceeding $10,000 for a taxable period is the federal short-term rate plus half (0.5) of a percentage point.

Q3 Interest Rates:

  • 3% for overpayments (2% for corporations)
  • 5% for the portion of a corporate overpayment exceeding $10,000
  • 3% for underpayments
  • 5% for large corporate underpayments

The 3% interest rate for overpayments and underpayments remains the same for the 5th quarter in a row, dating back to July 1, 2020. The ruling announcing the rates of interest will appear in Internal Revenue Bulletin 2021-20, dated June 21, 2021.

If you have any questions, please contact your Henry+Horne advisor.

Sam Aleman