IRS won’t raise interest rates in 2021 third quarter

Your Guide to State, Local, Federal, Estate + International Taxation

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