IRS News Release  
June 08, 1998

IRS Announces Quarterly Interest Rates

WASHINGTON - The Internal Revenue Service today announced that interest rates for the calendar quarter beginning July 1, 1998, will be seven (7) percent for overpayments, eight (8) percent for underpayments, and ten (10) percent for large corporate underpayments. The overpayment rate for the portion of a corporate overpayment exceeding $10,000 will be five and onehalf (5.5) percent.

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis, the rate on underpayments is one (1) percent higher than the rate on overpayments, and the rate for large corporate underpayments is two (2) percent higher than the rate on underpayments. The interest paid on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the sum of the federal short-term rate plus one-half (0.5) of a percentage point. The interest rates announced today are computed from the federal short-term rate based on daily compounding determined during April 1998.

Rev. Rul. 98-32, announcing the new rates of interest, is attached and will appear in Internal Revenue Bulletin No. 1998-25, dated June 22, 1998.

Part III Section 6621.-- Determination of Interest Rate 26 CFR 301.6621-1: Interest rate.


Rev. Rul. 98-32

Section 6621 of the Internal Revenue Code establishes different rates for interest on tax overpayments and interest on tax underpayments. Under Section 6621(a)(1), the overpayment rate is the sum of the federal short-term rate plus 2 percentage points, except the rate for the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the sum of the federal short-term rate plus 0.5 of a percentage point for interest computations made after December 31, 1994. Under Section 6621(a)(2), the underpayment rate is the sum of the federal short-term rate plus 3 percentage points.

Section 6621(c) provides that for purposes of interest payable under Section 6601 on any large corporate underpayment, the underpayment rate under Section 6621(a)(2) is determined by substituting "5 percentage points" for 113 percentage points." See Section 6621(c) and Section 301.6621-3 of the Regulations on Procedure and Administration for the definition of a large corporate underpayment and for the rules for determining the applicable date. Section 6621(c) and Section 301.6621-3 are generally effective for periods after December 31, 1990.

Section 6621(b)(1) provides that the Secretary will determine the federal short- term rate for the first month in each calendar quarter.

Section 6621(b)(2)(A) provides that the federal short-term rate determined under Section 6621(b)(1) for any month applies during the first calendar quarter beginning after such month.

Section 6621(b)(3) provides that the federal short-term rate for any month is the federal short-term rate determined during such month by the Secretary in accordance with Section 1274(d), rounded to the nearest full percent (or, if a multiple of 1/2 of 1 percent, the rate is increased to the next highest full percent).

Notice 88-59, 1988-1 C.B. 546, announced that, in determining the quarterly interest rates to be used for overpayments and underpayments of tax under Section 6621, the Internal Revenue Service will use the federal short-term rate based on daily compounding because that rate is most consistent with Section 6621 which, pursuant to Section 6622, is subject to daily compounding.

Rounded to the nearest full percent, the federal shortterm rate based on daily compounding determined during the month of April 1998 is 5 percent. Accordingly, an overpayment rate of 7 percent and an underpayment rate of 8 percent are established for the calendar quarter beginning July 1, 1998. The overpayment rate for the portion of a corporate overpayment exceeding $10,000 for the calendar quarter beginning July 1, 1998, is 5.5 percent. The underpayment rate for large corporate underpayments for the calendar quarter beginning July 1, 1998, is 10 percent. These rates apply to amounts bearing interest during that calendar quarter.

Interest factors for daily compound interest for annual rates of 5.5 percent, 7 percent, 8 percent, and 10 percent are published in Tables 16, 19, 21, and 25 of Rev. Proc. 95-17, 1995-1 C.B. 556, 570, 573, 575, and 579. Annual interest rates to be compounded daily pursuant to Section 6622 that apply for prior periods are set forth in the tables accompanying this revenue ruling.

Drafting Information

The principal author of this revenue ruling is Raymond Bailey of the office of Assistant Chief Counsel (Income Tax andAccounting). For further information regarding this revenue ruling, contact Mr. Bailey on (202) 622-6226 (not a toll-free call).


                 TABLE OF INTEREST RATES
PERIODS BEFORE JUL. 1, 1975 - PERIODS ENDING DEC. 31, 1986
              OVERPAYMENTS AND UNDERPAYMENTS

                               DAILY RATE TABLE
PERIOD                       RATE    IN 1995-1 C.B.
Before Jul. 1, 1975            6%   Table   2,   pg. 557
Jul. 1, 1975--Jan. 31, 1976    9%   Table   4,   pg. 559
Feb. 1, 1976--Jan. 31, 1978    7%   Table   3,   pg. 558
Feb. 1, 1978--Jan. 31, 1980    6%   Table   2,   pg. 557
Feb. 1, 1980--Jan. 31, 1982    2%   Table   5,   pg. 560
Feb. 1, 1982--Dec. 31, 1982   20%   Table   6,   pg. 560
Jan. 1, 1983--Jun. 30, 1983   16%   Table   37,  pg. 591
Jul. 1, 1983--Dec. 31, 1983   11%   Table   27,  pg. 581
Jan. 1, 1984--Jun. 30, 1984   11%   Table   75,  pg. 629
Jul. 1, 1984--Dec. 31, 1984   11%   Table   75,  pg. 629
Jan. 1, 1985--Jun. 30, 1985   13%   Table   31,  pg. 585
Jul. 1, 1985--Dec. 31, 1985   11%   Table   27,  pg. 581
Jan. 1, 1986--Jun. 30, 1986   10%   Table   25   pg. 579
Jul. 1, 1986--Dec. 31, 1986    9%   Table   23,  pg. 577



                TABLE OF INTEREST RATES
              FROM JAN. 1, 1987 - PRESENT

                             OVERPAYMENTS    UNDERPAYMETNS
                             RATE TABLE PG   RATE TABLE PG
                              1995-1 C.B.     1995-1 C.B.

Jan. 1, 1987--Mar. 31, 1987  8%  21  575    9%   23   577
Apr. 1, 1987--Jun. 30, 1987  8%  21  575    9%   23   577
Jul. 1, 1987--Sep. 30, 1987  8%  21  575    9%   23   577
Oct. 1, 1987--Dec. 31, 1987  9%  23  577   10%   25   579
Jan. 1, 1988--Mar. 31, 1988  10% 73  627   11%   75   629
Apr. 1, 1988--Jun. 30, 1988  9%  71  625   10%   73   627
Jul. 1, 1988--Sep. 30, 1988  9%  71  625   10%   73   627
Oct. 1, 1988--Dec. 31, 1988  10% 73  627   11%   75   529
Jan. 1, 1989--Mar. 31, 1989  10% 25  579   11%   27   581
Apr. 1, 1989--Jun. 30, 1989  11% 27  581   12%   29   583
Jul. 1, 1989--Sep. 30, 1989  11% 27  581   12%   29   583
Oct. 1, 1989--Dec. 31, 1989  10% 25  579   11%   27   581
Jan. 1, 1990--Mar. 31, 1990  10% 25  579   11%   27   581
Apr. 1, 1990--Jun. 30, 1990  10% 25  579   11%   27   581
Jul. 1, 1990--Sep. 30, 1990  10% 25  579   11%   27   581
Oct. 1, 1990--Dec. 31, 1990  10% 25  579   11%   27   581
Jan. 1, 1991--Mar. 31, 1991  10% 25  579   11%   27   581
Apr. 1, 1991--Jun. 30, 1991  9%  23  577   10%   25   581
Jul. 1, 1991--Sep. 30, 1991  9%  23  577   10%   25   579
Oct. 1, 1991--Dec. 31, 1991  9%  23  577   10%   25   579
Jan. 1, 1992--Mar. 31, 1992  8%  69  623    9%   71   679
Apr. 1, 1992--Jun. 30, 1992  7%  67  621    8%   69   623
Jul. 1, 1992--Sep. 30, 1992  7%  67  621    8%   69   623
Oct. 1, 1992--Dec. 31, 1992  6%  65  619    7%   67   621
Jan. 1, 1993--Mar. 31, 1993  6%  17  571    7%   19   573
Apr. 1, 1993--Jun. 30, 1993  6%  17  571    7%   19   573
Jul. 1, 1993--Sep. 30, 1993  6%  17  571    7%   19   573
Oct. 1, 1993--Dec. 31, 1993  6%  17  571    7%   19   573
Jan. 1, 1994--Mar. 31, 1994  6%  17  571    7%   19   573
Apr. 1, 1994--Jun. 30, 1994  6%  17  571    7%   19   573
Jul. 1, 1994--Sep. 30, 1994  7%  19  573    8%   21   573
Oct. 1, 1994--Dec. 31, 1994  8%  21  575    9%   23   575
Jan. 1, 1995--Mar. 31, 1995  8%  21  575    9%   23   577
Apr. 1, 1995--Jun. 30, 1995  9%  23  577   10%   23   579
Jul. 1, 1995--Sep. 30, 1995  8%  21  575    9%   25   577
Oct. 1, 1995--Dec. 31, 1995  8%  21  575    9%   23   577
Jan. 1, 1996--Mar. 31, 1996  8%  69  623    9%   23   525
Apr. 1, 1996--Jun. 30, 1996  7%  67  621    8%   71   623
Jul. 1, 1996--Sep. 30, 1996  8%  69  623    9%   69   625
Oct. 1, 1996--Dec. 31, 1996  8%  69  623    9%   71   625
Jan. 1, 1997--Mar. 31, 1997  8%  21  575    9%   23   577
Apr. 1, 1997--Jun. 30, 1997  8%  21  575    9%   23   577
Jul. 1, 1997--Sep. 30, 1997  8%  21  575    9%   23   577
Oct. 1, 1997--Dec. 31, 1997  8%  21  575    9%   23   577
Jan. 1, 1998--Mar. 31, 1998  8%  21  575    9%   23   577



              TABLE OF INTEREST RATES FOR
             LARGE CORPORATE UNDERPAYMENTS
             FROM JANUARY 1, 1991 - PRESENT

                              RATE TABLE PG
                               1995-1 C.B.
Jan. 1, 1991--Mar. 31, 1991   13%   31   585
Apr. 1, 1991--Jun. 30, 1991   12%   29   583
Jul. 1, 1991--Sep. 30, 1991   12%   29   583
Oct. 1, 1991--Dec. 31, 1991   12%   25   583
Jan. 1, 1992--Mar. 31, 1992   11%   74   629
Apr. 1, 1992--Jun. 30, 1992   10%   74   627
Jul. 1, 1992--Sep. 30, 1992    9%   71   627
Oct. 1, 1992--Dec. 31, 1992    9%   73   652
Jan. 1, 1993--Mar. 31, 1993    9%   23   577
Apr. 1, 1993--Jun. 30, 1993    9%   23   577
Jul. 1, 1993--Sep. 30, 1993    9%   23   577
Oct. 1, 1993--Dec. 31, 1993    9%   23   577
Jan. 1, 1994--Mar. 31, 1994    9%   23   577
Apr. 1, 1994--Jun. 30, 1994   10%   25   577
Jul. 1, 1994--Sep. 30, 1994   11%   27   577
Oct. 1, 1994--Dec. 31, 1994   11%   27   579
Jan. 1, 1995--Mar. 31, 1995   12%   29   581
Apr. 1, 1995--Jun. 30, 1995   11%   27   581
Jul. 1, 1995--Sep. 30, 1995   11%   27   581
Oct. 1, 1995--Dec. 31, 1995   11%   25   681
Jan. 1, 1996--Mar. 31, 1996   10%   73   628
Apr. 1, 1996--Jun. 30, 1996   11%   75   627
Jul. 1, 1996--Sep. 30, 1996   11%   75   629
Oct. 1, 1996--Dec. 31, 1996   11%   75   529
Jan. 1, 1997--Mar. 31, 1997   11%   27   581
Apr. 1, 1997--Jun. 30, 1997   11%   27   581
Jul. 1, 1997--Sep. 30, 1997   11%   27   581
Oct. 1, 1997--Dec. 31, 1997   11%   27   581
Jan. 1, 1998--Mar. 31, 1998   11%   27   581
Apr. 1, 1998--Jun. 30, 1998   10%   25   579
Jul. 1, 1998--Sep. 30, 1998   10%   25   579

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