9/12/97 IR-97-38 IRS ANNOUNCES QUARTERLY INTEREST RATES Washington -- The Internal Revenue Service today announced that interest rates for the calendar quarter beginning October 1, 1997, will remain at eight percent for overpayments, nine percent for underpayments, and eleven percent for large corporate underpayments. The overpayment rate for the portion of corporate overpayments exceeding $10,000 will remain at 6.5 percent. Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis, the rate on underpayments is one percent higher than the rate on overpayments, and the rate for large corporate underpayments is two 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 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 July 1997. Rev. Rul. 97-40, announcing the new rates of interest, is attached and will appear in Internal Revenue Bulletin No. 1997-39 dated September 29, 1997. X X X Part I Section 6621.-- Determination of Interest Rate 26 CFR 301.6621-1: Interest rate. Rev. Rul. 97-40 Section 6621 of the Internal Revenue Code establishes different rates for interest on tax overpayments and interest on tax underpayments. Under  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  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  6601 on any large corporate underpayment, the underpayment rate under  6621(a)(2) is determined by substituting "5 percentage points" for "3 percentage points." See  6621(c) and  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 rate. Section 6621(c) and  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  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  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  6621, the Internal Revenue Service will use the federal short-term rate based on daily compounding because that rate is most consistent with  6621 which, pursuant to  6622, is subject to daily compounding. Rounded to the nearest full percent, the federal short-term rate based on daily compounding determined during the month of July 1997 is 6 percent. Accordingly, an overpayment rate of 8 percent and an underpayment rate of 9 percent are established for the calendar quarter beginning October 1, 1997. The overpayment rate for the portion of corporate overpayments exceeding $10,000 for the calendar quarter beginning October 1, 1997, is 6.5 percent. The underpayment rate for large corporate underpayments for the calendar quarter beginning October 1, 1997, is 11 percent. These rates apply to amounts bearing interest during that calendar quarter. Interest factors for daily compound interest for annual rates of 6.5 percent, 8 percent, 9 percent, and 11 percent are published in Tables 18, 21, 23, and 27 of Rev. Proc. 95-17, 1995-1 C.B. 556, 572, 575, 577, and 581. Annual interest rates to be compounded daily pursuant to  6622 that apply for prior periods are set forth in the accompanying tables. DRAFTING INFORMATION The principal author of this revenue ruling is Marcia Rachy of the Office of Assistant Chief Counsel (Income Tax and Accounting). For further information regarding this revenue ruling, contact Ms. Rachy on (202) 622-4940 (not a toll-free call). TABLE OF INTEREST RATES PERIODS BEFORE JUL. 1, 1975 - PERIODS ENDING DEC. 31, 1986 OVERPAYMENTS AND UNDERPAYMENTS PERIOD DAILY RATE TABLE 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 12% 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 UNDERPAYMENTS 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% 75 629 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% 25 579 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% 71 625 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% 21 575 Oct. 1, 1994--Dec. 31, 1994 8% 21 575 9% 23 577 Jan. 1, 1995--Mar. 31, 1995 8% 21 575 9% 23 577 Apr. 1, 1995--Jun. 30, 1995 9% 23 577 10% 25 579 Jul. 1, 1995--Sep. 30, 1995 8% 21 575 9% 23 577 Oct. 1, 1995--Dec. 31, 1995 8% 21 575 9% 23 577 Jan. 1, 1996--Mar. 31, 1996 8% 69 623 9% 71 625 Apr. 1, 1996--Jun. 30, 1996 7% 67 621 8% 69 623 Jul. 1, 1996--Sep. 30, 1996 8% 69 623 9% 71 625 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 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% 29 583 Jan. 1, 1992--Mar. 31, 1992 11% 75 629 Apr. 1, 1992--Jun. 30, 1992 10% 73 627 Jul. 1, 1992--Sep. 30, 1992 10% 73 627 Oct. 1, 1992--Dec. 31, 1992 9% 71 625 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 9% 23 577 Jul. 1, 1994--Sep. 30, 1994 10% 25 579 Oct. 1, 1994--Dec. 31, 1994 11% 27 581 Jan. 1, 1995--Mar. 31, 1995 11% 27 581 Apr. 1, 1995--Jun. 30, 1995 12% 29 583 Jul. 1, 1995--Sep. 30, 1995 11% 27 581 Oct. 1, 1995--Dec. 31, 1995 11% 27 581 Jan. 1, 1996--Mar. 31, 1996 11% 75 629 Apr. 1, 1996--Jun. 30, 1996 10% 73 627 Jul. 1, 1996--Sep. 30, 1996 11% 75 629 Oct. 1, 1996--Dec. 31, 1996 11% 75 629 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 TABLE OF INTEREST RATES FOR CORPORATE OVERPAYMENTS EXCEEDING $10,000 FROM JANUARY 1, 1995 - PRESENT RATE TABLE PG 1995-1 C.B. Jan. 1, 1995--Mar. 31, 1995 6.5% 18 572 Apr. 1, 1995--Jun. 30, 1995 7.5% 20 574 Jul. 1, 1995--Sep. 30, 1995 6.5% 18 572 Oct. 1, 1995--Dec. 31, 1995 6.5% 18 572 Jan. 1, 1996--Mar. 31, 1996 6.5% 66 620 Apr. 1, 1996--Jun. 30, 1996 5.5% 64 618 Jul. 1, 1996--Sep. 30, 1996 6.5% 66 620 Oct. 1, 1996--Dec. 31, 1996 6.5% 66 620 Jan. 1, 1997--Mar. 31, 1997 6.5% 18 572 Apr. 1, 1997--Jun. 30, 1997 6.5% 18 572 Jul. 1, 1997--Sep. 30, 1997 6.5% 18 572 Oct. 1, 1997--Dec. 31, 1997 6.5% 18 572