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Interest Rates Drop for the First Quarter Of 2003

IR-2002-131, Dec. 2, 2002

WASHINGTON – The Internal Revenue Service today announced that the interest rates for the calendar quarter beginning Jan. 1, 2003, will drop by one percentage point in each category to:  

  1. five (5) percent for overpayments [four (4) percent in the case of a corporation];
  2. five (5) percent for underpayments;
  3. seven (7) percent for large corporate underpayments; and
  4. two and one-half (2.5) percent for the portion of a corporate overpayment exceeding $10,000.

These are the lowest rates since a 1975 tax law change provided that interest rates would be adjusted based on money market rates.

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis.  For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.  Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points.  The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points.  The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is 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 October 2002.

Rev. Rul. 2002-70, announcing the new rates of interest, is attached and will appear in Internal Revenue Bulletin No. 2002-50, dated December 16, 2002.

X  X  X

Part I

Section 6621.-- Determination of Interest Rate

26 CFR 301.6621-1:  Interest rate.

Rev. Rul. 2002-70

Section 6621 of the Internal Revenue Code establishes the rates for interest on tax overpayments and tax underpayments.  Under § 6621(a)(1), the overpayment rate beginning January 1, 2003, is the sum of the federal short-term rate plus 3 percentage points (2 percentage points in the case of a corporation), 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 date.  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)(2)(B) provides that in determining the addition to tax under

§ 6654 for failure to pay estimated tax for any taxable year, the federal short-term rate that applies during the third month following such taxable year also applies during the first 15 days of the fourth month following such taxable year.

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 October 2002 is 2 percent.  Accordingly, an overpayment rate of 5 percent (4 percent in the case of a corporation) and an underpayment rate of 5 percent are established for the calendar quarter beginning January 1, 2003.  The overpayment rate for the portion of a corporate overpayment exceeding $10,000 for the calendar quarter beginning January 1, 2003, is 2.5 percent.  The underpayment rate for large corporate underpayments for the calendar quarter beginning January 1, 2003, is 7 percent.  These rates apply to amounts bearing interest during that calendar quarter.

The 5 percent rate also applies to estimated tax underpayments for the first calendar quarter in 2003 and for the first 15 days in April 2003.

Interest factors for daily compound interest for annual rates of 2.5 percent, 4 percent, 5 percent, and 7 percent are published in Tables 10, 13, 15, and 19 of Rev. Proc. 95-17, 1995-1 C.B. 556, 564, 567, 569, and 573. 

Annual interest rates to be compounded daily pursuant to § 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 Associate Chief Counsel (Procedure and Administration) Administrative Provisions and Judicial Practice Division.  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

 

 

In 1995-1 C.B

PERIOD

RATE

DAILY RATE TABLE

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 – DEC. 31, 1998

 

OVERPAYMENTS

UNDERPAYMENTS

 

1995-1 C.B

1995-1 C.B

 

RATE

TABLE

PG

RATE

TABLE

PG

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

0%

25

579

Jan. 1, 1988--Mar. 31, 1988

0%

73

627

1%

75

629

Apr. 1, 1988--Jun. 30, 1988

9%

71

625

0%

73

627

Jul. 1, 1988--Sep. 30, 1988

9%

71

625

0%

73

627

Oct. 1, 1988--Dec. 31, 1988

0%

73

627

1%

75

629

Jan. 1, 1989--Mar. 31, 1989

0%

25

579

1%

27

581

Apr. 1, 1989--Jun. 30, 1989

1%

27

581

2%

29

583

Jul. 1, 1989--Sep. 30, 1989

1%

27

581

2%

29

583

Oct. 1, 1989--Dec. 31, 1989

0%

25

579

1%

27

581

Jan. 1, 1990--Mar. 31, 1990

0%

25

579

1%

27

581

Apr. 1, 1990--Jun. 30, 1990

0%

25

579

1%

27

581

Jul. 1, 1990--Sep. 30, 1990

0%

25

579

1%

27

581

Oct. 1, 1990--Dec. 31, 1990

0%

25

579

1%

27

581

Jan. 1, 1991--Mar. 31, 1991

0%

25

579

1%

27

581

Apr. 1, 1991--Jun. 30, 1991

9%

23

577

0%

25

579

Jul. 1, 1991--Sep. 30, 1991

9%

23

577

0%

25

579

Oct. 1, 1991--Dec. 31, 1991

9%

23

577

0%

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

0%

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

Jan. 1, 1998--Mar. 31, 1998

8%

21

575

9%

23

577

Apr. 1, 1998--Jun. 30, 1998

7%

19

573

8%

21

575

Jul. 1, 1998--Sep. 30, 1998

7%

19

573

8%

21

575

Oct. 1, 1998--Dec. 31, 1998

7%

19

573

8%

21

575

TABLE OF INTEREST RATES

FROM JANUARY 1, 1999 – PRESENT
NONCORPORATE OVERPAYMENTS AND UNDERPAYMENTS

 

1995-1 C.B.

 

RATE

TABLE

PAGE

Jan. 1, 1999--Mar. 31, 1999

7%

19

573

Apr. 1, 1999--Jun. 30, 1999

8%

21

575

Jul. 1, 1999--Sep. 30, 1999

8%

21

575

Oct. 1, 1999--Dec. 31, 1999

8%

21

575

Jan. 1, 2000--Mar. 31, 2000

8%

69

623

Apr. 1, 2000--Jun. 30, 2000

9%

71

625

Jul. 1, 2000--Sep. 30, 2000

9%

71

625

Oct. 1, 2000--Dec 31, 2000

9%

71

625

Jan. 1, 2001--Mar. 31, 2001

9%

23

577

Apr. 1, 2001--Jun. 30, 2001

8%

21

575

Jul. 1, 2001--Sep. 30, 2001

7%

19

573

Oct. 1, 2001--Dec. 31, 2001

7%

19

573

Jan. 1, 2002--Mar. 31, 2002

6%

17

571

Apr. 1, 2002--Jun. 30, 2002

6%

17

571

Jul. 1, 2002--Sep. 30, 2002

6%

17

571

Oct. 1, 2002--Dec. 31, 2002

6%

17

571

Jan. 1, 2003--Mar. 31, 2003

5%

15

569

TABLE OF INTEREST RATES
FROM JANUARY 1, 1999 – PRESENT
CORPORATE OVERPAYMENTS AND UNDERPAYMENTS

 

OVERPAYMENTS

UNDERPAYMENTS

 

1995-1 C.B

1995-1 C.B

 

RATE

TABLE

PG

RATE

TABLE

PG

Jan. 1, 1999--Mar. 31, 1999

6%

17

571

7%

19

573

Apr. 1, 1999--Jun. 30, 1999

7%

19

573

8%

21

575

Jul. 1, 1999--Sep. 30, 1999

7%

19

573

8%

21

575

Oct. 1, 1999--Dec. 31, 1999

7%

19

573

8%

21

575

Jan. 1, 2000--Mar. 31, 2000

7%

67

621

8%

69

623

Apr. 1, 2000--Jun. 30, 2000

8%

69

623

9%

71

625

Jul. 1, 2000--Sep. 30, 2000

8%

69

623

9%

71

625

Oct. 1, 2000--Dec. 31, 2000

8%

69

623

9%

71

625

Jan. 1, 2001--Mar. 31, 2001

8%

21

575

9%

23

577

Apr. 1, 2001--Jun. 30, 2001

7%

19

573

8%

21

575

Jul. 1, 2001--Sep. 30, 2001

6%

17

571

7%

19

573

Oct. 1, 2001--Dec. 31, 2001

6%

17

571

7%

19

573

Jan. 1, 2002--Mar. 31, 2002

5%

15

569

6%

17

571

Apr. 1, 2002--Jun. 30, 2002

5%

15

569

6%

17

571

Jul. 1, 2002—Sep. 30, 2002

5%

15

569

6%

17

571

Oct. 1, 2002—Dec. 31, 2002

5%

15

569

6%

17

571

Jan. 1, 2003—Mar. 31, 2003

4%

13

567

5%

15

569

TABLE OF INTEREST RATES FOR
LARGE CORPORATE UNDERPAYMENTS

FROM JANUARY 1, 1991 – PRESENT

 

 

 

1995-1 C.B

 

RATE

TABLE

PAGE

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

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

Oct. 1, 1998--Dec. 31, 1998

10%

25

579

Jan. 1, 1999--Mar. 31, 1999

9%

23

577

Apr. 1, 1999--Jun. 30, 1999

10%

25

579

Jul. 1, 1999--Sep. 30, 1999

10%

25

579

Oct. 1, 1999--Dec. 31, 1999

10%

25

579

Jan. 1, 2000--Mar. 31, 2000

10%

73

627

Apr. 1, 2000--Jun. 30, 2000

11%

75

629

Jul. 1, 2000--Sep. 30, 2000

11%

75

629

Oct. 1, 2000--Dec. 31, 2000

11%

75

629

Jan. 1, 2001--Mar. 31, 2001

11%

27

581

Apr. 1, 2001--Jun. 30, 2001

10%

25

579

Jul. 1, 2001--Sep. 30, 2001

9%

23

577

Oct. 1, 2001--Dec. 31, 2001

9%

23

577

Jan. 1, 2002--Mar. 31, 2002

8%

21

575

Apr. 1, 2002--Jun.  30, 2002

8%

21

575

Jul. 1, 2002--Sep. 30, 2002

8%

21

575

Oct. 1, 2002--Dec. 31, 2002

8%

21

575

Jan. 1, 2003--Mar. 31, 2003

7%

19

573

TABLE OF INTEREST RATES
FOR CORPORATE OVERPAYMENTS EXCEEDING $10,000
FROM JANUARY 1, 1995 – PRESENT

 

 

 

1995-1 C.B

 

RATE

TABLE

PAGE

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

Jan. 1, 1998--Mar. 31, 1998

6.5%

18

572

Apr. 1, 1998--Jun. 30, 1998

5.5%

16

570

Jul. 1. 1998--Sep. 30, 1998

5.5%

16

570

Oct. 1, 1998--Dec. 31, 1998

5.5%

16

570

Jan. 1, 1999--Mar. 31, 1999

4.5%

14

568

Apr. 1, 1999--Jun. 30, 1999

5.5%

16

570

Jul. 1, 1999--Sep. 30, 1999

5.5%

16

570

Oct. 1, 1999--Dec. 31, 1999

5.5%

16

570

Jan. 1, 2000--Mar. 31, 2000

5.5%

64

618

Apr. 1, 2000--Jun. 30, 2000

6.5%

66

620

Jul. 1, 2000--Sep. 30, 2000

6.5%

66

620

Oct. 1, 2000--Dec. 31, 2000

6.5%

66

620

Jan. 1, 2001--Mar. 31, 2001

6.5%

18

572

Apr. 1, 2001--Jun. 30, 2001

5.5%

16

570

Jul. 1, 2001--Sep. 30, 2001

4.5%

14

568

Oct. 1, 2001--Dec. 31, 2001

4.5%

14

568

Jan. 1, 2002--Mar. 31, 2002

3.5%

12

566

Apr. 1, 2002--Jun. 30, 2002

3.5%

12

566

Jul. 1, 2002--Sep. 30, 2002

3.5%

12

566

Oct. 1, 2002--Dec. 31, 2002

3.5%

12

566

Jan. 1, 2003--Mar. 31, 2003

2.5%

10

564

Page Last Reviewed or Updated: 18-Aug-2012