Interest Rates Increase for the Fourth Quarter of 2004
IR-2004-112, Aug. 30, 2004
WASHINGTON — The Internal Revenue Service today announced there will be a one percentage point increase in the interest rates for the calendar quarter beginning October 1, 2004. The interest rates are as follows:
five (5) percent for overpayments [four (4) percent in the case of a corporation];
five (5) percent for underpayments;
seven (7) percent for large corporate underpayments; and
two and one-half (2.5) percent for the portion of a corporate overpayment exceeding $10,000.
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 July 2004.
Related Item: Revenue Ruling 2004-92