On March 16, 2016, The IRS announced that it will be raising interest rates for both individual and corporate taxpayers beginning in the second calendar quarter of 2016. Here is the breakdown of these new rates, as provided on the IRS website and featured on capracticeadvisor.com
After several years of relatively low interest, this will be the first time rates have gone up since 2011. These new rates will affect individual and corporate taxpayers, but corporations will especially want to take note of this.
Tax preparers working with corporations will need to take several changes to interest into account starting on the first of April, when these rates are officially implemented. For interest on corporate overpayment exceeding $10,000, this new change is based on the federal short-term interest rate, which recently went up from 0% to 1%. This has been calculated as the federal rate plus one-half. The other interest rate increases are based on daily compounding and may be subject to change during future calendar quarters.
For a more extensive breakdown on these new interest rates for 2016, the IRS provides a PDF of Revenue Ruling 2016-06, which shows the most recent interest rates as well as the rates in previous quarters. Tax preparers can consult this as a reference when handling this tax year’s returns, as well as returns for prior years.