26 USC 6621 – Determination of rate of interest
(a) General rule
(1) Overpayment rate
The overpayment rate established under this section shall be the sum of—
(A) the Federal short-term rate determined under subsection (b), plus
(B) 3 percentage points (2 percentage points in the case of a corporation).
To the extent that an overpayment of tax by a corporation for any taxable period (as defined in subsection (c)(3), applied by substituting “overpayment” for “underpayment”) exceeds $10,000, subparagraph (B) shall be applied by substituting “0.5 percentage point” for “2 percentage points”.
(2) Underpayment rate
The underpayment rate established under this section shall be the sum of—
(A) the Federal short-term rate determined under subsection (b), plus
(B) 3 percentage points.
(b) Federal short-term rate
For purposes of this section—
(1) General rule
The Secretary shall determine the Federal short-term rate for the first month in each calendar quarter.
(2) Period during which rate applies
(A) In general
Except as provided in subparagraph (B), the Federal short-term rate determined under paragraph (1) for any month shall apply during the first calendar quarter beginning after such month.
(B) Special rule for individual estimated tax
In determining the addition to tax under section 6654 for failure to pay estimated tax for any taxable year, the Federal short-term rate which applies during the 3rd month following such taxable year shall also apply during the first 15 days of the 4th month following such taxable year.
(3) Federal short-term rate
The Federal short-term rate for any month shall be the Federal short-term rate determined during such month by the Secretary in accordance with section 1274(d). Any such rate shall be rounded to the nearest full percent (or, if a multiple of ½ of 1 percent, such rate shall be increased to the next highest full percent).
(c) Increase in underpayment rate for large corporate underpayments
(1) In general
For purposes of determining the amount of interest payable under section 6601 on any large corporate underpayment for periods after the applicable date, paragraph (2) of subsection (a) shall be applied by substituting “5 percentage points” for “3 percentage points”.
(2) Applicable date
For purposes of this subsection—
(A) In general
The applicable date is the 30th day after the earlier of—
(i) the date on which the 1st letter of proposed deficiency which allows the taxpayer an opportunity for administrative review in the Internal Revenue Service Independent Office of Appeals is sent, or
(ii) the date on which the deficiency notice under section 6212 is sent.
The preceding sentence shall be applied without regard to any such letter or notice which is withdrawn by the Secretary.
(B) Special rules
(i) Nondeficiency procedures
In the case of any underpayment of any tax imposed by this title to which the deficiency procedures do not apply, subparagraph (A) shall be applied by taking into account any letter or notice provided by the Secretary which notifies the taxpayer of the assessment or proposed assessment of the tax.
(ii) Exception where amounts paid in full
For purposes of subparagraph (A), a letter or notice shall be disregarded if, during the 30-day period beginning on the day on which it was sent, the taxpayer makes a payment equal to the amount shown as due in such letter or notice, as the case may be.
(iii) Exception for letters or notices involving small amounts
For purposes of this paragraph, any letter or notice shall be disregarded if the amount of the deficiency or proposed deficiency (or the assessment or proposed assessment) set forth in such letter or notice is not greater than $100,000 (determined by not taking into account any interest, penalties, or additions to tax).
(3) Large corporate underpayment
For purposes of this subsection—
(A) In general
The term “large corporate underpayment” means any underpayment of a tax by a C corporation for any taxable period if the amount of such underpayment for such period exceeds $100,000.
(B) Taxable period
For purposes of subparagraph (A), the term “taxable period” means—
(i) in the case of any tax imposed by subtitle A, the taxable year, or
(ii) in the case of any other tax, the period to which the underpayment relates.
(d) Elimination of interest on overlapping periods of tax overpayments and underpayments
Terms Used In 26 USC 6621
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- corporation: includes associations, joint-stock companies, and insurance companies. See 26 USC 7701
- individual: shall include every infant member of the species homo sapiens who is born alive at any stage of development. See 1 USC 8
- Secretary: means the Secretary of the Treasury or his delegate. See 26 USC 7701
- taxable year: means the calendar year, or the fiscal year ending during such calendar year, upon the basis of which the taxable income is computed under subtitle A. See 26 USC 7701
- taxpayer: means any person subject to any internal revenue tax. See 26 USC 7701
To the extent that, for any period, interest is payable under subchapter A and allowable under subchapter B on equivalent underpayments and overpayments by the same taxpayer of tax imposed by this title, the net rate of interest under this section on such amounts shall be zero for such period.