The Internal Revenue Service has announced that interest rates related to OASDI will remain the same for the calendar quarter beginning July 1, 2018. The interest rates are as follows: five percent for over-payments (four percent in the case of a corporation); five percent for underpayments; seven percent for large corporate underpayments; and two-and-one-half percent for the portion of a corporate over-payment exceeding $10,000.
Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the over-payment and underpayment rate is the federal short-term rate plus three percentage points. Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus three percentage points and the over-payment rate is the federal short-term rate plus two percentage points. The rate for large corporate underpayments is the federal short-term rate plus five percentage points. The rate on the portion of a corporate over-payment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half of a percentage point.
These interest rates are computed from the federal short-term rate based on daily compounding determined during April 2018.
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