Landmark Tax Group

How Much Interest Does The IRS Charge

The Internal Revenue Service charges interest when you owe taxes and penalties on your federal tax return. The amount of interest the IRS charges on a tax liability changes quarterly. See below for the most current IRS interest rates.

Beginning January 1, 2016, the interest rates for the IRS are:

  • three (3) percent for overpayments [two (2) percent in the case of a corporation];
  • three (3) percent for underpayments;
  • five (5) percent for large corporate underpayments; and
  • one-half (0.5) 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 are announced quarterly and are based on daily compounding.

See: What to Know About Penalty and Interest Abatement

See: 8 Facts on Late Filing and Paying Penalties

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For immediate assistance with IRS interest and penalties, or another tax matter, contact us today at 1-714-382-6780 for a FREE and CONFIDENTIAL consultation with our CPAs and former IRS Agents. 

                     

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