Rev. Rul. 87-23

1987-1 C.B. 349, 1987-13 I.R.B. 46.

INTEREST RATES; UNDERPAYMENTS AND OVERPAYMENTS

Published: March 30, 1987

Section 6221.-Determination of Rate of Interest, 26 CFR 301.6621-1: Interest rate

  Interest rates; underpayments and overpayments. The rate of interest determined under section 6621 of the Code for the calendar quarter beginning April 1, 1987, will continue to be 8 percent for overpayments and 9 percent for underpayments.

  Section 6621 of the Internal Revenue Code establishes differential rates for allowance of interest on tax overpayments and assessment of interest on tax underpayments. Under section 6621(a)(1), the overpayment rate is the sum of the short-term federal rate plus 2 percentage points. Under section 6621(a)(2), the underpayment rate is the sum of the short-term federal rate plus 3 percentage points.

  Section 6221(b)(1) of the Code provides that the Secretary shall determine the short-term federal rate for the first month in each calendar quarter.

  Section 6621(b)(2) of the Code provides that the federal short- term rate determined under section 6621(b)(1) for any month shall apply during the first calendar quarter beginning after such month.

  Section 6621(b)(3) of the Code provides that 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), rounded to the nearest full percent (or, if a multiple of 1/2 of 1 percent, such rate shall be increased to the next highest full percent).

  Rounded to the nearest full percent, the federal short-term rate determined during the month of January 1987 is 6 percent. Accordingly, an overpayment rate of 8 percent and an underpayment rate of 9 percent are established for the calendar quarter beginning April 1, 1987. The rates apply to amounts bearing interest during that calendar quarter. Pursuant to section 6621(b)(2)(B) of the Code, the 9 percent rate applicable to individual estimated tax underpayments also applies from April 15, 1987, through June 30, 1987.

  Daily rates for compound interest for 8 percent and 9 percent were published in Tables 14 and 15 of Rev. Proc. 83-7, 1983-1 C.B. 583, 597, 598.

  Compound interest rates for prior periods are set forth in the following table:
                                      DAILY RATE TABLE
PERIOD                          RATE   In 1983-1 C.B.
            OVERPAYMENTS AND UNDERPAYMENTS
January 1, 1983-June 30, 1983    16%  Table 22, pg. 605
July 1, 1983-December 31, 1983   11%  Table 17, pg. 600
January 1, 1984-June 30, 1984    11%  Table 41, pg. 625
July 1, 1984-December 31, 1984   11%  Table 41, pg. 625
January 1, 1985-June 30, 1985    13%  Table 19, pg. 602
July 1, 1985-December 31, 1985   11%  Table 17, pg. 600
January 1, 1986-June 30, 1986    10%  Table 16, pg. 599
July 1, 1986-December 31, 1986    9%  Table 15, pg. 598
                     OVERPAYMENTS
January 1, 1987-March 31, 1987    8%   Table 14, pg 597
                     UNDERPAYMENTS
January 1, 1987-March 31, 1987    9%  Table 15, pg. 598