Rev. Rul. 87-87

1987-2 C.B. 284.

INTEREST RATES; UNDERPAYMENTS AND OVERPAYMENTS

Published: September 8, 1987

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 October 1, 1987, will increase to 9 percent for overpayments and 10 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 6621(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 each 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 July 1987 is 7 percent. Accordingly, an overpayment rate of 9 percent and an underpayment rate of 10 percent is established for the calendar quarter beginning October 1, 1987. The rates apply to amounts bearing interest during that calendar quarter. The 10 percent rate also applies to estimated tax underpayments for the quarter.

  Interest factors for daily compound interest for annual rates of 9 percent and 10 percent were published in Tables 15 and 16 of Rev. Proc. 83-7, 1983-1 C.B. 585, 598, 599.

  Annual interest rates to be compounded daily pursuant to section 6622 of the Code that apply 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
April 1, 1987 - June 30, 1987          8%        Table 14, pg. 597
July 1, 1987 - September 30, 1987      8%        Table 14, pg. 597
                             UNDERPAYMENTS
January 1, 1987 - March 31, 1987       9%        Table 15, pg. 598
April 1, 1987 - June 30, 1987          9%        Table 15, pg. 598
July 1, 1987 - September 30, 1987      9%        Table 15, pg. 598

Rev. Rul. 87-87, 1987-2 C.B. 284