Rev. Rul. 89-36
1989-1 C.B. 309, 1989-11 I.R.B. 5.
Internal Revenue Service
Revenue Ruling
INTEREST RATES; UNDERPAYMENTS AND OVERPAYMENTS
Published: February 24, 1989
Section 6621. - Determination of Interest Rate, 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, 1989, will increase 11 percent for overpayments and 12 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 federal short-term rate plus 2 percentage points. Under section 6621(a)(2), the underpayment rate is the sum of the federal short-term rate plus 3 percentage points.
Section 6621(b)(1) of the Code provides that the Secretary shall determine the federal short-term rate for the first month in each calendar quarter.
Section 6621(b)(2)(A) 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)(2)(B) of the Code provides that 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 third month following such taxable year shall also apply during the first 15 days of the fourth month following such taxable year.
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, the rate shall be increased to the next highest full percent).
Notice 88-59, 1988-20 I.R.B. 30, announced that in determining the quarterly interest rates to be used for overpayments and underpayments of tax under section 6621 of the Code, the Internal Revenue Service will use the federal short-term rate based on daily compounding because that rate is most consistent with section 6621 which, pursuant to section 6622, is subject to daily compounding.
Rounded to the nearest full percent, the federal short-term rate based on daily compounding determined during the month of January 1989 is 9 percent. Accordingly, an overpayment rate of 11 percent end an underpayment rate of 12 percent are established for the calendar quarter beginning April 1, 1989. These rates apply to amounts bearing interest during that calendar quarter except that, pursuant to section 6621(b)(2)(B) of the Code, the 11 percent rate applicable to underpayments for the calendar quarter beginning January 1, 1989, continues to be applicable to individual estimated tax underpayments from April 1, 1989, through April 15, 1989. For April 16, 1989, through June 30, 1989, the 12 percent underpayment rate applies to such individual estimated tax underpayments.
Interest factors for daily compound interest for annual rates of 11 percent and 12 percent were published in Tables 17 and 18 of Rev. Proc. 83-7, 1983-1 C.B. 583, 600, 601.
Annual interest rates to be compounded daily pursuant to section 6622 of the Code that apply for prior periods are set forth in the accompanying tables.
DRAFTING INFORMATION
The principal author of this revenue ruling is Mary Jane Kossar of the Office of Assistant Chief Counsel (Income Tax and Accounting). For further information regarding this revenue ruling, contact Ms. Kossar on (202) 566-3453 (not a toll-free call).
TABLE OF INTEREST RATES
PERIODS BEFORE JUL. 1, 1975 - DEC. 31, 1986
OVERPAYMENTS AND UNDERPAYMENTS
PERIOD RATE DAILY RATE TABLE
IN 1983-1 C.B.
Before Jul. 1, 1975 6% Table 2, pg. 586
Jul. 1, 1975--Jan. 31, 1976 9% Table 4, pg. 588
Feb. 1, 1976--Jan. 31, 1978 7% Table 3, pg. 587
Feb. 1, 1978--Jan. 31, 1980 6% Table 2, pg. 586
Feb. 1, 1980--Jan. 31, 1982 12% Table 5, pg. 588
Feb. 1, 1982--Dec. 31, 1982 20% Table 6, pg. 588
Jan. 1, 1983--Jun. 30, 1983 16% Table 22, pg. 605
Jul. 1, 1983--Dec. 31, 1983 11% Table 17, pg. 600
Jan. 1, 1984--Jun. 30, 1984 11% Table 41, pg. 625
Jul. 1, 1984--Dec. 31, 1984 11% Table 41, pg. 625
Jan. 1, 1985--Jun. 30, 1985 13% Table 19, pg. 602
Jul. 1, 1985--Dec. 31, 1985 11% Table 17, pg. 600
Jan. 1, 1986--Jun. 30, 1986 10% Table 16, pg. 599
Jul. 1, 1986--Dec. 31, 1986 9% Table 15, pg. 598
TABLE OF INTEREST RATES
FROM JAN. 1, 1987 - PRESENT
OVERPAYMENTS UNDERPAYMENTS
-----------------------------------
RATE TABLE PG RATE TABLE PG.
Jan. 1, 1987--Mar. 31, 1987 8% 14 597 9% 15 598
Apr. 1, 1987--Jun. 30, 1987 8% 14 597 9% 15 598
Jul. 1, 1987--Sep. 30, 1987 8% 14 597 9% 15 598
Oct. 1, 1987--Dec. 31, 1987 9% 15 598 10% 16 599
Jan. 1, 1988--Mar. 31, 1988 10% 40 624 11% 41 625
Apr. 1, 1988--Jun. 30, 1988 9% 39 623 10% 40 624
Jul. 1, 1988--Sep. 30, 1988 9% 39 623 10% 40 624
Oct. 1, 1988--Dec. 31, 1988 10% 40 624 11% 41 625
Jan. 1, 1989--Mar. 31, 1989 10% 16 599 11% 17 600
Apr. 1, 1989--Jun. 30, 1989 11% 17 600 12% 18 601
Rev. Rul. 89-36, 1989-1 C.B. 309, 1989-11 I.R.B. 5.