REVENUE RULE 91-20

1991-1 C.B. 229, 1991-11 I.R.B. 1.

Internal Revenue Service
Revenue Ruling

INTEREST RATES; UNDERPAYMENTS AND OVERPAYMENTS

Published: March 5, 1991

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, 1991, will be 9 percent for overpayments, 10 percent for underpayments, and 12 percent for large corporate underpayments.

Section 6621 of the Internal Revenue Code establishes differential rates for allowance of interest on tax overpayments and assessments of interests 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(c) of the Code, as added by the Revenue Reconciliation Act of 1990, Pub. L. 101-508, section 11341(a)(2), 104 Stat. 1388 (1990), provides that for purposes of interest payable under section 6601 on any large corporate underpayment, the underpayment rate under section 6621(a)(2) shall be applied by substituting "5 percentage points" for "3 percentage points." See section 6621(c) and section 301.6621-3T of the Temporary Regulations on Procedure and Administration for the definition of a large corporate underpayment and for the rules for determining the applicable date. Section 6621(c) and section 301.6621-3T are generally effective for periods after December 31, 1990.

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 individual estimated tax for any taxable year, the federal short-term rate which applies during the third month following such taxable 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, 1988-1 C.B. 546, 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 1991 is 7 percent. Accordingly, an overpayment rate of 9 percent and an underpayment rate of 10 percent are established for the calendar quarter beginning April 1, 1991. The underpayment rate for large corporate underpayments for the calendar quarter beginning April 1, 1991, is 12 percent. These rates apply to amounts bearing interest during that calendar quarter.

In addition, pursuant to section 6621(b)(2)(B) of the Code, the rate applicable to underpayments for the calendar quarter beginning January 1, 1991, continues to be applicable to individual estimated tax underpayments from April 1, 1991, through April 15, 1991. The underpayment rate for the calendar quarter beginning January 1, 1991, is 11 percent. Therefore, the rate applicable to individual estimated tax underpayments is 11 percent from April 1, 1991, through April 15, 1991, and 10 percent from April 16, 1991, through June 30, 1991.

Interest factors for daily compound interest for annual rates of 9 percent, 10 percent and 12 percent were published in Tables 15, 16 and 18 of Rev. Proc. 83-7, 1983-1 C.B. 583, 598, 599, and 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

       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

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

Jul. 1, 1989 Sep. 30, 1989 11% 17 600 12% 18 601

Oct. 1, 1989 Dec. 31, 1989 10% 16 599 11% 17 600

Jan. 1, 1990 Mar. 31, 1990 10% 16 599 11% 17 600

Apr. 1, 1990 Jun. 30, 1990 10% 16 599 11% 17 600

Jul. 1, 1990 Sep. 30, 1990 10% 16 599 11% 17 600

Oct. 1, 1990 Dec. 31, 1990 10% 16 599 11% 17 600

Jan. 1, 1991 Mar. 31, 1991 10% 16 599 11% 17 600

Apr. 1, 1991 Jun. 30, 1991  9% 15 598 10% 16 599

RATES FOR LARGE CORPORATE UNDERPAYMENTS FROM JANUARY 1, 1991-PRESENT

Jan. 1, 1991 Mar. 31, 1991  13%    19   602

Apr. 1, 1991 Jun. 30, 1991  12%    18   601

Rev. Rul. 91-20, 1991-1 C.B. 229, 1991-11 I.R.B. 1.