Rev. Rul. 96-28
1996-1 C.B. 326, 1996-24 I.R.B. 11

INTERNAL REVENUE SERVICE
Revenue Ruling

INTEREST RATES; UNDERPAYMENTS AND OVERPAYMENTS

Released: May 28, 1996
Published: June 10, 1996

Section 6621. - Determination of Interest Rate, 26 CFR 301.6621-1: Interest rate.
Interest rates; underpayment and overpayments. The rate of interest determined under section 6621 of the Code for the calendar quarter beginning July 1, 1996, is 8 percent for overpayments, 9 percent for underpayments, and 11 percent for large corporate underpayments. The rate of interest paid on the portion of a corporate overpayment exceeding $10,000 is 6.5 percent.

Section 6621 of the Internal Revenue Code establishes different rates for interest on tax overpayments and interest on tax underpayments. Under § 6621(a)(1), the overpayment rate is the sum of the federal short-term rate plus 2 percentage points, except the rate for the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the sum of the federal short- term rate plus 0.5 of a percentage point for interest computations made after December 31, 1994. Under § 6621(a)(2), the underpayment rate is the sum of the federal short-term rate plus 3 percentage points.

Section 6621(c) provides that for purposes of interest payable under § 6601 on any large corporate underpayment, the underpayment rate under § 6621(a)(2) is determined by substituting "5 percentage points" for "3 percentage points." See § 6621(c) and § 301.6621-3 of the Regulations on Procedure and Administration for the definition of a large corporate underpayment and for the rules for determining the applicable rate. Section 6621(c) and § 301.6621-3 are generally effective for periods after December 31, 1990.

Section 6621(b)(1) provides that the Secretary will determine the federal short-term rate for the first month in each calendar quarter.

Section 6621(b)(2)(A) provides that the federal short-term rate determined under § 6621(b)(1) for any month applies during the first calendar quarter beginning after such month.

Section 6621(b)(3) provides that the federal short-term rate for any month is the federal short-term rate determined during such month by the Secretary in accordance with § 1274(d), rounded to the nearest full percent (or, if a multiple of 1/2 of 1 percent, the rate is 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 § 6621, the Internal Revenue Service will use the federal short-term rate based on daily compounding because that rate is most consistent with § 6621 which, pursuant to § 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 April 1996 is 6 percent. Accordingly, an overpayment rate of 8 percent and an underpayment rate of 9 percent are established for the calendar quarter beginning July 1, 1996. The overpayment rate for the portion of corporate overpayments exceeding $10,000 for the calendar quarter beginning July 1, 1996, is 6.5 percent. The underpayment rate for large corporate underpayments for the calendar quarter beginning July 1, 1996, is 11 percent. These rates apply to amounts bearing interest during that calendar quarter.

Interest factors for daily compound interest for annual rates of 6.5 percent, 8 percent, 9 percent, and 11 percent are published in Tables 66, 69, 71, and 75 of Rev. Proc. 95-17, 1995-1 C.B. 556, 620, 623, 625, and 629.

Annual interest rates to be compounded daily pursuant to § 6622 that apply for prior periods are set forth in the accompanying tables.

DRAFTING INFORMATION

The principal author of this revenue ruling is Marcia Rachy of the Office of Assistant Chief Counsel (Income Tax and Accounting). For further information regarding this revenue ruling, contact Ms. Rachy on (202) 622-4940 (not a toll- free call).

TABLE OF INTEREST RATES
PERIODS BEFORE JUL. 1, 1975 - PERIODS ENDING DEC. 31, 1986

        Before Jul. 1, 1975 6% Table  2, pg. 557

Jul. 1, 1975-Jan. 31, 1976  9% Table  4, pg. 559

Feb. 1, 1976-Jan. 31, 1978  7% Table  3, pg. 558

Feb. 1, 1978-Jan. 31, 1980  6% Table  2, pg. 557

Feb. 1, 1980-Jan. 31, 1982 12% Table  5, pg. 560

Feb. 1, 1982-Dec. 31, 1982 20% Table  6, pg. 560

Jan. 1, 1983-Jun. 30, 1983 16% Table 37, pg. 591

Jul. 1, 1983-Dec. 31, 1983 11% Table 27, pg. 581

Jan. 1, 1984-Jun. 30, 1984 11% Table 75, pg. 629

Jul. 1, 1984-Dec. 31, 1984 11% Table 75, pg. 629

Jan. 1, 1985-Jun. 30, 1985 13% Table 31, pg. 585

Jul. 1, 1985-Dec. 31, 1985 11% Table 27, pg. 581

Jan. 1, 1986-Jun. 30, 1986 10% Table 25, pg. 579

Jul. 1, 1986-Dec. 31, 1986  9% Table 23, pg. 577

TABLE OF INTEREST RATES
FROM JAN. 1, 1987 - PRESENT
In 95-1 C.B.

Jan. 1, 1987-Mar. 31, 1987  8% 21 575  9% 23 577

Apr. 1, 1987-Jun. 30, 1987  8% 21 575  9% 23 577

Jul. 1, 1987-Sep. 30, 1987  8% 21 575  9% 23 577

Oct. 1, 1987-Dec. 31, 1987  9% 23 577 10% 25 579

Jan. 1, 1988-Mar. 31, 1988 10% 73 627 11% 75 629

Apr. 1, 1988-Jun. 30, 1988  9% 71 625 10% 73 627

Jul. 1, 1988-Sep. 30, 1988  9% 71 625 10% 73 627

Oct. 1, 1988-Dec. 31, 1988 10% 73 627 11% 75 629

Jan. 1, 1989-Mar. 31, 1989 10% 25 579 11% 27 581

Apr. 1, 1989-Jun. 30, 1989 11% 27 581 12% 29 583

Jul. 1, 1989-Sep. 30, 1989 11% 27 581 12% 29 583

Oct. 1, 1989-Dec. 31, 1989 10% 25 579 11% 27 581

Jan. 1, 1990-Mar. 31, 1990 10% 25 579 11% 27 581

Apr. 1, 1990-Jun. 30, 1990 10% 25 579 11% 27 581

Jul. 1, 1990-Sep. 30, 1990 10% 25 579 11% 27 581

Oct. 1, 1990-Dec. 31, 1990 10% 25 579 11% 27 581

Jan. 1, 1991-Mar. 31, 1991 10% 25 579 11% 27 581

Apr. 1, 1991-Jun. 30, 1991  9% 23 577 10% 25 579

Jul. 1, 1991-Sep. 30, 1991  9% 23 577 10% 25 579

Oct. 1, 1991-Dec. 31, 1991  9% 23 577 10% 25 579

Jan. 1, 1992-Mar. 31, 1992  8% 69 623  9% 71 625

Apr. 1, 1992-Jun. 30, 1992  7% 67 621  8% 69 623

Jul. 1, 1992-Sep. 30, 1992  7% 67 621  8% 69 623

Oct. 1, 1992-Dec. 31, 1992  6% 65 619  7% 67 621

Jan. 1, 1993-Mar. 31, 1993  6% 17 571  7% 19 573

Apr. 1, 1993-Jun. 30, 1993  6% 17 571  7% 19 573

Jul. 1, 1993-Sep. 30, 1993  6% 17 571  7% 19 573

Oct. 1, 1993-Dec. 31, 1993  6% 17 571  7% 19 573

Jan. 1, 1994-Mar. 31, 1994  6% 17 571  7% 19 573

Apr. 1, 1994-Jun. 30, 1994  6% 17 571  7% 19 573

Jul. 1, 1994-Sept. 30, 1994 7% 19 573  8% 21 575

Oct. 1, 1994-Dec. 31, 1994  8% 21 575  9% 23 577

Jan. 1, 1995-Mar. 31, 1995  8% 21 575  9% 23 577

Apr. 1, 1995-Jun. 30, 1995  9% 23 577 10% 25 579

Jul. 1, 1995-Sep. 30, 1995  8% 21 575  9% 23 577

Oct. 1, 1995-Dec. 31, 1995  8% 21 575  9% 23 577

Jan. 1, 1996-Mar. 31, 1996  8% 69 623  9% 71 625

Apr. 1, 1996-Jun. 30, 1996  7% 67 621  8% 69 623

Jul. 1, 1996-Sep. 30, 1996  8% 69 623  9% 71 625

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

Jan. 1, 1991-Mar. 31, 1991 13% 31 585

Apr. 1, 1991-Jun. 30, 1991 12% 29 583

Jul. 1, 1991-Sep. 30, 1991 12% 29 583

Oct. 1, 1991-Dec. 31, 1991 12% 29 583

Jan. 1, 1992-Mar. 31, 1992 11% 75 629

Apr. 1, 1992-Jun. 30, 1992 10% 73 627

Jul. 1, 1992-Sep. 30, 1992 10% 73 627

Oct. 1, 1992-Dec. 31, 1992  9% 71 625

Jan. 1, 1993-Mar. 31, 1993  9% 23 577

Apr. 1, 1993-Jun. 30, 1993  9% 23 577

Jul. 1, 1993-Sep. 30, 1993  9% 23 577

Oct. 1, 1993-Dec. 31, 1993  9% 23 577

Jan. 1, 1994-Mar. 31, 1994  9% 23 577

Apr. 1, 1994-Jun. 30, 1994  9% 23 577

Jul. 1, 1994-Sep. 30, 1994 10% 25 579

Oct. 1, 1994-Dec. 31, 1994 11% 27 581

Jan. 1, 1995-Mar. 31, 1995 11% 27 581

Apr. 1, 1995-Jun. 30, 1995 12% 29 583

Jul. 1, 1995-Sep. 30, 1995 11% 27 581

Oct. 1, 1995-Dec. 31, 1995 11% 27 581

Jan. 1, 1996-Mar. 31, 1996 11% 75 629

Apr. 1, 1996-Jun. 30, 1996 10% 73 627

Jul. 1, 1996-Sep. 30, 1996 11% 75 629

TABLE OF INTEREST RATES FOR CORPORATE OVERPAYMENTS EXCEEDING $10,000
FROM JANUARY 1, 1995 - PRESENT
1995-1 C.B.

Jan. 1, 1995-Mar. 31, 1995 6.5%   18    572

Apr. 1, 1995-Jun. 30, 1995 7.5%   20    574

Jul. 1, 1995-Sep. 30, 1995 6.5%   18    572

Oct. 1, 1995-Dec. 31, 1995 6.5%   18    572

Jan. 1, 1996-Mar. 31, 1996 6.5%   66    620

Apr. 1, 1996-Jun. 30, 1996 5.5%   64    618

Jul. 1, 1996-Sep. 30, 1996 6.5%   66    620

Rev. Rul. 96-28, 1996-1 C.B. 326, 1996-24 I.R.B. 11