PHOENIX — The Internal Revenue Service recently announced that interest rates will remain the same for the calendar quarter beginning Oct. 1. The rates will be:

• 4 percent for overpayments (three percent in the case of a corporation);
• 1.5 percent for the portion of a corporate overpayment exceeding $10,000;
• 4 percent for underpayments; and
• 6 percent for large corporate underpayments.

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.

Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus .5 of a percentage point.

The interest rates recently announced are computed from the federal short-term rate determined during July to take effect Aug. 1, based on daily compounding.

Revenue Ruling 2016-23, announcing the rates of interest will appear in Internal Revenue Bulletin 2016-39, dated Sept. 26.

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