Internal Revenue Service (“IRS”) Interest Rates Drops According to Notice 746

The Internal Revenue Service (“IRS”) has released Notice 746 which provides information about penalties and interest, and lists the latest interest rates. According to the notice interest rates will go down one percentage point in January.

Not surprisingly the IRS generally pays 1% less on money it owes to taxpayers (overpayments) then it expects taxpayers to pay to it (underpayments). Interest is compounded daily, and is in addition to penalties. The interest rates on underpayments and overpayments are as follows:

Periods Percentage Rates
Underpayment Overpayment
July 1, 1996 through March 31, 1998 9 8
April 1, 1998 through December 31, 1998 8 7
January 1, 1999 through March 31, 1999 7 7
April 1, 1999 through March 31, 2000 8 8
April 1, 2000 through March 31, 2001 9 9
April 1, 2001 through June 30, 2001 8 8
July 1, 2001 through December 31, 2001 7 7
January 1, 2002 through December 31, 2002 6 6
January 1, 2003 through September 30, 2003 5 5
October 1, 2003 through March 31, 2004 4 4
April 1, 2004 through June 30, 2004 5 5
July 1, 2004 through September 30, 2004 4 4
October 1, 2004 through March 31, 2005 5 5
April 1, 2005 through September 30, 2005 6 6
October 1, 2005 through June 30, 2006 7 7
July 1, 2006 through December 31, 2007 8 8
Beginning January 1, 2008 7 7

Different rates may apply to corporations, or to certain tax motivated transactions. If you owe the IRS more than $75,000 and would like to find out if you can settle for less with the IRS contact tax problem attorney Dennis Brager.

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