Independent Contractor Compliance Blog - by Collabrus™

WASHINGTON - The Internal Revenue Service announced this week that interest rates for the calendar quarter beginning April 1, 2010 are:

• four (4) percent for overpayments for non corporations
• three (3) percent for overpayments in the case of a corporation;
• four (4) percent for underpayments for all;
• six (6) percent for large corporate underpayments;
• one and one-half (1.5) percent for the portion of a corporate overpayment exceeding $10,000.

Are you interested in how interest rates are determined?

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis by adding a premium to the federal short-term rate which is currently one (1) percent.

For taxpayers who are not 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
• 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 overpayments exceeding $10,000 is the federal short-term rate plus one-half (0.5) of a percentage point.

Don’t forget your estimated deposits.

Interest is also charged on any amounts due for failure to pay estimated tax for the first 15 days in April.

All federal tax liabilities are subject to these interest rates.

Interest is compounded daily from the date the government determines the tax should have been paid until it is paid.