General rule
Overpayment rate
Underpayment rate
Federal short-term rate
General rule
The Secretary shall determine the Federal short-term rate for the first month in each calendar quarter.
Period during which rate applies
In general
Except as provided in subparagraph (B), the Federal short-term rate determined under paragraph (1) for any month shall apply during the first calendar quarter beginning after such month.
Special rule for individual estimated tax
In determining the addition to tax under section 6654 for failure to pay estimated tax for any taxable year, the Federal short-term rate which applies during the 3rd month following such taxable year shall also apply during the first 15 days of the 4th month following such taxable year.
Federal short-term rate
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). Any such rate shall be rounded to the nearest full percent (or, if a multiple of ½ of 1 percent, such rate shall be increased to the next highest full percent).
Increase in underpayment rate for large corporate underpayments
In general
For purposes of determining the amount of interest payable under section 6601 on any large corporate underpayment for periods after the applicable date, paragraph (2) of subsection (a) shall be applied by substituting “5 percentage points” for “3 percentage points”.
Applicable date
In general
Special rules
Nondeficiency procedures
In the case of any underpayment of any tax imposed by this title to which the deficiency procedures do not apply, subparagraph (A) shall be applied by taking into account any letter or notice provided by the Secretary which notifies the taxpayer of the assessment or proposed assessment of the tax.
Exception where amounts paid in full
For purposes of subparagraph (A), a letter or notice shall be disregarded if, during the 30-day period beginning on the day on which it was sent, the taxpayer makes a payment equal to the amount shown as due in such letter or notice, as the case may be.
Exception for letters or notices involving small amounts
For purposes of this paragraph, any letter or notice shall be disregarded if the amount of the deficiency or proposed deficiency (or the assessment or proposed assessment) set forth in such letter or notice is not greater than $100,000 (determined by not taking into account any interest, penalties, or additions to tax).
Large corporate underpayment
In general
The term “large corporate underpayment” means any underpayment of a tax by a C corporation for any taxable period if the amount of such underpayment for such period exceeds $100,000.
Taxable period
Elimination of interest on overlapping periods of tax overpayments and underpayments
To the extent that, for any period, interest is payable under subchapter A and allowable under subchapter B on equivalent underpayments and overpayments by the same taxpayer of tax imposed by this title, the net rate of interest under this section on such amounts shall be zero for such period.
Pub. L. 93–625, § 7(a)(1)88 Stat. 2114 Pub. L. 94–455, title XIX, § 1906(b)(13)(A)90 Stat. 1834 Pub. L. 96–167, § 4(b)93 Stat. 1275 Pub. L. 97–34, title VII, § 711(a)95 Stat. 340 Pub. L. 97–248, title III, § 345(a)96 Stat. 636 Pub. L. 98–369, div. A, title I, § 144(a)98 Stat. 682 Pub. L. 99–514, title XV100 Stat. 2744 Pub. L. 100–647, title I, § 1015(d)102 Stat. 3569 Pub. L. 101–239, title VII, § 7721(b)103 Stat. 2399 Pub. L. 101–508, title XI, § 11341(a)104 Stat. 1388–470 Pub. L. 103–465, title VII, § 713(a)108 Stat. 5001 Pub. L. 104–188, title I, § 1702(c)(6)110 Stat. 1870 Pub. L. 105–34, title XIV, § 1463(a)111 Stat. 1057 Pub. L. 105–206, title III112 Stat. 741 Pub. L. 116–25, title I, § 1001(b)(1)(E)133 Stat. 985 (Added , , ; amended , , ; , , ; –(c), , ; , , ; , , ; , §§ 1511(a), (c)(1), 1535(a), , , 2750; , , ; , , ; , , ; , , ; , (7), , ; , title XVI, § 1604(b)(1), , , 1097; , §§ 3301(a), 3302(a), , ; , , .)
Editorial Notes
Amendments
Pub. L. 116–252019—Subsec. (c)(2)(A)(i). substituted “Internal Revenue Service Independent Office of Appeals” for “Internal Revenue Service Office of Appeals”.
Pub. L. 105–206, § 3302(a)1998—Subsec. (a)(1)(B). , amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: “2 percentage points.”
Pub. L. 105–206, § 3301(a)Subsec. (d). , added subsec. (d).
Pub. L. 105–34, § 1604(b)(1)1997—Subsec. (a)(1). , substituted “subsection (c)(3), applied by substituting ‘overpayment’ for ‘underpayment’)” for “subsection (c)(3))” in concluding provisions.
Pub. L. 105–34, § 1463(a)Subsec. (c)(2)(B)(iii). , added cl. (iii).
Pub. L. 104–188, § 1702(c)(6)1996—Subsec. (c)(2)(A). , inserted closing provisions “The preceding sentence shall be applied without regard to any such letter or notice which is withdrawn by the Secretary.”
Pub. L. 104–188, § 1702(c)(7)Subsec. (c)(2)(B)(i). , substituted “this title” for “this subtitle”.
Pub. L. 103–4651994—Subsec. (a)(1). inserted concluding provisions.
Pub. L. 101–5081990—Subsec. (c). added subsec. (c).
Pub. L. 101–2391989—Subsec. (c). repealed subsec. (c) which related to attribution of interest on substantial underpayments to tax motivated transactions.
Pub. L. 100–647, § 1015(d)(1)1988—Subsec. (a)(1)(A), (2)(A). , substituted “Federal short-term” for “short-term Federal”.
Pub. L. 100–647, § 1015(d)(2)Subsec. (b). , substituted “Federal short-term” for “short-term Federal” in heading.
Pub. L. 100–647, § 1015(d)(1)Subsec. (b)(1). , substituted “Federal short-term” for “short-term Federal”.
Pub. L. 99–514, § 1511(a)1986—Subsec. (a). , added subsec. (a) and struck out former subsec. (a) which read as follows: “The annual rate established under this section shall be such adjusted rate as is established by the Secretary under subsection (b).”
Pub. L. 99–514, § 1511(a)Subsec. (b). , added subsec. (b) relating to determination of Federal short-term rate and struck out former subsec. (b) which related to interest rate adjustments and establishment of adjusted rates.
Pub. L. 99–514, § 1511(a)Subsec. (c). , (c)(1), redesignated subsec. (d) as (c), in par. (1), struck out “annual” before “rate of interest” and substituted “the underpayment rate established under this section” for “the adjusted rate established under subsection (b)”, and struck out former subsec. (c) definition of prime rate, which read as follows: “For purposes of subsection (b), the term ‘adjusted prime rate charged by banks’ means the average predominant prime rate quoted by commercial banks to large businesses, as determined by the Board of Governors of the Federal Reserve System.”
Pub. L. 99–514, § 1535(a)Subsec. (c)(3)(A)(v). , added cl. (v).
Pub. L. 99–514, § 1511(c)(1)(A)Subsec. (d). , redesignated subsec. (d) as (c).
Pub. L. 98–3691984—Subsec. (d). added subsec. (d).
Pub. L. 97–2481982—Subsec. (b). substituted provisions that if the adjusted prime rate charged by banks (rounded to the nearest full percent) during the 6-month period ending on September 30 of any calendar year, or during the 6-month period ending on March 31 of any calendar year, differs from the interest rate in effect under this section on either such date, respectively, then the Secretary shall establish, within 15 days after the close of the applicable 6-month period, an adjusted rate of interest equal to such adjusted prime rate, and that any adjusted rate of interest established under paragraph (1) shall become effective on January 1 of the succeeding year in the case of an adjustment attributable to paragraph (1)(A), and on July 1 of the same year in the case of an adjustment attributable to paragraph (1)(B), for provisions that the Secretary was to establish an adjusted rate of interest for the purpose of subsection (a) not later than October 15 of any year if the adjusted prime rate charged by banks during September of that year, rounded to the nearest full percent, was at least a full percentage point more or less than the interest rate which was then in effect, and that any such adjusted rate of interest would be equal to the adjusted prime rate charged by banks, rounded to the nearest full percent, and would become effective on January 1 of the immediately succeeding year.
Pub. L. 97–34, § 711(a)1981—Subsec. (b). , struck out provision that an adjustment provided for under this subsection not be made prior to the expiration of 23 months following the date of any preceding adjustment under this subsection which changes the rate of interest.
Pub. L. 97–34, § 711(c), substituted “January 1” for “February 1”.
Pub. L. 97–34, § 711(b)Subsec. (c). , struck out “90 percent of” before “the average predominant prime rate”.
Pub. L. 96–167section 2411(a) of title 281979—Subsec. (a). substituted provisions setting the annual rate established under this section to be such adjusted rate as is established by the Secretary under subsec. (b) of this section for provision that the rate of interest under sections 6601(a), 6602, 6611(a), 6332(c)(1), and 7426(g) of this title, and under was to be 9 percent per annum, or such adjusted rate as was established by the Secretary under subsection (b).
Pub. L. 94–4551976—Subsecs. (a), (b). struck out “or his delegate” after “Secretary”.
Statutory Notes and Related Subsidiaries
Effective Date of 1998 Amendment
section 3301(a) of Pub. L. 105–206section 3301(c) of Pub. L. 105–206section 6601 of this titleAmendment by applicable to interest for periods beginning after , and, subject to applicable statutes of limitation, to interest for periods beginning before , if taxpayer reasonably identifies and establishes periods of overpayments and underpayments for which zero rate applies, and not later than , requests application of subsec. (d) of this section to such periods, see , set out as a note under .
Pub. L. 105–206, title III, § 3302(b)112 Stat. 742
Effective Date of 1997 Amendment
Pub. L. 105–34, title XIV, § 1463(b)111 Stat. 1058
section 1604(b)(1) of Pub. L. 105–34Pub. L. 103–465section 1604(b)(4) of Pub. L. 105–34section 412 of this titleAmendment by effective as if included in the sections of the Uruguay Round Agreements Act, , to which it relates, see , set out as a note under .
Effective Date of 1996 Amendment
Pub. L. 104–188Pub. L. 101–508, title XIsection 1702(i) of Pub. L. 104–188section 38 of this titleAmendment by effective, except as otherwise expressly provided, as if included in the provision of the Revenue Reconciliation Act of 1990, , to which such amendment relates, see , set out as a note under .
Effective Date of 1994 Amendment
Pub. L. 103–465, title VII, § 713(b)108 Stat. 5002
Effective Date of 1990 Amendment
Pub. L. 101–508, title XI, § 11341(b)104 Stat. 1388–471
Effective Date of 1989 Amendment
Pub. L. 101–239section 7721(d) of Pub. L. 101–239section 461 of this titleAmendment by applicable to returns the due date for which (determined without regard to extensions) is after , see , set out as a note under .
Effective Date of 1988 Amendment
Pub. L. 100–647Pub. L. 99–514section 1019(a) of Pub. L. 100–647section 1 of this titleAmendment by effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, , to which such amendment relates, see , set out as a note under .
Effective Date of 1986 Amendment
Pub. L. 99–514section 1511(d) of Pub. L. 99–514section 47 of this titleAmendment by section 1511(a), (c)(1) of applicable for purposes of determining interest for periods after , see , set out as a note under .
Pub. L. 99–514, title XV, § 1535(b)100 Stat. 2750
Effective Date of 1984 Amendment
Pub. L. 98–369, div. A, title I, § 144(c)98 Stat. 684
Effective Date of 1982 Amendment
Pub. L. 97–248, title III, § 345(b)96 Stat. 636 Pub. L. 98–369, div. A, title VII, § 714(m)98 Stat. 963
Effective Date of 1981 Amendment
Pub. L. 97–34, title VII, § 711(d)95 Stat. 340
For subsectionsand (a) (b).—
For subsection (c).—
Effective Date of 1979 Amendment
Pub. L. 96–167, § 4(c)(2)93 Stat. 1276
Effective Date
Pub. L. 93–625, § 7(e)88 Stat. 2116
Regulations
Pub. L. 99–514, title XV, § 1511(b)100 Stat. 2744