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Interest Rates and Abatement |
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The IRS will charge interest on any underpayment of tax - whether it is from an original return with a balance due, or the result of an audit. The period always begins with the due date of the return, and ends with the receipt of payment by the IRS. The interest rate is reviewed and, when appropriate, changed quarterly. Effective April 1, 2011, the rate increases from 3% to 4%. The historical rates are given in the table below. The IRS may lower the interest on tax owed when the interest is due to an unreasonable delay by an IRS official performing a "ministerial" or "managerial" act. A "ministerial act" means a procedural or mechanical act that does not involve the exercise of judgment or discretion, and that occurs during the processing of a taxpayer's case after all prerequisites to the act, such as conferences and review by supervisors, have taken place. A decision concerning the proper application of federal tax law (or other federal or state law) is not a ministerial act. A "managerial act" means an administrative act that occurs during the processing of a taxpayer's case involving the temporary or permanent loss of records or the exercise of judgment or discretion relating to management of personnel. A decision concerning the proper application of federal tax law (or other federal or state law) is not a managerial act. Further, a general administrative decision, such as the IRS's decision on how to organize the processing of tax returns or its delay in implementing an improved computer system, is not a managerial act for which interest can be abated. An example might be where the manager pulls an agent off your case to send to a training center for a teaching assignment. An error or delay in performing a ministerial or managerial act will be taken into account only if no significant aspect of the error or delay is attributable to the taxpayer involved. Moreover, an error or delay in performing a ministerial or managerial act will be taken into account only if it occurs after the IRS has contacted the taxpayer in writing with respect to the deficiency or payment. The good news is that no significant aspect of the error or delay is attributable to the taxpayer merely because the taxpayer consents to extend the period of limitations. Often, filing a Freedom of Information Request is most helpful in getting the documentation necessary to establish that part of the interest charged is because of a ministerial or managerial act. As mentioned previously, interest is computed from the due date of the return (without regard to extensions) to the date of actual payment. In addition to interest, a failure to pay penalty may be applicable (equal to 1/2 of one percent per month - or approximately 6% a year - to a maximum of 25%). Interest Rate on Noncorporate Overpayments and Underpayments
Dates Overpayments Underpayments
Apr. 1, 2011 -- Jun. 30, 2011 4% 4%
Jan. 1, 2011 -- Mar. 31, 2011 3% 3%
Oct. 1, 2010 -- Dec. 31, 2010 4% 4%
Jul. 1, 2010 -- Sep. 30, 2010 4% 4%
Apr. 1, 2010 -- Jun. 30, 2010 4% 4%
Jan. 1, 2010 -- Mar. 31, 2010 4% 4%
Oct. 1, 2009 -- Dec. 31, 2009 4% 4%
Jul. 1, 2009 -- Sep. 30, 2009 4% 4%
Apr. 1, 2009 -- Jun. 30, 2009 4% 4%
Jan. 1, 2009 -- Mar. 31, 2009 5% 5%
Oct. 1, 2008 -- Dec. 31, 2008 6% 6%
Jul. 1, 2008 -- Sep. 30, 2008 5% 5%
Apr. 1, 2008 -- Jun. 30, 2008 6% 6%
Jan. 1, 2008 -- Mar. 31, 2008 7% 7%
Oct. 1, 2007 -- Dec. 31, 2007 8% 8%
Jul. 1, 2007 -- Sep. 30, 2007 8% 8%
Apr. 1, 2007 -- Jun. 30, 2007 8% 8%
Jan. 1, 2007 -- Mar. 31, 2007 8% 8%
Oct. 1, 2006 -- Dec. 31, 2006 8% 8%
Jul. 1, 2006 -- Sep. 30, 2006 8% 8%
Apr. 1, 2006 -- Jun. 30, 2006 7% 7%
Jan. 1, 2006 -- Mar. 31, 2006 7% 7%
Oct. 1, 2005 -- Dec. 31, 2005 7% 7%
Jul. 1, 2005 -- Sep. 30, 2005 6% 6%
Apr. 1, 2005 -- Jun. 30, 2005 6% 6%
Jan. 1, 2005 -- Mar. 31, 2005 5% 5%
Oct. 1, 2004 -- Dec. 31, 2004 5% 5%
Jul. 1, 2004 -- Sep. 30, 2004 4% 4%
Apr. 1, 2004 -- Jun. 30, 2004 5% 5%
Jan. 1, 2004 -- Mar. 31, 2004 4% 4%
Oct. 1, 2003 -- Dec. 31, 2003 4% 4%
Jul. 1, 2003 -- Sep. 30, 2003 5% 5%
Apr. 1, 2003 -- Jun. 30, 2003 5% 5%
Jan. 1, 2003 -- Mar. 31, 2003 5% 5%
Oct. 1, 2002 -- Dec. 31, 2002 6% 6%
Jul. 1, 2002 -- Sep. 30, 2002 6% 6%
Apr. 1, 2002 -- Jun. 30, 2002 6% 6%
Jan. 1, 2002 -- Mar. 31, 2002 6% 6%
Oct. 1, 2001 -- Dec. 31, 2001 7% 7%
Jul. 1, 2001 -- Sep. 30, 2001 7% 7%
Apr. 1, 2001 -- Jun. 30, 2001 8% 8%
Jan. 1, 2001 -- Mar. 31, 2001 9% 9%
Oct. 1, 2000 -- Dec. 31, 2000 9% 9%
Jul. 1, 2000 -- Sep. 30, 2000 9% 9%
Apr. 1, 2000 -- Jun. 30, 2000 9% 9%
Jan. 1, 2000 -- Mar. 31, 2000 8% 8%
Oct. 1, 1999 -- Dec. 31, 1999 8% 8%
Jul. 1, 1999 -- Sep. 30, 1999 8% 8%
Apr. 1, 1999 -- Jun. 30, 1999 8% 8%
Jan. 1, 1999 -- Mar. 31, 1999 7% 7%
Oct. 1, 1998 -- Dec. 31, 1998 7% 8%
Jul. 1, 1998 -- Sep. 30, 1998 7% 8%
Apr. 1, 1998 -- Jun. 30, 1998 7% 8%
Jan. 1, 1998 -- Mar. 31, 1998 8% 9%
Interest Rate on
Corporate Overpayments and Underpayments
Dates Overpayments Underpayments Apr. 1, 2011 -- Jun. 30, 2011 3% 4% Jan. 1, 2011 -- Mar. 31, 2011 2% 3% Oct. 1, 2010 -- Dec. 31, 2010 3% 4% Jul. 1, 2010 -- Sep. 30, 2010 3% 4% Apr. 1, 2010 -- Jun. 30, 2010 3% 4% Jan. 1, 2010 -- Mar. 31, 2010 3% 4% Oct. 1, 2009 -- Dec. 31, 2009 3% 4% Jul. 1, 2009 -- Sep. 30, 2009 3% 4% Apr. 1, 2009 -- Jun. 30, 2009 3% 4% Jan. 1, 2009 -- Mar. 31, 2009 4% 5% Oct. 1, 2008 -- Dec. 31, 2008 5% 6% Jul. 1, 2008 -- Sep. 30, 2008 4% 5% Apr. 1, 2008 -- Jun. 30, 2008 5% 6% Jan. 1, 2008 -- Mar. 31, 2008 6% 7% Oct. 1, 2007 -- Dec. 31, 2007 7% 8% Jul. 1, 2007 -- Sep. 30, 2007 7% 8% Apr. 1, 2007 -- Jun. 30, 2007 7% 8% Jan. 1, 2007 -- Mar. 31, 2007 7% 8% Oct. 1, 2006 -- Dec. 31, 2006 7% 8% Jul. 1, 2006 -- Sep. 30, 2006 7% 8% Apr. 1, 2006 -- Jun. 30, 2006 6% 7% Jan. 1, 2006 -- Mar. 31, 2006 6% 7% Oct. 1, 2005 -- Dec. 31, 2005 6% 7% Jul. 1, 2005 -- Sep. 30, 2005 5% 6% Apr. 1, 2005 -- Jun. 30, 2005 5% 6% Jan. 1, 2005 -- Mar. 31, 2005 4% 5% Oct. 1, 2004 -- Dec. 31, 2004 4% 5% Jul. 1, 2004 -- Sep. 30, 2004 3% 4% Apr. 1, 2004 -- Jun. 30, 2004 4% 5% Jan. 1, 2004 -- Mar. 31, 2004 3% 4% Oct. 1, 2003 -- Dec. 31, 2003 3% 4% Jul. 1, 2003 -- Sep. 30, 2003 4% 5% Apr. 1, 2003 -- Jun. 30, 2003 4% 5% Jan. 1, 2003 -- Mar. 31, 2003 4% 5% Oct. 1, 2002 -- Dec. 31, 2002 5% 6% Jul. 1, 2002 -- Sep. 30, 2002 5% 6% Apr. 1, 2002 -- Jun. 30, 2002 5% 6% Jan. 1, 2002 -- Mar. 31, 2002 5% 6% Oct. 1, 2001 -- Dec. 31, 2001 6% 7% Jul. 1, 2001 -- Sep. 30, 2001 6% 7% Apr. 1, 2001 -- Jun. 30, 2001 7% 8% Jan. 1, 2001 -- Mar. 31, 2001 8% 9% Oct. 1, 2000 -- Dec. 31, 2000 8% 9% Jul. 1, 2000 -- Sep. 30, 2000 8% 9% Apr. 1, 2000 -- Jun. 30, 2000 8% 9% Jan. 1, 2000 -- Mar. 31, 2000 7% 8% Oct. 1, 1999 -- Dec. 31, 1999 7% 8% Jul. 1, 1999 -- Sep. 30, 1999 7% 8% Apr. 1, 1999 -- Jun. 30, 1999 7% 8% Jan. 1, 1999 -- Mar. 31, 1999 6% 7%
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