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2019 Third Quarter IRS Interest Rates | MN International Tax Law Firm

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On June 5, 2019, the Internal Revenue Service announced 2019 Third Quarter IRS Interest Rates. This quarter, the IRS interest rates will be reduced for the first time in years.

2019 Third Quarter IRS Interest Rates: 3rd Quarter and Interest Rates Defined

Third quarter of 2019 begins on July 1, 2019 and ends on September 30, 2019. The term “IRS interest Rates” refers to both, IRS underpayment and overpayment rates. In other words, these are the interest rates that the IRS will charge on any late tax liability; at the same time, these are also the interest rates that the IRS will pay on tax refunds (for example, if a refund results from amending a tax return).

For international tax purposes, the IRS Interest Rates also refer to the rates that the IRS will change on any PFIC tax under the default PFIC IRC Section 1291 calculations. These are also the rates that taxpayers will need to pay on any tax due as part of their offshore voluntary disclosure submissions, including Streamlined Domestic Offshore Procedures and Streamlined Foreign Offshore Procedures. Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis; therefore, US taxpayers and tax professionals should refer to IRS announcements of IRS interest rates on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.

2019 Third Quarter IRS Interest Rates: How These Rates Were Determined

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis; therefore, US taxpayers and tax professionals should refer to IRS announcements of IRS interest rates on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.

2019 Third Quarter IRS Interest Rates: Rate Reduction

The 2019 Third Quarter IRS Interest Rates will be reduced from those of the second quarter as follows:

five (5) percent for overpayments (four (4) percent in the case of a corporation) instead of six (6) and (5) percent respectively;
five (5) percent for underpayments from (6) percent;
seven (7) percent for large corporate underpayments from eight (8) percent; and
two and one-half (2.5) percent for the portion of a corporate overpayment exceeding $10,000 (it used to one and one-half (1.5) percent).

Sherayzen Law Office will continue to closely monitor the moves of the Federal Reserve regarding its interest rates in the future.