Overpayment and underpayment rates remain the same for the first quarter of 2013

The interest rates for tax overpayments and underpayments for the calendar quarter beginning January 1, 2013, will remain the same as for the fourth quarter of 2012.

For noncorporate taxpayers, the rate for both underpayments and overpayments for the first quarter of 2013 will remain unchanged at 3%. The 3% rate also applies to estimated tax underpayments for the first quarter in 2013.

These interest rates for tax overpayments and underpayments have remained constant for the last six quarters (beginning on October 1, 2011 and ending so far on March 31, 2013). We expect this rate to continue for most if not all of 2013. This means that you will no more than 1.5% of the total amount underpaid on your taxes.  Please see prior blog posts, for payment strategies.

For corporations, the overpayment rate for the first quarter of 2013 will remain at 2%. Corporations will receive .5% for overpayments exceeding $10,000. The underpayment rate for the first quarter of 2013 for corporations will be 3%, but will be 5% for large corporate underpayments.

 

Interest factors for daily compound interest for annual rates of 0.5% are published in Appendix A of Rev Rul 2012-32. Interest factors for daily compound interest for an annual rate of 2%, 3%, and 5% are published in Tables 57, 59, and 63 of Rev Proc 95-17, 1995-1 CB 556 (dealing with leap year computations).

 

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