It may make sense to not pay your 2013 Federal Income Taxes, YET

Money still remains cheap.

Since the down turn of the economic cycle, we have continually postponed making tax payments and opting to pay the IRS penalty instead.  The main reason is that the IRS rates on under payments has beeen at historical lows.

IRS has announced that the interest rates for tax overpayments and underpayments for the calendar quarter beginning July 1, 2013, will remain the same as for the second quarter of 2013.

The interest rates for tax overpayments and underpayments have remained constant for eight quarters in a row (i.e., beginning since Oct. 1, 2011 and ending on Sept. 30, 2013).

For noncorporate taxpayers, the rate for both underpayments and overpayments for the third quarter of 2013 will remain unchanged at 3%. The 3% rate also applies to estimated tax underpayments for the third quarter in 2013.  This works out to be a 1.5% rate on taxes not paid until the due date of the return.  This is an incredibly cheap short term rate.

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

If you have any questions regarding these rates or the impact to your specific situation, please do not hesitate to contact us.

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