June 30, 2020 11:15 pm

IRS Interest Rates Decrease for Q3 2020

The IRS has announced that the interest rates applicable to overpayments and underpayments of federal taxes are much lower in the third quarter of 2020 compared with the rates in the second quarter of the year (Rev. Rul. 2020-13). The rates are:

  • 3% for overpayments by individuals and other noncorporate taxpayers
  • 2% for overpayments by corporations
  • 0.5% for the portion of a corporate overpayment exceeding $10,000;
  • 3% for underpayments; and
  • 5% for large corporate underpayments

Note: The IRS also announced the blended rate for 2020, which is used to figure imputed interest on below market demand loans outstanding for the entire year (Rev. Rul. 2020-14). The blended rate is 0.89% (in contrast to last year’s rate of 2.42%).

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Tax Glossary

Capital gain distribution

A mutual-fund distribution allocated to gains realized on the sale of fund portfolio assets. You report the distribution as long-term capital gain even if you held the fund shares short term.

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